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House Ag Committee, Day One
The House Ag Committee meets again today to consider the provisions of H.R. 2419, the 2007 Farm Bill. The hearing begins at 10:00 am Eastern in 1300 Longworth, and live audio and video will be available here.
Yesterday, the Committee issued a publication notice, which indicated that, “A draft copy of a Manager’s Amendment for the Farm Bill was released today. It is available online at:
http://agriculture.house.gov/inside/2007FarmBill.html.
The notice stated that, “The document is intended for use during the markup process and is subject to change prior to the meeting.”
Dow Jones writer Bill Tomson reported yesterday that, “Support is growing in the U.S. House of Representatives for Agriculture Committee Chairman Collin Peterson’s plan to reform U.S. farm policy after last-minute efforts to secure funding for key initiatives, he told reporters Tuesday.
“There are still farm sectors disappointed with subsidy cuts in Peterson’s 2007 farm bill proposal, and Bush administration officials continue to complain there are not enough changes to existing policy.
“But Peterson, D-Minn., said he’s not worried.”
Mr. Tomson also stated that, “Current policy allows farmers faced with abnormally low commodity prices to get government ‘counter-cyclical’ subsidies, but Peterson’s plan allows them to opt instead to get the payments based on poor revenue levels.
“U.S. Department of Agriculture officials asked Congress to make a complete counter-cyclical switch from price-based to revenue-based subsidies, but Peterson said he wasn’t convinced that was the way to go. Instead, he decided to offer both for the next five years.
“‘This will give us an opportunity to see how this idea will work in practice while offering a new choice to farmers,’ he said.”
New Money
Note that Mr. Tomson indicated that, “last-minute efforts to secure funding for key initiatives,” has also contributed to growing support for Chairman Peterson’s proposals.
Although the Dow Jones article did not elaborate on specifics with respect to this funding, Tom Karst, writing yesterday at Fresh Talk, reported that, “A staffer with Rep. Dennis Cardoza reports that the updated mark from House Agriculture Committee chairman Collin Peterson, to be unveiled tomorrow, will feature big increases in paid-for fruit and vegetable/specialty crop priorities. How big? The fruit and vegetable snack program goes from relying totally on reserve funds to being allocated $350 million in real money over five years. Specialty crop block grants go from $265 million over five years to $365 million over five years. There is $215 million for specialty crop research and $30 million in additional funds for organic research. And more.
“All together, the new chairman’s mark will reportedly include $1.6 billion for specialty crops over five years, well more than double from Peterson’s first mark. Savings were found in crop insurance programs to help fund the increases in [fruit and vegetable] programs.”
With respect to savings from crop insurance, recall that Des Moines Register writer Philip Brasher reported on Monday at the Cash Crops Blog that, “New details about the House farm bill are emerging on the eve of the Agriculture Committee’s first day of votes.
“According to Agriculture Department officials, the legislation would cut payments to crop insurance companies by about $1 billion over the next 10 years, or $100 million a year.
“The committee’s chairman, Collin Peterson, has been saying that he plans to cut the amount of money that the insurers can get for administrative and operating costs.
“The administrative and operating costs are figured on the basis of the insurance premiums, which are in turned based on price of the covered commodities. Since commodity prices are up sharply, so are the insurance premiums.
“The crop insurance program has been projected to rise in cost from $4.7 billion next year to $5.5 billion in 2012.”
Ken Cook commented yesterday at the Mulch on the Fresh Talk report of additional money for fruit and vegetable programs. In part, Mr. Cook stated that, “We’ve seen some variations and additional detail (that we really can’t tell you), but in general this is very good news for Mr. Cardoza’s leadership. He pushed against the crop subsidy lobby until he got his message through that fruit and vegetable growers will settle for nothing less than a fair share of this farm bill–and every farm bill to come.
“As with everything else in this farm bill, no one is taking these numbers for granted yet. They remain significantly under the objectives set forth in Mr. Cardoza’s original marker bill, the EAT Healthy America Act. Without further committee concessions, the only place to close the deal in the House is on the floor.
“But any time someone makes gains like this for a better, fairer farm bill, you have to tip your hat.
“Chairman Cardoza, well done, sir. This is a down payment to be proud of, and signals the promise of an important new direction in a farm policy, and an important reconfiguration of farm bill politics, that in the past has been 92 percent at the service of just five crops.”
