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House Budget & Farm Spending
Today, the House Budget Committee will begin to mark up the Concurrent Resolution on the Budget for fiscal year 2008. While the Budget Committees continue to shape the direction of U.S. farm policy by formulating spending parameters, other specific proposals regarding spending for specialty crops and federal farm payment limits have emerged.
I. House Budget & Farm Spending
II. Farm Bill Developments
III. Trade, Doha
I. House Budget & Farm Spending
Today, the House Budget Committee will begin to mark up the Concurrent Resolution on the Budget for fiscal year 2008.
Reuters writer Charles Abbott reported yesterday that, “Farm-state lawmakers will have to find spending cuts elsewhere in the budget if they want to spend more on biofuels or other agriculture programs, the chairman of the House Budget Committee warned on Tuesday.
“Rep. John Spratt, Democrat of South Carolina, said there was no guaranteed increase in agriculture funding in his budget blueprint for fiscal 2008 and beyond. But there will be a reserve fund the Agriculture Committee can tap for this year’s overhaul of farm policy if it finds new revenue or a spending cut to pay for new spending.
“The approach is similar to a plan now being mulled in the Senate. Its budget committee proposed a $15 billion reserve, available over five years for agriculture, if ‘offsets’ are found.
“‘We will have a reserve fund like that,’ said Spratt. An aide said the size of the reserve would be decided later.”
Mr. Abbott added that, “Spratt outlined his budget proposal ahead of a bill-drafting sessions in the Budget Committee on Wednesday. He said he would propose ‘quite a few’ reserve funds and described them as the ‘logical complement’ to so-called ‘pay-as-you-go’ rules because offsets could be credited to specific accounts.”
The “Washington Insider” section of DTN (link requires subscription) reported yesterday that, “House Budget Committee Chairman John Spratt, D-S.C., told the press he expects to have reserve funds in his plan, though he declined to specify their issues, aside from children’s health. However, the process may be more contentious in the House where liberal groups are seeking substantially more funding than President Bush has requested, thus bringing them into conflict with more conservative Democrats who want to restrain outlays. In this environment, it is not clear which caucuses will submit their own budget blueprints on the floor, or what the implications of these debates will be for agriculture.
“Even if the Senate’s $15 billion proposed add-on to the baseline level for agriculture did not require a spending offset, it would cover only about one-fourth of the market-imposed reduction for commodity spending expected in the March baseline — far less than many groups hoped. In addition, the competition for funds for tax cuts, social programs and other high-priority spending could be even tougher in the House.
“This suggests that budget pressure on farm-bill spending could be a far more important factor in the shape of the next farm bill than earlier expected, Washington Insider believes.”
Congressional Quarterly’s Catharine Richert provided more detailed analysis with respect to the Milk Income Loss Contract (MILC) program in an item from yesterday.
“Dairy-state farmers have scored a one-year extension of milk price subsidies, but they are already gearing up for the bigger fight of perpetuating the program beyond 2008.
“The Milk Income Loss Contract (MILC) program, which pays dairy farmers for losses when the price of milk dips below a government target, is set to end in August — one month before the 2002 farm bill expires.”
Ms. Richert added that, “The $283 million temporary fix, attached to the House’s $124 billion-plus war supplemental, would keep the program funded through fiscal 2008 but does nothing to guarantee that the subsidies will be included in the farm bill that Congress is set to write this year. Because the program’s authorization expires before the current farm bill, the cost of the dairy subsidies is not built into the baseline budget for the new farm bill.”
Recall that on Monday, after highlighting specific issues contained in the war supplemental, including the “$283 million for the milk income loss contract program,” White House Press Secretary Tony Snow indicated that, “As the bill is presently constituted, the President would have to veto it.”
Ian Swanson and Jackie Kucinich, writing yesterday at The Hill webpage, flushed out more detail regarding the war supplemental, “As the House prepares to vote on the Iraq supplemental budget later this week, it appears that the sweeteners for farm-state and Gulf Coast lawmakers have had little effect so far in winning over undecided Democrats, let alone Republicans.
“As a case in point, heavy hitters in the farm community are not aggressively lobbying members to support the $3.7 billion in disaster assistance that Democratic leaders included in the supplemental budget.
“Representatives of the National Cattlemen’s Beef Association (NCBA) and the American Farm Bureau Federation said they are telling members they support the disaster assistance — but are not insisting that members vote in favor of the Iraq supplemental to move the long-stalled farm aid provisions.”
The Hill article explained that, “Farm Bureau President Bob Stallman said his group is telling lawmakers that it supports the disaster assistance in the Iraq bill. Another Farm Bureau representative, however, echoed the NCBA message by saying the Iraq issue is too sensitive for the Farm Bureau to insist on the bill as a vehicle for the farm assistance.
“If the Iraq supplemental fails, Stallman said, the Farm Bureau will look for another vehicle for disaster assistance.”
II. Farm Bill Developments
In more specific news regarding the development of the 2007 Farm Bill, Michael Doyle, writing this morning at the Sacramento Bee webpage, reported that, “California fruit and vegetable farmers put their cards on the table Tuesday with a multibillion-dollar bill that’s part wish list and part bargaining chip.
