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Farm Bill Developments
A USDA news release from Friday stated that, “Agriculture Secretary Mike Johanns today announced the detail assignment on May 31, 2007 of Joseph W. Glauber, a distinguished economist and expert in the field of international agricultural trade, to the position of Special Doha Agricultural Envoy at the office of the U.S. Trade Representative. Dr. Glauber will step into Ambassador Dick Crowder’s role as lead agriculture negotiator for the Doha Round.”
I. Farm Bill Developments
II. Food Stamps
III. Trade
I. Farm Bill Developments
Bill Glauber, writing late last week at the Milwaukee Journal-Sentinel (Wisconsin), reported that, “A bipartisan coalition of lawmakers, including U.S. Rep. Ron Kind (D-Wis.), embarked on an uphill mission Thursday to end America’s long-standing farm subsidy system.
“The lawmakers proposed a transition from farm subsidies to ‘risk management accounts’ to help farmers when hard economic times hit. They claim that the new program would save $55 billion over 10 years compared with costs of extending existing farm subsidies. Savings would be used to increase funding in areas ranging from the food stamp program to rural development and renewable energy.
“U.S. Reps. Ron Kind (D-WI), Jeff Flake (R-AZ), Joseph Crowley (D-NY) and Dave Riechert (R-WA) joined Senator Lugar at a U.S. Capitol press conference on May 10, 2007. Senate and House bills will be introduced in the next couple days” (Picture and quote from Sen. Lugar’s webpage).
“The farm subsidy system has been part of U.S. agriculture policy since President Roosevelt’s New Deal. Chief beneficiaries of the current program include those who produce corn, wheat, rice, cotton and soybeans.
“‘We intend to introduce a new vision for American farm policy,’ Kind said from Washington, D.C. ‘You can think of them like farmer IRA accounts.’”
The article indicated that, “Direct payments to farmers would decline during a transitional period. Programs that provide a safety net if prices drop will be continued to 2008 in the Senate proposal and 2009 in the House proposal.
“Under the proposal, dairy farmers also would make the transition from the Milk Income Loss Contract program, which compensates producers when domestic prices fall below a certain level, to dairy risk management accounts.”
The Journal-Times (Racine, Wisconsin) added that, “There is probably no better time for the United States to tackle this outdated and ineffective program since, by several barometers, the nation’s farms have been doing well.”
Senator Richard Lugar (R-Indiana) joined Reps. Ron Kind (D-WI), Jeff Flake (R-AZ), Joseph Crowley (D-NY) and Dave Riechert (R-WA) with a companion Senate proposal.
Matt Kaye, writing on Friday at the Hoosier Ag Today webpage, indicated that, “At a Capitol Hill press conference, [Sen. Richard Lugar (R-Indiana)] explained how the program would work on his own Indiana farm, ‘Under this new plan, the Lugar farm would continue to receive (these) payments for one-year. After that year, my farm will receive direct payments that decline over the next five years. And most of those payments would be deposited in our individual risk management account, held in conjunction with the secretary of Agriculture, at a lending institution of our choice.’ All the funds would be used by producers of program and non-program crops to buy crop or revenue insurance or cover non-covered losses, after existing programs end. ‘In order to give the Administration the time to write the regulations required under this proposal, the current Farm Bill would be extended by one year in the Senate plan, and, I understand, two-years in the House plan. Thereafter, farmers would rely exclusively on these accounts, and on their revenue and crop insurance policies to manage the ups and downs of agriculture,’ Lugar added.”
To listen to an audio segment of Rep. Kind discussing the legislation, see this 4:30 min. clip (MP3) that was posted at the Brownfield webpage.
Meanwhile, Charlene Shupp and Chris Torres reported on Thursday at the Lancaster Farming webpage (Pennsylvania) that, “Last week, U.S. Representatives Rosa DeLauro (D-Conn.) and Wayne Gilchrest (R-Md.) introduced the Farm, Nutrition, and Community Investment Act to represent farmers from the Northeast and Mid-Atlantic regions in the 2007 Farm Bill.
“‘Congress will be crafting a farm bill this year and we have a real opportunity to influence the debate to the benefit of farmers in the Northeast and Mid-Atlantic regions,’ said DeLauro. ‘For far too long these regions have been under-represented in the Farm Bill, even though agriculture in the regions contribute $15 billion to the economy.’”
