Path to the 2012 Farm Bill: NSAC Assessment of House Committee-Passed Bill
July 12th, 2012
In an earlier post we provided highlights and lowlights of the House Agriculture Committee one-day markup of their version of the 2102 Farm Bill, including a rundown of sustainable agriculture amendments passed and defeated. Here we turn to an assessment of the bill overall. Still to come is a piece discussing possible next steps in the path to the 2012 Farm Bill.
Little Reform in the “Reform” Bill
The title of the House bill (H.R. 6083) is the Federal Agriculture Reform and Risk Management (FARRM) Act of 2012. Despite the title, overall there is very little reform to speak of. Like its Senate counterpart, the bill ends direct payments but reinvests nearly 80 percent of the savings back into new commodity and crop insurance subsidies. Also like the Senate bill, it stakes the claim to the limited projected savings on the basis of commodity prices staying relatively high throughout the entire coming decade. Should a price melt down occur during those ten years, the projected savings could easily evaporate. The House bill also includes similar brand new, highly-subsidized crop revenue insurance programs for cotton (the Stacked Income Protection Plan or STAX) and for all other commodities (Supplemental Coverage Option or SCO), projected to cost nearly $8 billion between them over the next 10 years.
Unlike the Senate bill, the House Committee bill would actually raise the amount of commodity payments any one farm can receive, vastly increasing the total based on current law from $130,000 to $250,000. The Senate bill set a still high, but more reasonable cap of $100,000. Even more to the point, the House bill leaves the barn door wide open on existing loopholes in the law that allow mega farms with reasonably good accountants and lawyers to collect unlimited payments, whereas the Senate bill includes historic reforms to close those loopholes. Representative Jeff Fortenberry (R-NE) introduced an amendment patterned on the Senate bill’s payment limitations language during House markup, and then withdrew, but not before putting his colleagues on notice of his intent to bring the amendment on the House floor.
Also unlike the Senate bill, the House Committee bill includes no income test for maximum taxpayer subsidies for crop and revenue insurance. Whereas the Senate bill includes a very modest 15 percentage point reduction in the subsidy rate (still leaving it at greater than a 50 percent insurance premium subsidy rate in most cases) for participants with more than $750,000 per spouse in adjusted gross annual income, the House Committee did not even consider or debate any limits on government subsidies for the crop and revenue insurance programs — programs projected to cost taxpayers nearly $10 billion a year over the next decade. Neither bill does an adequate job of addressing payment limits and income limits for insurance subsidies, but the absence of even the modest Senate provision from the House Committee bill puts an exclamation point on the runaway entitlement mentality that has taken over the industry and its biggest clients.
Also unlike the Senate bill, the House Committee bill does not contain nationwide protections against having the availability of heavily subsidized insurance drive the further destruction of native grasslands and prairie. Whereas the Senate bill temporarily reduces subsidy rates for busting out native sod anywhere in the country, the House bill limits the application of the provision to the Prairie Pothole Region of the upper Midwest. This limitation creates an unworkable and grossly inequitable provision that does not even protect the major sodbusting locations in the states that include a portion of the Prairie Pothole Region.
The House Committee bill, also in contrast to the Senate bill, does not require those receiving taxpayer subsidies for insurance to maintain soil erosion plans on marginal lands or to protect wetlands.
One of the most important reforms of the 2008 Farm Bill was the inclusion of a livestock and poultry fair competition and contract reform set of provisions. Neither the House nor Senate bill takes additional steps forward on restoring a competitive livestock marketplace. Incredibly, however, the House Committee bill now includes a provision that strikes all of the gains from 2008, including repealing the contract reform regulations called for in the 2008 Bill and finalized under an agreement struck by Congress just last year. This anti-farmer and ranchers amendment was sponsored by Representatives Mike Conaway (R-TX) and Jim Costa (D-CA).
Food Stamp Cuts
In sharp contrast to the complete lack of scrutiny in markup to fraud, waste, and abuse in the production subsidy programs, the Committee spent several hours sharply debating the underlying $16.1 billion in cuts to the largest food assistance program (food stamps, now also called SNAP), with majorities beating back a variety of amendments to eliminate or reduce the cuts and also to greatly increase the size of the cuts. Much of the debate was layered in double speak, with references to state options and flexibility to tailor their low income assistance programs as waste and abuse — including the suggestion that the two to three million people who will lose benefits under the House bill, especially the working poor, received them somehow illegitimately.
Setbacks for Conservation Policy
In addition to the absence of good conservation policy with respect to crop and revenue insurance subsidies, the House Committee bill also deals a major setback to farm bill working lands conservation. The bill reduces acreage for the Conservation Stewardship Program (CSP) by 30 percent and cuts funding by over $3 billion, over $1 billion more than the Senate bill.
