In its “Path to the 2012 Farm Bill” series, NSAC gets into the details of the 2012 Farm Bill debate.

On Wednesday, February 15, the Senate Agriculture Committee held its first in a series of four hearings for the upcoming 2012 Farm Bill.  Hearings are an important part in the farm bill process because they bring attention to critical issues and policy changes that are needed, informing the debates and deliberations around the bill.

Titled “Energy and Economic Growth for Rural America,” the hearing covered programs and policies in the Energy and Rural Development Titles of the farm bill.

Opening Remarks and the Farm Bill Timeline

Chairwoman Debbie Stabenow (D-MI) opened the hearing with general comments on the next farm bill, noting that with the nation’s agriculture sector employing 16 million Americans, the farm bill is thus a “jobs bill.”  With the current farm bill expiring on September 30, 2012, she added that it is “critical” that a farm bill be passed this year, a sentiment she acknowledged was echoed in a letter sent by over 80 organizations last week, including NSAC, to complete the farm bill in 2012.  Later in the hearing, she commented that the $23 billion in proposed cuts from the Agriculture Committees for the Super Committee last year were “our fair share” of deficit reduction.

Sen. Stabenow spoke about the importance of our “bio economy,” including biomass production, and cited the Rural Energy for America Program (REAP) as the most popular of energy programs and an excellent job creator.  Specific to Rural Development, Sen. Stabenow explained her priorities on efficiency of programs and regional approaches, as well as to the need for long-term, sustainable economic growth in rural America.

Ranking Member Pat Roberts (R-KS) followed, agreeing with the Chairwoman on the need to consider the complexity of Rural Development programs as this impacts the ability of USDA to deliver these programs and of Americans to access them.  He made a note that the W.K. Kellogg Foundation plays a crucial role in his state in supporting rural economic development.

Roberts concluded his opening remarks by commenting on the need for crop insurance for agricultural producers and expressed disappointment with the President Obama’s proposed budget for Fiscal Year (FY) 2013, with $8 billion in cuts to this safety net.  Later in the hearing on the subject of the timeline for the next farm bill, Sen. Roberts noted that this spring’s process will have as a goal the finalizing the Senate version of the bill shortly after the conclusion of the fourth hearing in late March.

Regarding Rural Development, Secretary Vilsack noted a need for streamlining of the 40 current programs, as well as administrative flexibility to provide for regionally-specific needs.  Referencing Sen. Roberts’ remark on cuts to crop insurance and justifying the lack of proposed cuts to nutrition assistance programs, he acknowledged that the President made a choice; the administration believes those that would be affected by the proposed crop insurance cuts are in a better position to handle difficult times than those struggling to put food on their tables.

Rural Development

Both Secretary Vilsack and a panel of witnesses spoke about Rural Development in the next farm bill.  In response to a question from Sen. Roberts about the White House Rural Council, established by an Executive Order in 2011, Secretary Vilsack highlighted the need for more venture capital investments in rural America as well as the Council’s ability to forge unique, cross-sector partnerships and commitments.  He offered the example of the Small Business Administration, who has committed to doubling its credit to rural America in the next five years, which would total $3.5 billion.

Sen. Cochram (R-MS) asked Secretary Vilsack about continued funding in the new farm bill for regionally-specific programs, such as the Delta Regional Authority in his state.  The Secretary agreed that rural America needs program flexibility to address regionally-specific needs and highlighted USDA’s Strikeforce Initiative as its current effort to do so – making programs accessible and known to rural Americans.  He said that while the next farm bill might not include “specific designations,” there are ways to create competitive grant programs that can select projects with the most need.  Secretary Vilsack also emphasized the need to authorize the administration’s “Great Regions” or Regional Innovation Initiative, which utilizes five percent of funding from a variety of USDA programs to target regional needs.

Sen. Nelson (D-NE) expressed concerns from constituents about the impacts of the FY 2012 agriculture appropriations bill on the Rural Microentrepreneur Assistance Program (RMAP), a program he advocated for in the 2008 Farm Bill.  He explained the importance of small business development and entrepreneurship in keeping rural communities alive, especially off-farm income.  Secretary Vilsack explained that the 2012 appropriations bill language was “confusing” since it zeroed out the program, but then assured Sen. Nelson that funds made available in  2010 and 2011 for micro loans can now proceed despite the 2012 cut.  That decision is welcome news to RMAP lenders and to the Main Street small businesses they assist.  NSAC is working with Senator Nelson and others to ensure the innovative, job-creating program is funded again in 2013 and beyond.