The article added that, “The package has bipartisan support and 16 co-sponsors as of early May. The market and economic development provision includes the flexibility to adapt to a state’s unique agriculture needs. The legislation would improve the working lands conservation program and increase access for producer participation.”
With respect to other Congressional activity, a news release issued by the House Ag Committee on Friday stated that, “Yesterday, the House Agriculture Subcommittee on Specialty Crops, Rural Development, and Foreign Agriculture held a hearing to review food aid and agriculture trade programs operated by the U.S. Department of Agriculture (USDA) and the U.S. Agency for International Development (USAID). Congressman Mike McIntyre of North Carolina is Chairman of the Subcommittee.
“Title III of the 2002 Farm Bill authorizes programs that provide food aid and that help promote U.S. agricultural products in overseas markets. Many of these programs expire in September and will have to be reauthorized as part of a new Farm Bill. The Subcommittee heard testimony about these programs from four panels of witnesses, including representatives from USDA and USAID as well as from U.S. Representatives James P. McGovern of Massachusetts and Jo Ann Emerson of Missouri.”
To view a complete list of witnesses and the opening statements delivered at this Ag Committee hearing, just click here.
Last Wednesday, the Senate Ag Committee held a hearing focusing primarily on farm bill policy proposals relating to farm and rural energy issues and rural development.
In his opening statement at the hearing, Ag Committee Chairman Tom Harkin (D-Iowa) stated that, “Our nation’s agricultural sector has already demonstrated impressive biofuels production capabilities, and there is impressive evidence it can provide even more in the future. Senator Lugar and I are just two of the believers. We introduced the Biofuels Security Act in January, calling for 30 billion gallons of renewable fuels by 2020 and 60 billion gallons by 2030. I’m pleased to see that a number of others, including President Bush and the Energy and Natural Resources Committee, are calling for very similar targets.
“If we achieve these levels of biofuels production, it will involve tens of millions of acres devoted to producing biomass feedstocks and very likely some significant shifts and changes in agriculture in America. I know there are concerns that greater biofuels production will disrupt supplies or prices of other agricultural products. Those concerns must be heeded and addressed. However, if we do the research and formulate the technology and market policies carefully, we can capitalize on this tremendous opportunity to produce energy in addition to needed supplies of food, feed and fiber. That will be beneficial to rural America as well as to the nation as a whole. Indeed, energy from our agricultural sector is the most important rural economic development opportunity in decades.”
In recent executive branch activity regarding U.S. farm and rural policy, a news release from USDA on Friday stated that, “Agriculture Under Secretary for Rural Development Thomas C. Dorr today announced the publication of new proposed rules designed to facilitate the further deployment of broadband services to rural communities nationwide.
“‘These proposed changes will improve broadband coverage in rural America,’ said Dorr. ‘Refining eligibility and coverage areas, along with increased emphasis on reaching areas with limited service are priorities within these proposed rule changes.’
“Dorr outlined several key elements of the proposed rules[select Dept. of Agriculture-ALL, and proposed rules]: Promoting deployment to rural areas with little or no service; Ensuring that residents in funded areas get broadband access more quickly; Limiting funding in urban areas and areas where a significant share of the market is served by incumbent providers; Clarifying and streamlining equity and marketing survey requirements; Increasing the transparency of the application process, including legal notice requirements, to make more informed lending/borrowing decisions; Promoting a better understanding of all application requirements, including market survey, competitive analysis, business plan, and system design requirements; and ensuring that projects funding are keeping pace with increasing demand for bandwidth.”
The release indicated that, “In addition, as part of its 2007 Farm Bill proposal, the USDA has requested re-authorization of the broadband program through 2012.”
In a related article regarding the Administration’s Farm Bill proposal, an item posted last week at The Farmer-Stockman webpage (Texas) stated that, “U.S. Congressman Mike Conaway, R-Tex., of Midland says the Congress, and not the Administration and USDA, will draft the language and direct funding as it relates to farm policy and the 2007 Farm Bill.
“The United States Department of Agriculture has released legislative language that would implement the credit title provisions of the Bush Administration’s proposal for the 2007 Farm Bill.