In another issue regarding vegetable growers, Gary Truitt reported yesterday at Hoosier Ag Today that, “The House version of the Farm Bill, currently being heard on Capitol Hill, contains a special pilot program for Indiana Tomato growers. The Farm Flex program would allow Hoosier tomato growers to plant on up to 10,000 acres currently enrolled in the farm program. Under the ’02 Farm Bill, growers were prevented from planting non-program crops on base acres enrolled in the USDA price support program.”
Fore more on the Farm Flex issue, see this FarmPolicy.com update from March.
Payment Limits
Reuters writer Charles Abbott reported yesterday that, “The chairman of the House Agriculture Committee proposed on Tuesday to bar millionaires from collecting U.S. crop and land stewardship subsidies, a reform that may aid passage of the new U.S. farm bill.
“Chairman Collin Peterson proposed farm subsidy changes that include a ban on collecting subsidies indirectly, such as through affiliated businesses, and require payments to be tracked to individuals.
“‘After talking to various groups and reform advocates, I believe the proposal we will consider is a sound compromise that no one is satisfied with but nonetheless represents reform,’ said Peterson.”
Mr. Abbott explained that, “Under current rules, grain, cotton and soybean farmers can collect up to $360,000 a year, but the limit can be evaded by using so-called commodity certificates.” (For more background on “commodity certificates,” click here.)
The Reuters article also explained that, “Peterson called the proposal to set a strict eligibility limit and eliminate the rule allowing growers to collect subsidies directly and through two affiliated operations ‘a big change’ that would save $522 million over 10 years.
“‘We have our leadership on board with this as reform,’ he said.
“Growers are eligible for farm supports if they have an adjusted gross income of less than $2.5 million; there is no cut-off if more than 75 percent of their income is from agricultural operations.”
The Reuters article also noted that, “Peterson said the $1 million AGI limit would be a ‘hard cap’ with no exemptions and would apply to crop and stewardship programs. Growers would be limited to $60,000 a year in so-called direct payments and $65,000 in counter-cyclical payments made when returns are below targets set by law. There would be no limit on income from price supports, however.”
“A congressional staff worker said $1 million AGI limit would apply separately to farmers and spouses, effectively a $2 million AGI per farm,” the article said.
Chris Clayton, writing yesterday at the DTN Ag Policy Blog, added that, “Marketing loans would change in several ways. There would be no limit in loan-deficiency payments for producers so commodity certificates would go away. The mindset is that if the marketing dynamics have changed — in other words if most commodity prices remain high — then the only commodity likely to continue needing LDPs would be cotton.”
Bill Tomson, in the Dow Jones article cited previously, described this aspect of the proposal by saying, “Another safety-net subsidy Peterson is seeking to change for the 2007 farm bill is the loan deficiency payment program in which farmers get payments when prices for commodities such as cotton and corn fall below loan rates. He said he is proposing a $150,000 cap on LDP payments be removed.
“The cost of removing that cap shouldn’t be much because prices are generally high, Peterson said, but the subsidy should be free of the cap just in case the payments are needed.”
For a re-cap of the payment limitation proposal, see this “FactBox” item posted yesterday at Reuters.
In news documenting reaction to the payment limitation proposal, Philip Brasher reported in today’s Des Moines Register that, “Proposed farm subsidy rules promoted by a House Democrat as ‘real reform’ could allow some big farms to get more money, not less, experts said.”
The article noted that, “Lobbyists familiar with the deal said it would raise the cap on the amount of fixed direct payments that an individual could collect each year to $60,000, up from $40,000.
“‘This is clearly a step backward,’ said Chuck Hassebrook of the Center for Rural Affairs, a Nebraska-based group that analyzes farm policy.”
(For more reaction from the Center for Rural Affairs on this issue, see, “This is NOT Reform,” an update posted today at the Center’s Blog for Rural America).
A press release issued yesterday by the Sustainable Agriculture Coalition stated that, “‘This proposal unfortunately fails the laugh test for payment limitation reform,’ said Ferd Hoefner, policy director for the Sustainable Agriculture Coalition. ‘A proposal that increases direct payment caps by $40,000 per year and removes all limits on marketing loan benefits can only truthfully be called counter-reformation. It will only accelerate farm consolidation and further subsidize the demise of the family farm.’”
Additional reaction could also be found at The Mulch in an update yesterday entitled, “Farm Bill: Sham Reform To ‘Limit’ Subsidies To Mega-Farms.”