The Rural Development panel featured Mathias McCauley, Director of Regional Planning & Community Development for Northwest Michigan Council of Governments.  Mr. McCauley represented his state and also the National Association of Counties (NACo) and the National Association of Development Organizations (NADO), highlighting the need to streamline programs while ensuring their accessibility.  He also noted how his remarks align with the priorities of the Campaign for a Renewed Rural Development, of which NSAC is a member.  Finally, he cited the Rural Business Enterprise Grant his organization received as just the tool needed to “leverage our assets” for innovation and entrepreneurship.

Dr. Florine Raitano, Past President of the Rural Community Assistance Corporation from Dillon, CO, echoed the comments heard throughout the hearing for regional approaches to Rural Development: “once you’ve seen one rural community, you’ve seen one rural community.”

Mark Rembert, Executive Director of Energize Clinton County in Ohio, spoke about the “hurricane” his hometown community faced went its largest employer left town.  He cited the $48,500 Rural Business Opportunity Grant (RBOG) they received as useful in building regional partnerships, engaging local assets, and supporting businesses.  He also spoke about the need for regional goal-setting and shared visions in order to move from a “reactive” to a proactive approach to Rural Development.

Finally, Charles Fluharty President and CEO with the Rural Policy Research Institute in Columbia, MO, spoke about disparities in funding for rural America.  As he pointed out, had rural communities received the same per capita funding as urban communities in 2010, there would have been an additional $28 billion invested in rural America.

NSAC is advocating for mandatory funding for vital programs in the new farm bill, including the Value-Added Producer Grant (VAPG) program and the Rural Microentrepreneur Assistance Program (RMAP), as well as for a Rural Community Prosperity Fund to provide streamlined, flexible funding for rural job creation and community development.  While these proposals would put only a small dent in the $28 billion disparity, it would nonetheless represent an important continuing farm bill commitment to rural investments beyond commodity and energy production payments.

Energy

Secretary Vilsack’s opening remarks highlighted the “extraordinary opportunity” that a “bio-based economy” presents: increasing farmer income, creating jobs, serving local and regional markets, and putting the U.S. “back in the business of making, creating, and innovating.”  At the hearing, Senators focused most of their questions to Secretary Vilsack on two issues – the cuts to the Rural Energy for America Program (REAP) and the Biomass Crop Assistance Program (BCAP) and Farm Bill funding for ethanol blender pumps.

President Obama’s FY2013 Budget Request provides no funding for BCAP and only $4.6 million for REAP.  Secretary Vilsack noted that the funding for both REAP and BCAP ends with the 2008 Farm Bill, with no baseline for the next Farm Bill.  He also noted that a potential alternative source of funding, USDA’s Business and Industry (B&I) Guaranteed Loans, are currently available only for commercially viable projects.  He suggested to the Senators that B&I loans be made more flexible to allow for renewable energy and energy efficiency projects provided by REAP and the development of crops for bioenergy feedstock provided by BCAP.

Senators Harkin (D-IA), Klobuchar (D-MN), and Hoeven (R-ND) emphasized their support for Farm Bill funding for fuel pumps that blend ethanol and gasoline to allow the expansion of ethanol into commercial transportation fuel.

The Energy Panel for the hearing also focused on BCAP and REAP.  Among the panelists were Steve Flick of Show Me Energy Cooperative who testified for the National Farmers Union in support of BCAP.  Show Me Energy received the first BCAP project funding to establish native prairie grasses that can be pelletized and used as fuel.  By September 2011, almost 26,000 acres had been enrolled in the project.

Lee Edwards, testifying for Virent – a company focused on developing fuel and chemicals from biomass – also noted the importance of BCAP in the development of feedstock, particularly in mitigating economic risks to farmers working with new feedstocks.  Bennie Hutchins with Ag Energy Resources in Mississippi emphasized the role that REAP has played in saving energy costs for farmers and rural businesses across the country.

Research and Beginning Farmers

Though the hearing focused on Energy and Rural Development, other key NSAC priorities were also discussed.  In a dialogue with Sen. Klobuchar (D-MN) about farm bill funding, Secretary Vilsack commented that “agricultural research has not deserved the attention it deserves…it has been flat lined for a long time.”  He added that when you look at the numbers, increased productivity in agriculture corresponds to investments in agriculture research.  NSAC is currently working with congressional offices on a major new agricultural research and extension bill.

When speaking to Sen. Boozman (R-AR), Secretary Vilsack spoke about concerns with our aging farmer population and the need to support beginning farmers and ranchers.  He suggested providing incentives for sales of farmland to not only beginning farmers and ranchers but also to socially disadvantaged farmers and ranchers.  NSAC is advocating for the Beginning Farmer and Rancher Opportunity Act (S. 1850, H.R. 3236), which would begin to tackle the needs of our next generation of farmers.

Three More Hearings to Come

The Senate Agriculture Committee will hold three more farm bill hearings in February and March on conservation, healthy food initiatives and local production, and risk management and commodities.