Will the next farm bill be written by budget cutters?

The biggest activity in Washington between now and Thanksgiving is the focus on the so-called “super committee,” those 12 Democrats and Republicans charged with reducing the deficit by $1.5 trillion over the next 10 years. Lobbyists, journalists and political analysts have begun to circle, figuratively, like vultures over the six senators and six representatives, trying to protect their turf or seeking bits of information that will offer clues to the outcome.
   Many are doubtful that this Joint Select Committee on Deficit Reduction will be able to reach consensus by Nov. 23, but members have a built-in incentive to find common ground:  If they fail to act, $1.2 billion in “sequestration” will kick in - across-the-board cuts split evenly between the defense budget and domestic discretionary spending.
  The authorizing committees, including those representing agriculture, have an Oct. 14 deadline to submit their recommendations to the panel, but some members are reluctant to do so without knowing how much to cut first.  As one committee staff member pointed out, it's hard to hit a target that has does not yet exist.
  If the Congress does not approve the deficit committee's recommendations, cuts totalling $1.2 trillion will kick in and automatic spending cuts across almost all other areas of the federal government will be required. Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) said her staff is looking at the level of agricultural cuts that would be required to meet that $1.2 trillion sequestration goal and will proceed from there.
  “That's a fair place to start,” Stabenow emphasized during the farm bill field hearing held recently in Wichita, Kansas.
  “We are going to work with members of our committee to go figure out how we can streamline and consolidate and stretch dollars farther.  What we don't want is people who are not deeply involved in agriculture making recommendations on what ought to happen.”
  Farm groups are also gearing up to make recommendations, although many are still in the concept stages. For example, the National Corn Growers Association (NCGA) is looking at ways to improve the existing ACRE program and transition away from direct payments, according to First Vice President Garry Niemeyer, Decatur, Ill. NCGA is reviewing a proposal forwarded by Illinois members that would be a modified ACRE proposal known as Agriculture Disaster Assistance Payments (ADAPT). ADAPT is crop specific like ACRE, but uses crop reporting districts rather than state yields to trigger payments and harvest prices rather than season-average prices to calculate payments, making it more like crop insurance.

Direct payments?
  A decision by the National Cotton Council (NCC) to lobby for a revenue-based crop insurance program in the next Farm Bill may be the latest indication that Direct Payments (DPs), a fixture of U.S. agricultural policy since the 1996 Freedom to Farm Act, are headed for the chopping block. After consulting with multiple Hill leadership sources, the NCC, a staunch proponent of the fixed, annual payments made to growers of so-called “program” crops - cotton, corn, soybeans, wheat and rice - concluded last week that a likely downsizing of agriculture's budget baseline in the name of deficit reduction - via either the “super committee” process or automatic, across-the-board spending cuts - would undermine the effectiveness of DPs “to the extent that alternatives must be evaluated to ensure growers have access to the most effective safety net.”
  “This is kind of a seismic shift,” said Don Carr, a policy analyst with the Environmental Working Group, a critic of the current farm safety net. “We're heartened by the idea that everyone is kind of rallying around the notion that Direct Payments are not that defensible,” especially at a time of high commodity prices and a tight federal budget.
  NCC acknowledged the need for change in a statement announcing its decision. A safety net consisting of affordable revenue-based crop insurance and a modified marketing loan, NCC opined, “will best utilize reduced budget resources (and) respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control.”
   Without providing details, NCC called for “modest enhancements” to existing crop insurance products “for which affordable options are not currently available.”
   Sources told us that the cotton industry is referring, in part, to crop insurance reform legislation sponsored by Rep. Randy Neugebauer, R-Texas, a member of the House Agriculture Committee, that was written into the panel's version of the of the 2008 Farm Bill but dropped on the House floor.
   Neugebauer's proposal would have allowed farmers to buy a portion of a Group Risk Plan policy, in addition to their base Actual Production History yield or revenue policy.
   “This combination functions as a disaster policy, giving farmers more protection when there is a countyloss which is likely to occur during a drought, flood, or large storm situation,” he said at the time.
  His office confirms that Neugebauer is dusting off the plan for the upcoming farm policy debate.
  Rep. Collin Peterson, D-Minn., the top Democrat on the House Agriculture Committee, urged the cotton industry during the 2008 Farm Bill debate to move toward a safety net anchored by crop insurance, or more of a counter-cyclical safety net as opposed to DPs.
   “I'm glad that they're moving in this direction, I think it's the right way to go and I think it's going to put pressure on the peanut and rice guys on what they're going to do now,” Peterson said in an exclusive interview with Agri-Pulse.
   Fearful of less money for DPs in new farm legislation, the USA Rice Federation and American Soybean Association (ASA) are considering potential increases in target prices as a more realistic safety net should prices for those crops tumble. ASA's safety net focus, the association said last week in a message to members, is on improvements in crop insurance and the Average Crop Revenue Election (ACRE) program that can increase participation nationwide.
  Of the approximately $5 billion in DPs, about $2 billion goes to corn, $1 billion to wheat, $600 million each to soybeans and cotton, and rice gets $450 million.
   In the Senate, Kent Conrad, the retiring North Dakota Democrat who chairs the powerful Budget Committee and is a senior member of the Agriculture panel, has asked the Congressional Budget Office to score a crop revenue guarantee program that incorporates features of ACRE and the standing disaster program known by the acronym SURE, according to Hill sources. To pay for the program, the concept assumes “elimination of (the) current counter-cyclical program, SURE program for crops eligible for the Crop Revenue Guarantee Program and ACRE, plus a 50% reduction in payment acreage under the Direct Payment program.”
  Joe Outlaw, co-director of Texas A&M's Agricultural and Food Policy Center, has been busy evaluating safety net options for various ag groups and members of Congress since June.
   Outlaw's advice to farm and commodity organizations is to identify preferred options based on reduced budget baselines of $10 billion, $15 billion and $20 billion, because “they're going to have to answer to the leadership of the House and Senate Agriculture committees very quickly.
  “We may have a farm bill in the next two months,” Outlaw said.

Copyright 2011 Agri-Pulse Communications, Inc. Author Sara Wyant publishes a newsletter, Agri-Pulse, in addition to this syndicated column. You can e-mail her at: agripulse@aol.com


Joint Select Committee on Deficit Reduction

 Members of the Joint Select Committee on Deficit Reduction  include: Sens. Patty Murray (D-Wash.), John Kerry (D-Mass.), Max Baucus (D-Mont.), Jon Kyl (R-Ariz.), Rob Portman (R-Ohio), Pat Toomey (R-Pa.), and Reps. Dave Camp (R-Mich.), Fred Upton (R-Mich.) and Jeb Hensarling (R-Texas.) Democrats Chris Van Hollen (D-MD), Jim Clyburn (D-SC), and Xavier Becerra (D-CA).