CSP helps to solve natural resource and environmental problems by supporting advanced conservation management undertaken by farmers and ranchers on a voluntary basis. More than twice as many farmers and ranchers apply for the program than can be enrolled even at current acreage and funding levels. In light of producer demand, and given the tremendous pressures being placed on production and the continuing urgent need to address the full array of agro-environmental problems, now is the time to be increasing support for advanced conservation systems, not scaling back. NSAC, however, reluctantly agreed to the 10 percent cut to CSP proposed by House and Senate Agriculture Committee leaders in their draft farm bill prepared for last year’s ill-fated Super Committee — an agreement that was retained in the Senate bill but that has now sadly been abandoned by the House bill.
The House Committee bill, like its Senate counterpart, failed to address the critical issue in the proposed new Regional Conservation Partnership Program, an amalgam of existing cooperative conservation initiatives. While both proposals would attempt to bring NGOs, state agencies, and producer groups into partnerships with Natural Resources Conservation Service to deliver targeted, multi-producer conservation projects, neither bill provides for technical assistance funding to support the cooperative projects or technical service providers. Instead, the bill requires NRCS — and NRCS alone — to provide all the technical assistance. This is a missed opportunity that seriously compromises the otherwise positive new combined program.
The House bill, while retaining the current payment limit for CSP, increases the limit for the Environmental Quality Incentives Program (EQIP) to the absurdly high $450,000 per farm, nearly 20 times higher than the average contract. This is a move intended to benefit the growth of industrial-size confined animal feeding operations or CAFOs. The Senate bill retains the current $300,000 cap. Both the House and Senate bills, however, continue blatant and nonsensical discrimination against organic farmers enrolling in EQIP. Organic farmers, and only organic farmers, are subject to an EQIP payment limit of $80,000 rather than the $300,000 or $450,000.
Mixed Bag for Beginning Farmers
The good news in the House Committee bill for beginning farmers is that it incorporates many of the policy changes proposed in the Beginning Farmer and Rancher Opportunity Act (BFROA) to strengthen current credit, conservation, and training programs. In addition to the many improvements already in the bill, during markup an amendment by Representatives Marcia Fudge (D-OH) and Jeff Fortenberry (R-NE) was passed that will create a microloan financing option at the Farm Service Agency for young, beginning, and returning veteran farmers, including an option for microloan pilots run by community-based intermediary lenders. This innovative measure is not included in the Senate bill. Also added by amendment was a new Veterans Agricultural Liaison position at USDA, sponsored by Representatives Leonard Bosswell (D-IA) and Chris Gibson (R-NY), and improvements to the Beginning Farmer and Rancher Development Program sponsored by Fortenberry and Representative Tim Walz (D-MN), the lead sponsors for the BFROA.
The bad news is that the House Committee bill cuts annual funding for the highly successful Beginning Farmer and Rancher Development Program (BFRDP) nearly in half and keeps funding for the very popular Conservation Reserve Program Transition Incentives Program (CRP-TIP) at current levels, which is only sufficient to keep the program in business for 18-24 months. The Senate bill includes a smaller 10-percent BFRDP cut while doubling funding for CRP-TIP. The House bill also eliminates the set-aside within BFRDP for socially disadvantaged farmers and ranchers, and increases the matching funds requirement, which will be detrimental to many community-based and farmer groups who have successfully used this program in the past. Both of these issues will need to be addressed as the bill proceeds to conference, or the House floor.
Both bills temporarily increase insurance premium subsidies for some but not all beginning farmers, at a significant cost of nearly $200 million. Unfortunately, the provision is not formulated in a way to help all beginning farmers or maximize its usefulness and practicality.
One place where the House Committee bill is an improvement on the Senate bill, though both still fall far short, is in funding the major minority farmer program known as Outreach and Assistance to Socially Disadvantaged Farmers and Ranchers. The House bill reduces annual funding by 50 percent, to $10 million a year, a level which is nonetheless twice as large as the ridiculously low funding level in the Senate bill.
Rural Development Still Largely Left Out
Both the Senate and House Committee bill provide minimal funding for rural economic development, though the House bill is even more minimal than the Senate bill. Both would fund the Value-Added Producer Grants program at $50 million or an average of $10 million a year. The Senate bill also provides $15 million for a continuation of the innovative, job-creating Rural Microentrepreneur Assistance Program, a program the House Committee bill effectively kills. The Senate bill also includes $50 million to fund heavily backlogged water and sewer grants for small rural communities, a measure the House Committee defeated in an amendment vote during markup. The Senate bill cuts rural development funding by 64 percent and the House by 88 percent relative to the average level of the past three farm bills.
Local Food, Specialty Crops – Mostly Gains
The marketing programs, including local food and organic agriculture, fared comparatively well in the House Agriculture Committee’s process, though there remains work to be done.
As in the Senate-passed bill, the House Committee bill now contains an expanded Farmers Market Promotion Program, renamed the Farmers Market and Local Food Promotion Program (FMLFPP) with an expanded reach to include marketing not only for direct producer-to-consumer marketing but also farm-to-institution and farm-to-retail marketing. The underlying provision was part of the Local Farms, Food, and Jobs Act sponsored by Representative Chellie Pingree (D-ME) and scores of co-sponsors and a major NSAC priority. Thanks to an amendment by Rep. Fortenberry during House markup, both bills now include program priorities for under-served communities, small and mid-sized farms, and local food capacity building. Also, both bills fund the program at $20 million per year in mandatory money.