“‘While I appreciate the Administration’s involvement in the continuing Farm Bill debate, it is well understood that Congress – not the Administration – will set spending levels and direct funding as it relates to the 2007 Farm Bill and other domestic farm policy,’ Conaway says. ‘I look forward to working with Chairman (Collin) Peterson, Ranking Member (Bob) Goodlatte, and other members of the House Agriculture Committee in drafting language and directing funding as it relates to farm policy and the 2007 Farm Bill.’”
In an item focusing on political farm bill strategy with respect to the legislative branch, Dan Owens noted on Friday at the Blog for Rural America (Center for Rural Affairs) that, “There is, to be frank, somewhat of a tactical split among the organizations working hard to reform the farm bill (through payment limits, more money for conservation, etc.) Especially when it comes to the House Agriculture Committee, which generally isn’t as interested in reform as the Senate Committee is. While we all share many of the same basic goals, some groups have decided to spend most of their time trying to convince members of the Agriculture Committee to reform the farm bill, while others have focused on representatives off the committee.
“Generally speaking, the representatives off the committee and the groups that support them see the House Ag Committee as too invested in the current system and unwilling to accept the changes necessary to reform the farm bill. This is why you have seen the proliferation of ‘farm bills’ from representatives off the committee- the most notable of which is probably Ron Kind’s bill, the Healthy Farms, Foods, and Fuels Act (Kind is also involved in another farm bill proposal that just came out, ‘FARM 21’). This can generally be referred to as a ‘floor strategy.’”
In more detail, Mr. Owens went on to say that, “Organizations focusing their efforts on the ag committee members generally believe that if you can’t persuade members of the committee to at least see the need to reform, you’ll never win on the issues you care about. Also, when the House and Senate conference committee meets to reconcile their respective versions of the farm bill, only senators and representatives from the ag committees will be present. It often happens that progressive reforms that passed one house or the other disappear in conference, so it is important that the conferees feel some loyalty to any reform provisions. This can generally be referred to as a ‘committee strategy’. In the interests of full disclosure, I will say that the Center for Rural Affairs is generally seen as a group using a ‘committee strategy.’
“In reality, everybody uses a combination of these two strategies, and I think that both are necessary for success.
“Once a farm bill comes out of the House Agriculture Committee and is sent to the floor for a vote by all 435 members, there will be opportunities for amendments to the bill. This is where the groups pursuing a floor strategy will seek to have their policy options put into the farm bill. Not only that, but the groups pursuing more of a committee strategy today will switch to a floor strategy and try to add in anything they didn’t get in committee.
“This is where Nancy Pelosi and the House leadership have enormous power over the farm bill. The number and type of amendments allowed is essentially controlled by the House leadership. If Collin Peterson really has an agreement with the leadership to prevent a vote on any meaningful amendments to the farm bill on the floor, then anyone pursuing an entirely floor strategy is doomed. Not only that, but groups with more of a committee strategy won’t be happy either, because they know that some fundamental reforms they are committed to simply will not happen in committee and they will have to fight for them on the floor.
“So this is a huge deal. If Pelosi blocks amendments on the bill, it is very possible that reforms suppported by the majority of the House will not be in the House version of the farm bill because votes will never be allowed. This would be a subversion of democracy- one committee being allowed to write an enormously important piece of legislation without regard to the desires of the rest of the House. In effect, this means that the citizens represented by Ag Committee members will get to write the farm bill- and to hell with everyone else.
“Let me go further. If Pelosi blocks amendments on the 2007 farm bill that are supported by a majority of the House, that would be a clear message that the change in leadership in the House means nothing at all; that the Democratic leadership intends to run the House in the same top-down corporate fashion as its predecessors.”
***
Recall in his most recent “Analysis from Washington” column at FarmPolicy.com, Dan Morgan stated that, “Citigroup, the multinational banking giant, has also entered the fray with a far-reaching plan for a voluntary buy out of farmers’ direct payments. It figures the plan would save $18.9 billion in the next 10 years if half of those eligible signed up.
“The plan assumes Congress won’t have the political will to simply end direct payments. But by offering a lump sum up front – or smaller guaranteed payments over 5 to 25 years – the program would fade out of existence. Citigroup would finance the buyout by selling bonds in the private market.
