Note: On Thursday afternoon the House failed to pass its new farm bill on a 195-234 vote. More here.
The House took up the farm bill debate in earnest on Wednesday (June 19). With over 100 amendments to get through, there was plenty for agriculture advocates to focus on.
But for those in the South, Amendment Two – offered by Ohio Rep. Bob Gibbs and Wisconsin Rep. Ron Kind – drew special scrutiny.
“I’ve met with all the Arkansas delegation,” said Jeffery Hall, associate director of national affairs for the Arkansas Farm Bureau, shortly before the debate opened. “They’re all optimistic that the House can get the farm bill passed even though there’s a lot to work through.
“We’re extremely concerned about the amendment from Gibbs and Kind. We’re in opposition to that and believe it would be devastating to rice, peanuts and other Southern crops.”
Hall lauded Arkansas Rep. Rick Crawford’s approach to the amendment, as he sent a “Dear Colleague” letter around the House explaining why the amendment should be voted against.
Proponents of the Gibbs/Kind amendment “argue that the Commodity Title is not market-oriented,” reads the letter. “This couldn’t be further from the truth” as the House bill would eliminate direct payments. The amendment would actually restore the “antiquated” base acre system and “continue to make payments to those who are no longer farming.”
The letter also pushed back against arguments that the farm bill is too kind to rice and peanuts. Analysis by “leading experts,” it says, “show that the average total cost of production for peanuts and rice are between $695 and $708 per ton and $14.92 per hundredweight, respectively. The reference prices in (the House farm bill) are well below their cost of production estimates, ensuring that neither rice nor peanut growers will ‘plant for the program’ like some allege.”
Regional differences were also addressed as the letter says the Gibbs/Kind amendment “only works for one or two regions of the country, while demolishing the farm safety net for all others.”
Gibbs rejected those arguments. “The amendment would have set a target price for all crops at 55 percent of the five-year, rolling Olympic average,” he said on the floor. “It would also change the acreage available for target price support to 85 percent of a farmer’s base acres.”
Oklahoma Rep. Frank Lucas, chairman of the House Agriculture Committee, opposed the amendment.
Kind claimed the amendment would still maintain “an important safety net for farmers if commodity prices do drop.” However, “supporters of the Price Loss Coverage Program as currently drafted will claim the program is necessary to ensure farmers have a safety net for when the market collapses. But instead, the program in the farm bill before us sets target prices so high that some commodities are guaranteed an 8 percent profit.”
Kind said no other business is guaranteed such profit margin other than crop insurance companies that are guaranteed 14 percent profit under the House farm bill. “By setting the target prices at this historically high level it will all but ensure a much higher likelihood of government payouts in the future. In fact, implementation of the PLC program will already require government payouts for the top five commodity crops.”
For rice, said Kind, the program would pay out $14 per hundredweight, while the current price is at $10.50. “It’s outrageous that while we’re cutting over $20 billion in the Nutrition Title, we’re adding on this high target price … in an area where it isn’t economically needed or feasible. Since farmers receive these payouts on planted acres, we’re encouraging them to overplant and plant on marginal lands that probably wouldn’t be brought into production anyway because their losses would be covered and a profit margin assured.”
Gibbs, pointing to his farming credentials, said producers “want their check to come from the market, not the government. My fear is the House farm bill will distort the market prices by setting the target prices too high.”
As for corn, “we had a drought and saw prices reach very high levels,” said Gibbs. If there are several years of good weather, “it’s possible we could see the prices of corn come down below these very high target rates and farmers would still be making money on a per-bushel basis, depending on yield. Yield has to be a factor. When you have Price Loss Coverage, yield isn’t factored in. When they can still be making some money on a per-bushel basis per acre and still get a government payout, it is market distortion.
“It is interesting to note that the organizations that support my amendment – the National Corn Growers Association, the American Soybean Association, and many national and state organizations – represent thousands of farmers out there supporting my amendment. It would cut $12 billion from the committee-marked bill. … They don’t want to go back to the previous policies of 1995 where we had market distortion and farmers planting for the program.”
The aforementioned letter takes on the reason for some commodity organizations backing the amendment. The groups “also support the Senate ARC program, which effectively guarantees the profits of corn and soybean farmers, or 88 percent of their historically high revenues. What’s more, these same commodity groups enjoy a government-mandated demand for their crops (the Renewable Fuel Standard), the highest levels of net farm income over the last five years and the highest participation rates of crop insurance in the country.”
Another concern: the WTO. Kind brought up the WTO complaint from Brazil on cotton subsidies and worried the proposed PLC program would set up another challenge.
Gibbs was on the same page. “When we changed this direct benefits paid to planted acres, that’s ripe for a WTO complaint. It could (cause) a trade war.”
Lucas, who adopted a calm demeanor throughout the long day of debate, requested that Gibbs withdraw the amendment, “with my commitment that we’ll continue to work on this issue as we move forward to produce an equitable and market-oriented farm bill.”
With that Gibbs “respectfully” withdrew the amendment.
Following the withdrawal, a coalition of groups that favored the amendment released a statement that read: "Our collective groups believe the Gibbs amendment would have received strong support on the House floor, and would have made the 2013 farm bill a better piece of legislation overall. As proponents of market-oriented farm policy, we are disappointed to see the amendment withdrawn and we thank Rep. Gibbs for his continued advocacy. We expect Chairman Lucas to respond to the farm policy concerns raised by the amendment during Conference on the farm bill, as he committed to do during his colloquy today with Rep. Gibbs. The final farm bill must be more equitable and market-oriented than the current Price Loss Coverage program in the House bill."