Bill Huffman
Director - Government Relations

The Friday Report

February 3, 2012

The stage is set for the U.S. Senate to go first in the development of their version of a new Farm Bill. We’ve reported for some weeks that we thought the Senate would draft a bill first and try to have it on the Senate floor by June. Senate Agriculture Committee Chair Debbie Stabenow Wednesday announced that her committee will hold four hearings with the first to be held on February 15th. 

The first hearing, February 15th, will focus on Energy and Economic Growth for Rural America. The second hearing, February 29th, will be about Strengthening Conservation through the 2012 Farm Bill. The third hearing is scheduled for March 14th and will be about Healthy Food Initiatives, Local Production and Nutrition. The commodity title for the bill will be last and that is scheduled March 21 and the subject will be Risk Management and Commodities in the 2012 Farm Bill.   

The commodity and risk management hearing will evaluate the need for and cost effectiveness of risk management tools available to farmers and how the Federal government can provide appropriate risk-management tools while making the best use of limited resources.

After the hearings, Chairman Stabenow plans to begin drafting a Senate bill with the hope that it can be a bi-partisan effort with Ranking Republican Senator Pat Roberts and the rest of Agriculture Committee members.  Clearly, the Senate is more likely to get a Farm Bill passed sooner than the House this year.

CBO Release Baseline Data

The Congressional Budget Office has published its January baseline data for mandatory Federal outlays for various programs administered by the U.S. Department of Agriculture. CBO said the actual outlay for calendar year 2011 was $15 billion for commodity programs including rice. That number is not surprising given high commodity prices for virtually all program crops.  For calendar year 2012, CBO projects outlays of $13 billion and in 2013 their projection is for $19 billion in Federal outlays for mandatory commodity programs. Over the next five years, CBO forecasts total outlays of $83 billion and over ten years the figure is $164 billion for mandatory commodity programs.

Interestingly, CBO projects mandatory outlays for the Supplemental Nutrition Assistance Program (SURE) (food stamps) to be $400 billion over the next five years and a whopping $772 billion over a ten year period.  For child nutrition (school lunch and other programs), the CBO baseline number is $112 billion over five years and $247 billion over the next ten years.

We need to realize these are Federal outlay projections by the Congressional Budget Office that are based upon certain assumptions. It is hard to know exactly what those assumptions are, but for nutrition and child nutrition programs it is pretty certain that the assumption is that current rules and programs will continue as they exist today.  For the commodity title, it is less certain what assumptions were used. 

What is important to know is that these projections will be utilized by Congress as they write the next Farm Bill. With the CBO projection for commodities, it is pretty clear that CBO assumes that the “direct payment program” will be ending this year and that Congress will develop a new “safety net” program of some kind for the various commodities including rice.

Senator Conrad Unveils a Crop Revenue Guarantee Program

Even before Chairman Stabenow announced the four hearings listed above, Senate Budget Committee Chairman Kent Conrad, D-N.D. announced that he is preparing to introduce a farm bill commodity title that would “guarantee farmers 90 percent of crop revenue on their individual operations.”  In a long interview with AgWeek, Senator Conrad’s top agriculture aide and former USDA Undersecretary for Farm and Foreign Agriculture Service, Jim Miller gave details of what Senator Conrad is proposing.  It is an interesting concept!

Miller told AgWeek that the Conrad proposal is designed to build on the key component of the farm safety net, crop insurance, by addressing shallow farm losses that are typically not covered by crop insurance but which can undermine a family farming operation. The Conrad bill would replace the Average Crop Revenue Election or ACRE program and the Supplemental Revenue Assistance (SURE) program in the current legislation. 

In advance of formal introduction of his legislation, Senator Conrad is approaching other Senators with his idea and does not yet have any commitments of support.  Senator Conrad, by the way, is a member of the Senate Agriculture Committee in addition to being Chairman of the Senate Budget Committee.

In a meeting in North Dakota with agriculture leaders, Senator Conrad said “With farm programs undergoing so much scrutiny, the public will not stand for farmers getting payments they do not need.”  He also said that when the Congressional Super Committee was trying to forge a deficit reduction deal last fall, many commodities asked for higher target prices, but many farm leaders fear that higher target prices would skew farmers’ decisions on what crops to plant and also lead to frequent payments.  In the case of the rice industry, higher target prices could result in more medium grain being grown in the South creating a burgeoning supply that could depress the market for all medium grain producers.

Basically, under Senator Conrad’s plan, farmers would be required to purchase a minimum catastrophic level of crop insurance coverage or participate in a non-insured crop disaster assistance program to be eligible to participate in what the Senator is calling the “Crop Revenue Guarantee Program”.  Depending on how much crop insurance a farmer takes out, the program would cover 75 to 90 percent of historic revenue.

Importantly, under the Conrad proposal, the marketing loan program would be extended and the countercyclical program would also be extended according to the information released from Senator Conrad’s office.  Conrad’s proposal would cover the “program” crops including wheat, feed grains including corn, grain sorghum, barley, oats, rice, oilseeds, peanuts and pulse crops (dry peas, lentils, chickpeas).

It is clear that Senator Conrad wants to get his proposal out front of what is expected to be several other proposals for future farm policy.  Clearly, this Farm Bill is going to be largely written by Upper Mid-West members of Congress and the South and California will have limited input into the final product. Another key figure in the development of this year’s Farm Bill will be Senator Max Baucus, D-MT, and Chairman of the Senate Finance Committee.  North Dakota and Montana seem to be teaming up for the battle.

Chairman Lucas Comments

House Agriculture Committee Chairman Frank Lucas, R-Ok, told Agri-Pulse News this week that he still want to do a Farm Bill this year, but it will be difficult to “get everything squared up…”  Lucas said he needs to work through some issues with Rep. Collin Peterson, D-MN; the Agriculture Committee’s ranking Democrat. Lucas said that the farm bill proposal sent to the Super Committee on deficit reduction last year will likely be the starting point for the House bill. Lucas told Agri-Pulse that the commodity title remains the biggest struggle, with “much of the debate centered on having either a one-size program or an option-based policy.”  Lucas confirmed that he is holding off on forming an opinion on whether he favors a shallow-loss program or a deep-loss program.

With 15 freshmen Republican members on his House Agriculture Committee, Chairman Lucas has his work cut out trying to corral his own caucus along with getting Democratic support for whatever type farm program his committee ultimately develops.

It certainly appears that if the Senate goes first and sends the House new Farm Bill legislation that might ultimately be helpful to Chairman Lucas in getting something done in his committee.

USA Rice Federation Governmental Affairs Conference

The annual USA Rice Federation Governmental Affairs Conference will be held February 13-15 in Washington, D.C.  Participants will receive reports on farm and trade policy issues, environmental regulations, and they will receive an update on the election outlook in November. There will also be appointments on Capitol Hill with key members of Congress including most of those serving on either the Senate or House Agriculture Committees.

Senate Agriculture Chair Stabenow to Visit California

Senator Debbie Stabenow, Chairwoman of the Senate Agriculture Committee will be in California February 23rd and 24th.  She will be in San Francisco for a dinner, will travel to Modesto as guest of Congressman Dennis Cardoza for a meeting with dairy and specialty crop producers and Farmers’ Rice Cooperative will be hosting Mrs. Stabenow for a meeting and a dinner in Sacramento on the evening of February 24th.  This will be a good chance to discuss with her California’s ideas and concerns about farm policy and trade issues.

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