“Citigroup officials hope to win support from key legislators such as Minority Leader John Boehner (R-Ohio), a long-time skeptic about farm subsidies.”
Philip Brasher, writing in Saturday’s Des Moines Register, provided a few more details with respect to the Citigroup- direct payments issue, “Elliott Conway, a managing director of Citigroup Global Markets Inc., is to brief Sen. Tom Harkin, D-Ia., on the plan next week. Harkin is chairman of the Senate Agriculture Committee. Conway has met with Harkin’s House counterpart, Rep. Collin Peterson, D-Minn.
“Most of the buyout payments would go to 15 states, led by Iowa, which would receive $1.8 billion, Citigroup estimates.
“Under the plan, the government would offer farmers a payment to replace their fixed direct payment and countercyclical payment. Both are tied to the acreage the grower farms.
“A recipient of $10,000 of those subsidies in 2006 would be offered three choices: Take $57,525 up front, $4,084 annually for 25 years, or $10,000 for each of the first five years and four declining payments after that.”
Mr. Brasher added that, “Harkin said Friday that he was interested in hearing about the proposal, which he termed ‘almost revolutionary,’ but that it may be too late for Congress to consider. His committee is to start writing the Senate’s version of the 2007 farm bill next month. The House panel will start work later this month.
“Bob Young, economist for the American Farm Bureau Federation, said buyouts are unlikely to interest farmers unless they believe subsidy programs will be eliminated or the buyout will be worth more than the future subsidies.”
For more on the general concept of farm program buyouts, see this FarmPolicy.com interview with Dr. David Orden, recall also that the Cato Institute has addressed the farm policy buyout concept in a recent paper, “Freeing the Farm: A Farm Bill for All Americans”- “Because the first-best solution of completely ending farm programs as of September 30, 2007—with no compensation or transition payments—is politically infeasible, we advocate that the government buy out the damaging and expensive support for farmers by paying them a fixed amount of money, which they would be free to spend as they wish. Although it would require large up-front outlays, a politically expedient buyout of agricultural subsidies and trade barriers, with concrete steps to ensure the changes are permanent, would be a worthwhile investment. The 2007 Farm Bill provides an opportunity for less government interference with rural America,” Cato said.
II. Food Stamps
The New York Times editorial board noted in today’s paper that, “If you think people do not go hungry in America, you’re wrong. At last count in 2005, 35 million low-income Americans — about a third of them children — lived in households that cannot consistently afford enough to eat. Since 2005, the situation has most likely become worse. Last year, real wages for low-income workers were still below 2001 levels. This year, job growth is slowing and prices are rising.
“And each year, the federal food stamp program — the bulwark against hunger for 26 million Americans — does less to help. In large part, that is because a key component of the formula for computing most families’ food stamps has not been adjusted for inflation since 1996. Over all, food stamps now average a meager $1.05 per person per meal.
“Bolstering food stamps must be Congress’s top priority in this year’s farm bill, the mammoth legislation that covers the food stamp program.
“Most important, lawmakers must stop the erosion in the purchasing power of food stamps, either by pegging the benefit formula to inflation or by making a big increase in the formula’s standard deduction. In 2002, when the last farm bill was passed, Congress improved the benefit formula for households with four or more people. But nearly 80 percent of all food stamp households have three or fewer members. It is unacceptable that their food stamps buy less food each year.”
III. Trade
A USDA news release from Friday stated that, “Agriculture Secretary Mike Johanns today announced the detail assignment on May 31, 2007 of Joseph W. Glauber, a distinguished economist and expert in the field of international agricultural trade, to the position of Special Doha Agricultural Envoy at the office of the U.S. Trade Representative. Dr. Glauber will step into Ambassador Dick Crowder’s role as lead agriculture negotiator for the Doha Round.
“‘I have worked closely with Joe and I have every confidence in his ability to lead U.S. agricultural negotiations in the World Trade Organization’s Doha Development Round,’ said Johanns. ‘As Deputy Chief Economist at the U.S. Department of Agriculture, Joe is a valuable member of our USDA team, and has been a key member of the U.S. government’s team throughout the Doha negotiations. He will make a great contribution in this larger role.’”
Keith Good