Thanks for the bipartisan efforts of Representatives Pingree, Renee Ellmers (R-NC), and Gibson, the House bill now, for the first time ever, authorizes schools with low annual commodity entitlement values (small rural schools) to start making their own food purchases in lieu of USDA commodities, provided USDA determines this would yield reduced administrative costs. The farm to school provision also creates demonstration projects in at least 10 schools to test alternatives to USDA distribution through farm to school procurement. An amendment offered by Senator Wyden (D-OR) during the Senate’s floor debate also authorizes five state pilots for exploring local food procurement in schools. These two variations will be addressed during conference, meaning the final farm bill should include important new advances for farm to school procurement.
The House bill also authorizes a five-state pilot program to explore alternatives to the DoD Fresh program for procurement of fresh fruits and vegetables. The bill still needs report language to clarify that local food procurement and farm to school programs are the intent of these DoD Fresh pilots.
At the discretion of the Secretary of Agriculture, both bills include an exemption for farmers markets from covering the full cost of equipment and implementation of electronic benefit transfer (EBT) for SNAP customers. Additionally, both bills authorize pilot programs for developing technology to accept SNAP benefits using mobile (smartphone) technology. These provisions are important to ensure that farmers have full market access when selling products locally.
On this same note, thanks to Rep. Pingree’s amendment during markup, the House bill now matches the Senate bill by authorizing the Secretary of Agriculture to develop a plan for allowing SNAP consumers, who receive benefits on a monthly basis, to participate in seasonal community-supported agriculture (CSA) programs.
Both the Senate and House Committee bills increase funding for Community Food Projects, the Senate from $5 million a year to $10 million a year, and the House from $5 million a year to $15 million. Based on a successful amendment offered by Rep. Tim Johnson (R-IL), the House bill now also includes a $5 million annual set-aside for incentivizing local produce purchases by SNAP consumers. The Senate bill does not include a set-aside for SNAP incentives, but rather includes SNAP incentives separately, funded at $20 million mandatory per year.
The House Committee bill does not currently include an important provision in the Senate-passed bill to collect data on agriculture production for local markets and to study the economic impacts of local food programs. The House bill but not the Senate bill includes a directive to the Food Safety Inspection Service to develop recommendations for how to improve technical assistance and guidance to meat and poultry processing facilities with 25 employees or less and to provide more user-friendly access to meat and poultry label information. The FSIS amendment was sponsored by Pingree and addresses a major current roadblock to increased marketing for sustainable livestock and poultry products.
The Specialty Crop Block Grant (SCBG) program received increased mandatory funding in both bills, from $55 million annually in the last Farm Bill to $70 million, and now includes a directive to the Secretary of Agriculture to develop guidance on multi-state projects with a total set-aside of $15 million over five years. An amendment offered by Rep. Reid Ribble (R-WI) and passed during House markup now includes research as an eligible use of grant funds under the multi-state projects. Disappointingly, neither bill includes the local and regional food provisions for SCBG from the Local Farms, Food, and Jobs Act.
Both bills include an important advance based on a proposal from the Local Farms, Food, and Jobs Act directing USDA to develop a nationwide whole farm revenue-based crop insurance option for diversified operations, including specialty crop farms and mixed grain and livestock or dairy operations. This product, once developed by USDA, would fill a huge gap in the current crop insurance portfolio that leaves most diversified sustainable and organic producers with few good insurance options. Unfortunately, the House bill sets a cap of $1 million in potential crop and livestock liabilities, which will exclude many mid-sized specialty crop and livestock and dairy operations from the advance. The Senate bill sets a more realistic $1.5 million liability cap. An amendment offered by Representatives Mike McIntyre (D-NC) and Walz during markup to raise the limit to $1.5 million did not pass.
Organic – Mostly Positive but One Big Problematic Difference
For organic agriculture, the House markup only made one significant improvement: the adoption of an organic crop insurance amendment offered by Rep. Peter Welch (D-VT), which directs USDA to develop an organic price series on which to base insurance indemnity payments.
The House Committee bill matches the Senate bill in providing $16 million a year in mandatory funding for the Organic Agriculture Research and Extension Initiative, a $4 million a year reduction from its current level. Both bills also fund the Organic Production and Market Data Initiatives (ODI) at $5 million in mandatory funding over the life of the bill.
Representative Welch (D-VT) offered and withdrew an amendment that would have removed barriers to the establishment of a potential organic checkoff program. The amendment would have exempted more organic producers from having to pay into conventional checkoffs, and would have allowed a multi-commodity sector like organic to establish a checkoff program if it so desired. Currently, only commodity-specific checkoff programs are allowed. The check-off proposal remains controversial within organic circles.
Few areas of the bill are more dramatically different than the National Organic Certification Cost Share Program. The Senate bill renews the program and increases its funding, while the House Committee bill repeals the program altogether. An amendment offered during markup by Rep. Jim Costa (D-CA) to restore funding for the program failed. Retaining and improving the cost share program will be a major rallying point for the organic community on the House floor and in conference.