“The legislation introduced by Rep. Dennis Cardoza, D-Merced, would dramatically boost federal spending on what are known as specialty crops. It’s a big turnaround for hundreds of unsubsidized crops, from asparagus to walnuts.
“‘Nontraditional crops have never had a seat at the table when Congress wrote a farm bill,’ Cardoza said, ‘but that is all about to change.’
“Nonetheless, the specialty crop bill also poses new budgetary and political problems. There will be competition for money, pressure from trading partners and a fight over planting flexibility.”
(For a more detailed look at planting flexibility issues, see, “Eliminating Fruit and Vegetable Planting Restrictions: How Would Markets Be Affected?” published by the U.S.D.A.’s Economic Research Service.)
Mr. Doyle added that, “Half a dozen other House members joined Cardoza in introducing the 120-page bill, drafted over many months with the significant help of farm associations. It tracks some recommendations made by the Bush administration, which has also urged greater spending on specialty crops.
“The bill does not provide traditional crop subsidies, such as those serving cotton, rice and wheat farmers. Instead, the money would fund research, marketing, conservation and federal crop purchases. School lunch programs would get more fruits and vegetables, for instance, and overseas food advertising more taxpayer aid.”
A news release regarding this development issued yesterday by Western Growers indicated that, “Western Growers today endorsed the Equitable Agriculture Today for a Healthy America Act (‘EAT HealthyAmerica Act’), introduced in the House by U.S. Representatives DennisCardoza (D-CA), Adam Putnam (R-FL), John Salazar (D-CO), Randy Kuhl (R-NY), Rick Larsen (D-WA) and Kevin McCarthy (R-CA). Western Growers is a co-chair of the Specialty Crop Farm Bill Alliance, a national coalition of over 95 organizations that have been working with the Representatives on the development of the legislation.
“‘This legislation is a comprehensive Farm Bill package that provides the necessary framework to enhance the competitiveness of specialty crop growers throughout the nation,’ said Tom Nassif, Western Growers President and CEO. Nassif praised the cosponsors of the landmark legislation for ‘recognizing the unique needs of the specialty crop industry and working to develop bold improvements to federal agricultural policy that are needed to enable specialty crop growers to remain competitive in the global markets of the 21st century.’”
Also yesterday, the American Farmland Trust issued a news release which said, “‘In the EAT Healthy America Act, Congress is working to ensure an abundant and affordable supply of fruits, vegetables and other specialty crops for the world’s consumers and to enhance the conservation efforts of the farmers,’ says Ralph Grossi, President of American Farmland Trust (AFT). The legislation was re-introduced by a broad bi-partisan Congressional coalition led by Representatives Cardoza (D-CA), Kuhl (R-NY), Larsen (D-WA), McCarthy (R-CA), Putnam (R-FL) and Salazar (D-CO). The bill provides a way to address the unmet needs of specialty crop farmers who seek government investment in research to mitigate pests and invasive species, conservation and nutrition programs rather than crop subsidies.
“‘Now is the time to link sound nutritional guidelines established by the health community—which call for greater consumption of fruits, vegetables, nuts and whole grains—to changes in agricultural policy,’ adds Grossi. ‘With the epidemic levels of diet-related diseases and mind-boggling national health care costs associated with them, we can’t afford to pretend these issues are going to disappear.’”
Meanwhile, Forrest Laws reported yesterday at the Delta Farm Press webpage that, “Reports of the death of the National Corn Growers Association’s revenue counter-cyclical proposal may be somewhat exaggerated.
“Although some have said the NCGA was backing away from the county RCCP for the 2007 farm bill, delegates to the association’s Corn Congress endorsed the proposal at the Commodity Classic.
“NCGA leaders said they believe the revenue counter-cyclical proposal, which would add a county-level revenue counter-cyclical payment to complement the existing federal crop insurance program, is still an idea whose time has come.”
Mr. Laws also noted that, “Bruce Babcock, professor and director of the Center for Agricultural and Rural Development at Iowa State University, says the proposal would bridge the gap between the current crop insurance program and farm programs that, in general, are not working for Midwest growers.
“They say the farm bill’s price-based counter-cyclical program has not helped them because they’ve been shut out of those payments when prices rise, which usually happens when they have a short harvest.” [FarmPolicy Note- the current surge in the price of corn is generally associated with an increase in the use of corn-based ethanol; U.S. corn production has been sound in recent years.]
“Ohio State University economist Carl Zulauf, another proponent of a revenue-based approach, said the current set of farm programs does not appear to adequately help farmers manage their actual risk, judging from the ‘annual enactment of ad hoc disaster assistance.’”
And with respect to livestock producers and farm policy, Brownfield’s Peter Shinn reported yesterday that, “A top lobbyist for the American Farm Bureau Federation (AFBF) is among those in attendance at the Animal Agriculture Alliance 6th Annual Stakeholders Summit here in Washington D.C. this week. A primary focus of the event is animal welfare, and AFBF Director of Public Policy Mary Kay Thatcher told Brownfield she came to the conference because of the potential impact animal welfare issues could have on the next farm bill.
