Path to the 2012 Farm Bill: House Budget Complicates Farm Bill, but Senate Committee Will Begin Anyway
March 30th, 2012
On Thursday, March 29, the House approved the FY 13 Budget Resolution introduced by Budget Committee Chair Paul Ryan (R-WI) by a 228-191 vote, with all Democrats and 10 Republicans voting no. The budget resolution will not be taken up by the Senate and hence will only control spending actions in the House.
The resolution abrogates the budget deal reached in August 2011 in two significant ways. First, it reduces the level of funding for discretionary government programs by $19 billion below the agreement reached as part of last year’s Budget Control Act. As a result, House appropriators will be writing their annual government funding bills at lower levels than their Senate counterparts, setting up another year-end government shutdown showdown much like the one last year the Budget Control Act was intended to overcome. The one exception to that rule will be House defense appropriators, who will be writing a bill with more spending in it than the Budget Control Act would allow and thus at higher levels than their Senate counterparts.
Second, it proposes to rescind the automatic (sequestration) government funding cuts scheduled to kick in starting January 1, 2013. These cuts are required under the Budget Control Act as a result of the failure of the congressional “Super Committee” process last year to come up with a plan to trim government programs, including mandatory and entitlement programs, by $1.2 trillion over the next decade. The House resolution retracts the first year of those automatic cuts (but only the first year) and replaces them with instructions to several House committees, including the Agriculture Committee, to find an equal amount of savings from mandatory programs under their control.
House Agriculture Committee
The budget resolution triggers two Farm Bill actions by the House Agriculture Committee. First, by April 27, the Agriculture Committee must produce a bill that cuts $33.2 billion from farm bill spending, including over $8 billion immediately in the first year. This will be a wrenching affair. There is no chance the Senate will do a similar bill, so the measure is doomed from the start. Yet, the bill must be substantive, must be reported on time, and must include the specific policies required to reach the $33.2 billion savings. Many observers expect this pre-farm bill episode to turn into a battle over SNAP (food stamp) benefits and to become a primarily partisan affair that will sour the atmosphere for actually producing a real farm bill later in the year.
Second, the budget resolution assumes ten-year farm bill cuts of $180 billion, including $30 billion in cuts to crop subsidy programs, $16 billion to conservation programs, and the balance to food stamp (equal to an approximately 17 percent cut to food stamps or about $90 a month for a family of four according to food stamp budget experts).
It is quite possible for the Agriculture Committee to return to its farm bill business later this year, after the dust has settled on the $33 billion reconciliation bill that is going nowhere but which they must attend to first. If they can manage that pivot, they could quite conceivably produce a farm bill that cuts somewhere between $23 billion (the amount proposed in last year’s draft bipartisan farm bill prepared for the Super Committee) and the $33 billion due on April 27. In fact, this week, Chairman Frank Lucas (R-OK) suggested a bill with cuts of about $30 billion.
If the House agrees to waive the budget resolution assumptions when proceeding to take up the farm bill, the Committee could thereby bypass the extreme $180 billion budget assumption from the budget resolution that just passed. However, it clearly becomes a more difficult task in light of near unanimous Republican support for the $180 billion cut reflected in this week’s budget resolution.
The best case scenario for getting a farm bill this year, on schedule, would appear to be for the Senate Agriculture Committee to approve its version of the bill before Memorial Day (see below) and for the House Committee to take it in June or July, make its adjustments, and then try to get both houses to adopt its versions of the bill and go to a House-Senate conference either in the midst of a national election season or in the lame duck session after the elections are over. This scenario, or any of several possible variations of it, is not an impossible scenario, but neither is it a particularly easy one.
If, as September approaches and the path forward to a five-year farm bill is not clear, Congress will need to turn hammering out a one-year extension of the current bill, with or without changes, and pass it before the current farm bill expires on September 30. Chairman Lucas hinted this week that this might become the necessary path forward.
NSAC strongly supports doing a real, long-term farm bill this year, including renewed farm bill funding for conservation, beginning farmer, minority farmer, organic research, specialty crop research, farmers markets, organic cost share, and renewable energy programs that will otherwise expire. If, however, an extension becomes necessary, we will urge that all programs be extended, including those mentioned above that will otherwise run out of money.