Looking Ahead
Congressional Quarterly writer Catharine Richert reported in an excellent recap article this morning that, “Although it appears that Peterson is on track to produce a bill that includes some funding boosts, lawmakers are unlikely to be deterred from offering amendments at Wednesday’s markup that would further expand the bill’s price tag.
“For example, conservation advocates may seek to increase the $3 billion for land preservation programs in Peterson’s bill. Hunting and fishing groups working together through the Theodore Roosevelt Conservation Partnership say they are satisfied with the committee’s work given the tight budget, but other groups, such as Environmental Defense, say they will push for more conservation funding.”
And Matt Kaye, writing yesterday at Hoosier Ag Today speculated that, “The Senate Farm Bill Schedule is now seen ‘sliding’ into September, which could force the need for a short-term extension of existing law. With the current farm Bill set to expire on September 30, it is looking more and more likely an extension will be needed since the Senate won’t take up the 2007 Farm Bill until September. Senate Ag Committee Chairman Tom Harkin says a floor fight over Iraq could keep the Farm Bill from getting time on the Senate Floor, ‘If that’s the case, then I’m out for getting floor time this month.’ Harkin does not want to mark up a bill in his committee now, and wait a whole month through the August recess to go to the floor in September.”
WTO Action
An update posted yesterday at the World Trade Organization webpage yesterday stated that, “Agriculture negotiations chairperson Ambassador Crawford Falconer and non-agricultural market access (NAMA) chairperson Ambassador Don Stephenson circulated their revised draft ‘modalities’ on 17 July 2007. The drafts are based on WTO member governments’ latest positions in the negotiations and are an assessment of what might be agreed for the formulas for cutting tariffs and trade-distorting agricultural subsidies, and related provisions.”
A separate WTO webpage contained the text of the draft as well as related audio files of a press conference conducted in associated with the draft release.
Alan Beattie, in an article posted yesterday at the Financial Times Online, reported that, “Heads of key negotiating committees in the troubled so-called Doha round of trade talks on Tuesday challenged members of the World Trade Organisation to make hefty cuts in tariffs and subsidies.”
Mr. Beattie added that, “Mr. Falconer’s [Crawford Falconer, the New Zealand WTO ambassador who chairs the farm negotiations] draft implies cutting the ceiling for US trade-distorting agricultural subsidies to between $13bn (€9.4bn, £6.5bn) and $16.4bn from current limits of about $22bn. This is above the $10bn-$11bn demanded by Brazil and India but below the $17bn informally floated by the US in talks.
“But it left largely open the politically charged issue of ‘special product’ provisions, which permit developing countries to shield particular commodities from cuts in import tariffs. Such loopholes have been targeted by US farmers, who say they undercut liberalisation in the agreement.”
Steven R. Weisman reported in today’s New York Times that, “The proposal was careful not to assign blame, but it also said time was running out on the possibility of a global trade deal. It was generally acknowledged to be a final attempt to save the talks, with the expectation that they would be declared a failure if it did not succeed.
“The Bush administration reacted cautiously to the new document, which calls on the United States to lower its farm subsidies, which affect trade by making American goods more competitive, to a range of $13 billion to $16.5 billion a year. The last American offer was to lower them to $17 billion a year. In 2005, the United States paid $19.7 billion in farm subsidies. That figure fell in 2006 to $12 billion as food prices rose. But Americans say they have been much higher historically.”
Reuters writers Doug Palmer and Missy Ryan reported yesterday that, “The United States reacted cautiously on Tuesday to a pair of compromise proposals in world trade talks, but said it hoped the new texts could eventually set the stage for a deal.
“‘We look forward to next week’s work in Geneva, when we will exchange with our trading partners initial reactions to the texts and discuss how to take the negotiations forward into the fall,’ said Gretchen Hamel, a spokeswoman for the U.S. Trade Representative’s office” (full statement available here).
Reuters writer Laura MacInnis added yesterday that, “The EU welcomed the proposals as ‘a useful step forward,’ but warned it had ‘important concerns and other significant issues in the negotiations that are not included in these texts’” (official EU statement available here).
A separate Reuters article from yesterday stated that, “An Indian trade official said on Tuesday it was too early to comment on compromise proposals for world trade talks, but the Group of 20 developing nations would meet on Thursday and issue a statement then.”
Keith Good