“‘We believe animal welfare may very well be the scariest topic that faces us in the upcoming farm bill debate,’ Thatcher said. And she agreed the emergence of animal welfare as a farm bill issue is reflective of the growing number of players with an interest in the legislation.
“In fact, Thatcher is convinced livestock issues generally will play a more prominent role in the 2007 farm bill than ever before. ‘I think that there will be the biggest discussion of the livestock title in this farm bill that we’ve had,’ Thatcher predicted. ‘And it’s likely to include country-of-origin labeling, animal ID, animal welfare, competition-type issues.’”
To listen to a Brownfield interview with Mary Kay Thatcher, just click here (3 min 45 sec MP3).
In other Farm Bill news, Iowa Senator Chuck Grassley (R) issued a news release yesterday, which stated that; “Senator Chuck Grassley today introduced an amendment that would place a limit of $250,000 on the amount of farm payments an individual can receive. Grassley introduced the amendment with Senator Byron Dorgan of North Dakota.
“‘This amendment makes perfect sense. It’s good policy and a nice way to help the Agriculture Committee dig into the $15 billion in off-sets it needs for the farm bill,’ Grassley said. ‘This proposal has always been popular and the reality is that with 72 percent of the payments going to 10 percent of farmers, we’ve got a serious problem on our hands.’
“The amendment would save $486 million over five years and $1.07 billion over 10 years. The amendment also specifies that the savings be applied to renewable energy/rural development, conservation and nutrition.”
Against the backdrop of specific Farm Bill proposals, Jerry Perkins reported in today’s Des Moines Register that, “Riding higher corn and soybean prices, Iowa farmland prices rose 13.6 percent in the past six months, according to a survey released Tuesday by farm real estate brokers and appraisers.
“Respondents to the survey, which is conducted every six months by the Iowa Farm and Land Chapter No. 2 Realtors Land Institute, said that increased commodity prices tied to escalating demand for corn and soybeans from ethanol and biodiesel plants are fueling the farmland price increase.
“The annual rate of increase for the state’s best farmland – that which produces more than 160 bushels of corn an acre – was 16.8 percent, compared with farmland prices a year ago.”
As corn and soybean based biofuel use continues to increase, causing ripple impacts throughout the agricultural economy, the U.S. Department of Agriculture stated in an announcement yesterday that, “Agriculture Secretary Mike Johanns today announced the award of $6.2 million in grants to more than two dozen small businesses and community groups to develop innovative uses for woody biomass, including renewable energy and new products, from national forests.
“‘These grants help communities, entrepreneurs and others turn residues from forest restoration activities into marketable forest and energy products,’ said Johanns. ‘Not only will these projects reduce the risk of wildfire, they will help us to achieve the President’s energy goals. Our farm bill proposals would take this effort to the next level by providing funding for research and new woody biomass projects.’”
III. Trade, Doha
Iowa Senator Charles Grassley (R) penned an opinion item that was posted yesterday at The Hill webpage where he noted that, “As this year’s planting season approaches for our nation’s farmers, they are surely keeping a watchful eye on Congress, for two reasons. First, we have to pass a new farm bill. And second, we have to decide whether to renew the president’s Trade Promotion Authority. As a farm-state lawmaker and ranking member of the Senate Finance Committee, I have added interest in seeing that our nation’s farmers are able to continue helping to feed the world while strengthening our economy through expanded trade.
“This July, when the president’s current Trade Promotion Authority expires, I’m afraid the Doha Round of trade negotiations will see its expiration along with it. Our U.S. trade representative, Susan Schwab, is gaining ground in these negotiations. We’re starting to see the potential for a meaningful agreement within reach. If we say goodbye to Trade Promotion Authority, we’ll end up walking away from all the potential benefits that those negotiations hold.”
Sen. Grassley indicated that, “Renewing Trade Promotion Authority for the president is not a Republican issue. It is not a Democratic issue. This is an American issue. The world expects America to lead on trade policy. If we cannot do that, other countries will step forward and we could end up being excluded from preferential trade deals.”
Meanwhile, the Associated Press reported yesterday that, “EU Trade Commissioner Peter Mandelson said Tuesday that world trade partners are running into ‘very serious time limitations’ as they try to strike a deal before the U.S. negotiators’ mandate expires in three months.
“He said he would tell ministers from the G-33 group of developing countries at a meeting in Jakarta, Indonesia, this week about the contribution they could make to talks to strike a new World Trade Organization deal that aims to open up the global flow of goods and services.
“‘I will be reviewing with them the progress made by the G-4 (EU, U.S., Brazil and India) since the beginning of the year and sharing my assessment that whilst we have made progress, we are now running into very serious time limitations as the clock ticks to the expiry of the U.S. negotiator’s Trade Promotion Authority at the end of June,’ he said in a short e-mailed statement.”
-Keith Good