Senate Agriculture Committee
Unfazed by House budget politics, the Senate Agriculture Committee leaders intend to markup and vote on their version of the new farm bill in late April, and possibly into May. Congress is at the start of a two week recess, and while they are out, agricultural staffers are meeting to go over each of the farm bill titles to discuss what should go in and what should come out. When the Senators return mid-month, it is expected there will be several closed-door member meetings to start to hammer out deals. If those go well, committee markup of the new farm bill could begin the last week of April.
The markup vehicle will be introduced by Chairwoman Debbie Stabenow (D-MI) at some point in advance of the markup. It is expected in broad outline to be similar to the draft farm bill put together hurriedly last year in advance of expected Super Committee action that in the end never transpired. It will likely include a net ten-year farm bill savings of $23 billion. Unlike last year’s draft farm bill, however, the new version is expected to include more no-cost policy measures and very likely will also adjust mandatory funding levels for certain programs.
NSAC continue to advocate for inclusion of important policies and programs to assist beginning farmers, improve farm income through value-added and regional food system development, improve access to healthy food, increase investments in research to support sustainable farm and food systems, and fund and make working lands conservation programs work better for farmers and the environment. On most of those fronts, it is still too early to tell how much progress is being made. In nearly all cases, most of the reforms still hang in the balance.
The commodity program section of the farm bill is still very much a work in progress. On Thursday, March 29, Senators Kent Conrad (D-ND), John Hoeven (R-ND), and Max Baucus (D-MT) introduced their preferred subsidy program, called the Revenue Loss Assistance Program (or RLAP), as part of their Revenue Loss Assistance and Crop Insurance Enhancement Act (S. 2261). RLAP is another “shallow loss” payment proposal, but one oriented very much to the needs of more northern and western areas as compared to the Aggregate Risk and Revenue Management (ARRM) program introduced last year by Corn Belt Senators Sherrod Brown (D-OH), John Thune (R-SD), Dick Durbin (D-IL), and Richard Lugar (R-IN).
Those two, very different shallow loss proposals are in the mix with proposals from southern groups and Senators for higher target prices and thus larger and more regular counter-cyclical payments plus a proposal from the cotton industry for a highly lucrative crop insurance-plus program that would take cotton out of the commodity title altogether except for marketing loans. If successful with their stand alone “STAX” proposal, cotton would achieve the unique status of having no payment caps and no conservation requirements whatsoever.
Payment caps will also be an issue regardless of what the underlying program choices of the Committee turn out to be. For instance, the Rural America Preservation Act (RAPA) bill backed by several Committee members and supported by NSAC would cap total payments at not more than $100,000 in any one year, and cap marketing loan gains at not more than $150,000 in any one year. The ARRM proposal, on the other hand, would cap payments at $130,000 and have place no limit on marketing loan gains. The new RLAP proposal would go higher still, with payments capped at $210,000 and no limits on marketing loan gains. Of those three proposals, only RAPA would close the loopholes which under current law and regulations allow mega farms to collect multiples of the payment cap regardless of the dollar limitation included in the farm bill.
Conservation obligations for receipt of taxpayer production subsidies also remain a hot topic. This week two former Secretaries of Agriculture endorsed the NSAC proposal to attach conservation requirements to any new commodity program and to re-attach them to the receipt of crop insurance subsidies. Under this proposal, all farmers could still purchase crop insurance, but to have the taxpayer pay the majority of the premium, the farmer would need to agree to stop excessive soil erosion and protect wetlands. Crop insurance subsidies will cost the taxpayer $90 billion over the next decade.
Needless to say, we are concentrating on Senate Committee action for the coming month. While the House budget reconciliation bill bears monitoring, it is unlikely to directly figure into the final farm bill deliberations, though indirectly it could very badly trouble the waters. The Senate Committee action, on the other hand, will to a significant degree determine whether the effort to pass a farm bill this year is worth fighting for or not. We will continue to keep readers appraised of developments and opportunities for engagement.