October 29, 2013

Farm Bill Conference: What to Expect

Burleigh Leonard

It seems like everybody—from President Obama to Senate Majority Leader Reid, to the bipartisan leadership of the House and Senate Agriculture Committees—wants to do a farm bill these days. Even the media’s talking heads suggest a new farm bill is needed, if only to demonstrate that Washington has not completely broken down.

However, a host of contentious issues will make it very difficult to arrive at a farm bill that can pass muster with the powers that be.

A closer look at some of the major issues reveals the regional, political and philosophical fault lines that could undermine attempts to sign a new, long-term farm bill into law:

Food Stamps. What Obamacare was to the continuing resolution, food stamps is to the farm bill. Liberal Democrats and Tea Party Republicans have staked out what appear to be irreconcilable positions on eligibility criteria and work requirements which directly affect the number of beneficiaries who qualify for food stamps and hence the cost of the program. The Senate bill cuts food stamps by $4 billion over ten years; the House bill cuts $40 billion. The fate of the farm bill is dependent on reaching an agreement on food stamps. That will require time and finesse, both of which are in short supply.

Decoupling Food Stamps from Farm Programs. House Tea Partiers opted to de-couple nutrition programs from agricultural programs, allowing them to vote for food stamp cuts and farmer subsidies. While both food stamps and farm programs will be considered in conference, the de-coupling issue is still alive. The traditional alliance that has long supported farm bills favors the Senate bill which keeps the two sets of programs joined at the hip. Trade-offs between food stamp cuts and de-coupling could be one way to engineer a compromise in conference.

Repeal of Old Permanent Law. The threat of reverting to old permanent law has served as an incentive to enact new farm bills. Most farm groups welcome having this “gun at the head” of legislators to reduce the risk of losing subsidies altogether. They support the Senate bill which retains old permanent law. Others, including Conference Chairman Lucas, believe it is prudent to update the old, underlying law with provisions that are more in tune with modern agriculture. They endorse the House bill that repeals old permanent law and replaces it with new permanent law in the form of the commodity programs in title I of the legislation.

Crop Insurance. Support for crop insurance is wide-spread; however, there are two sticking points that conferees will be hard-pressed to resolve. The Senate bill requires farmers to comply with good conservation practices in order to qualify for crop insurance premium subsidies and reduces the crop insurance premium subsidy for individuals whose adjusted gross income is in excess of $750,000. The House bill contains neither provision, and Chairman Lucas can be expected to insist on the House position, arguing that conservation cross-compliance and means-testing discourage farmer participation thus undercutting the policy objectives of conservation and crop insurance programs.

Commodity Programs. The commodity subsidy programs under both the House and Senate bills are a mind-numbing array of esoteric provisions. The general design of the commodity programs in the House and Senate bills is similar; however, the details vary from one commodity to another as well as between the two versions of the legislation. How the differences over these details are settled will determine not only the regional winners and losers among farmers but also the potential for retaliation against U.S. exports by our WTO trading partners. Differences over the dairy program may very well invite a showdown between Speaker Boehner and Rep. Peterson, the Congressional defender-in-chief of dairy producers.

King Amendment. Rep. Steve King succeeded in including language in the House farm bill which prohibits states from imposing their agricultural production rules on products from other states. This measure is intended to counter a California law that establishes cage-size requirements for laying hens and has generated a barrage of criticism from animal welfare groups. Consumer and environmental organizations also oppose the King amendment because, they claim, it will compromise health and safety laws in many states. The Senate bill contains no such provision.

The President, House Democrats and a bipartisan mix of Senators have signaled their preference for the Senate farm bill, due largely to the less onerous food stamp cuts contained therein. House Republicans will be left to single-handedly defend their bill. We have seen this movie before and we know how it ends: House Republicans refuse to budge in the face of scathing attacks from a united Democratic party; just as the clock strikes midnight, Senate elders intervene to save the day…  by kicking the can another ten feet down the road.

If you are a gambler, put your money on another extension of the current farm bill that avoids the horrors of permanent law and gets us beyond next year’s mid-term elections.