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Path to the 2012 Farm Bill: Is a Deal Possible and What Would A Good Deal Look Like?

December 5th, 2012

Last week we tried to briefly summarize the options remaining for Congress on the farm bill.  Since then, there have been some new signs of progress on getting a full five-year bill finished this month, though also signs of continuing confusion and uncertainty.  Last week we rated that option as possible, but did not give it great odds, with a modified short term farm bill extension as the option with perhaps the higher odds.

However, the agriculture “gang of four” — Senate Agriculture Chair and Ranking Member Debbie Stabenow (D-MI) and Pat Roberts (R-KS) and House Agriculture Chair and Ranking Member Frank Lucas (R-OK) and Collin Peterson(D-MN) — have been meeting this week and, according to news reports, are said to be making progress and to be focused particularly on finding a compromise between the Senate-passed and House Committee-passed commodity titles.

Meanwhile, the two primary negotiators on the bigger matter of the so-called fiscal cliff issues – the White House and House Speaker John Boehner (R-OH) – have made initial offers on potential funding cut and tax increase targets, but to date there have been no counteroffers and negotiations for the moment at least seem to be at a standstill.  A new farm bill or short term farm bill extension would most likely hitch a ride on the bigger package – unless of course there isn’t one.

In explaining the President’s initial offer, Treasury Secretary Tim Geithner said over the weekend that cuts in farm subsidies — similar to the President’s proposal from last February for $30 billion in cuts over 10 years from commodity and crop insurance subsidies — were an example of where they would propose cutting mandatory funding.  That $30 billion number for cuts to those two farm subsidy programs almost exactly match the ones proposed in the House-adopted budget, championed by Representative or former Vice Presidential candidate Paul Ryan (R-WI).

Yet, both before and after Geithner’s weekend appearance, Agriculture Secretary Tom Vilsack was speaking up publicly in favor of a deal that would adopt the Senate and House farm bill’s vision of saving only $15 billion (net) from these two sources.  It is not completely clear which view is held by the President himself, though we assume that Secretary Vilsack is speaking on behalf of the President in discussions he is having with the gang of four.

Meanwhile, there has been no signal at all from the House Speaker or Majority Leader that a full five-year farm bill deal is on the docket.  That is not to say it could not be, but only to say that to date they exhibit no enthusiasm at all for heading in that direction, especially since it would mean bypassing House floor action on the new farm bill, denying the “people’s house” a chance to work its will.

Instead, they strongly hint that an extension of the old farm bill, with direction to the Agriculture Committees to save a given amount of money and report a new bill that achieves that size cut by a date certain in 2013, is the more likely path forward.  In that type of extension context, we have previously noted what the key modifications – all of which start with the letter “D” — are that will be necessary for an acceptable outcome.

Without some type of clear signal from the Speaker, or from the President, or better yet both, it may prove difficult for the gang of four to reach a deal that could fly.  On the other hand, the current attitude of House GOP leaders could perhaps turn around if a comprehensive agreement is reached among the Agriculture Committee leaders.  It’s a bit of a chicken and egg situation at the moment.

If a deal was reached on a new five-year farm bill, as opposed to a farm bill extension, what would a good deal look like?  A new farm bill worth supporting as part of a final deal in 2012 must:

• Include all of the important subsidy program reforms contained in the Senate-passed bill but not included in the House Committee-passed bill, namely the –
  • $50,000 ($100,000 married) per farm limit on all forms of commodity and revenue payments
  • $75,000 ($150,000 married) per farm limit on all forms of marketing loan gains and payments
  • historic reform of the “actively engaged in farming” rules that make the payment limit effective
  • lower Adjusted Gross Income (AGI) threshold for commodity subsidies and the lower crop insurance premium subsidy rates for those who exceed the AGI
  • new directives for the Risk Management Agency to develop improved insurance products for underserved segments of agriculture
  • re-linkage of soil and wetland conservation requirements to premium subsidies
  • nationwide “sodsaver” provision to prevent subsidized destruction of grasslands, and
  • cap on subsidized planted acres at recent average plantings rather than on base acres.

We do not believe these Senate-passed reforms go nearly far enough in the reform direction, but any final bill lacking even these provisions would, in our view, be a very bad deal.

• Reject the unfair, disproportional, and illogical extra billion dollar cut in the House Committee-passed bill to the Conservation Stewardship Program, returning to the gang of four agreement from 2011, reflected in the Senate-passed bill, to treat working lands programs the same.
• Adopt but further improve the Senate version of the Regional Conservation Partnership Program, and meld the best conservation title provisions from the two bills for all of the remaining programs in that title.
• Find ways to further improve the highest funding level (higher level in parentheses below) adopted for the set of innovative, job and business opportunity creating development programs that must be renewed in the new bill –
  • Beginning Farmer and Rancher Development Program (Senate $17 million a year)
  • Outreach and Assistance to Socially Disadvantaged Farmers and Ranchers (House $10 million a year)
  • CRP- Transition Incentives Program (Senate $50 million over 5 years)
  • Value-Added Producer Grants (both bills $50 million over 5 years)
  • Rural Microentrepreneur Assistance Program (Senate $15 million over 5 years)
  • Rural Energy for America Program (Senate $48.2 million a year)
  • Organic Agriculture Research and Extension Initiative (both bills $16 million a year)
  • National Organic Certification Cost Share Program (Senate $11.5 million a year)
  • Organic Production and Market Data Initiatives (both bills $5 million a year), and
  • Farmers Market and Local Food Promotion Program (both bills $20 million a year)

While we are grateful the two bills renewed funding for these important farm bill programs, we believe most of the funding levels, even at the higher of the two bills, are too low and should be enhanced in the final package.

• Include the groundbreaking House Committee-passed provisions for farm to school procurement innovation, microloans to young, beginning and minority farmers, and the priority for farm ownership participation loans.
• Include the higher Senate level of support for healthy food access incentives for SNAP recipients, the Senate reauthorization of the ATTRA sustainable agriculture information service program, and the Senate authorization of the Local Food Data Initiative.
• Include a budget neutral improvement to the new provision in both bills providing certain beginning farmers with higher crop insurance premium subsidies to make it consistent with other USDA beginning farmer programs.
• Reject all of the anti-farmer and anti-environment policy riders inappropriately included in the House Committee-passed bill, including the riders to repeal existing law and regulation to promote fair competition and contracts, emasculate already weak review procedures for genetically engineered crops, weaken pesticide regulation as it pertains to clean water and to endangered species, and preventing state and local governments from enforcing their own health and safety laws.

With just a dozen legislative days left, the overall situation for the farm bill remains clear as mud.  The pendulum so far this week has moved a bit in the direction of actually finalizing a new five-year bill, but major roadblocks remain.  As time begins to run out, it is paramount that negotiations proceed on two tracks, one track for a five-year bill and one track for a modified short term extension.  Reaching the end of the lame duck session with no action is unacceptable.

 

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