Policy specialists discuss farm bill
By Larry Dreiling
While the next U.S. farm bill is not scheduled for passage until 2012, the work of shaping the legislation already is under way on Capitol Hill.
With that in mind, organizers of the 2010 Commodity Classic, held recently at Anaheim, Calif., brought together the lobbyists for the two largest general farm organizations to discuss current issues facing production agriculture, and offer a taste of the oncoming debate toward the 2012 farm bill.
Chandler Goule, vice president of government relations for the National Farmers Union, and Mary Kay Thatcher, director of agriculture policy for the American Farm Bureau Federation, offered their viewpoints to High Plains Journal columnist Sara Wyant of Agri-Pulse Communications.
The meeting room was packed--no doubt because board members from all four commodity groups that host the convention were about to have policy-shaping board meetings of their own following the session, and those leaders wanted to hear what the two general farm lobbyists had to say.
The two did not disappoint, as the hour ran through a number of issues, but with an emphasis on transitioning producers away from traditional income support programs to crop insurance.
On the 2012 farm bill, Wyant asked the simple question: Why so early?
"I think Chairman (Collin) Peterson's main concern is that we are going to be hit with a directive from the president to have budget reconciliation next year and there may be a chance to rewrite the farm bill in 2011, a year earlier than we would have expected to pass such legislation," Goule said.
"He's telling farm groups to start early, start now. He wants not just farm groups but food safety and nutrition interests and everybody together on this so that if we start writing the farm bill in 2011, then we're prepared."
Added Thatcher: "I think we'll have hearings, primarily because dairy has kind of a new proposal on getting rid of dairy price supports and the MILC (Milk Income Loss Contract) program, and going to a sort of crop insurance program--what you might call a margin insurance program. I suspect the vast majority of commodity groups like the current farm bill and, if they don't, they'll change it.
"The risk in doing anything differently is that we could all say 'We want to change X, Y, and Z.' Then some member like (Rep.) Ron Kind (D-WI) decides he wants to change it. I suspect you won't have a lot of people with new ideas in the March-April-May timeframe, but you may later on."
Budget cuts ahead
Thatcher said she had read that Peterson was discussing cuts as much as 10 percent in support programs.
"That goes back to reconciliation," Thatcher said. "If that happens, we'll have different ideas about how we'll get there."
Goule agreed, saying, "Nutrition will be tough to cut to pass a farm bill. Conservation programs will be difficult to cut and get 218 votes for passage. We as a community of farmers and ranchers participate in the nutrition programs as well as the commodity programs. We're going to have to find a way to keep producers on the land, and that will be through crop insurance in a new farm bill."
Wyant noted that Peterson's approach to the 2008 farm bill was to set a baseline budget, then have each commodity group meet with U.S. Department of Agriculture officials to discuss their thoughts on modifying the bill to suit their interests. She asked if that process would likely be repeated.
"The chairman likes to give everyone their opportunities to express their opinion," Goule said. "He wants a very transparent process, for everyone to understand it."
The idea of a budget cut, Thatcher said, is "a very scary thing."
She added: "We're right at the point where about 70 percent of USDA's budget is in nutrition programs. If you look at the incredible growth of these programs, like food stamps, going from 20 million people served in 2000 to 38 million now. It's projected to go up even more.
"So when you have someone coming in and saying cut 10 percent of the budget, there's no way they're going to take money out of that 70 percent of the nutrition programs. The 30 percent that's left--commodity programs, conservation, crop insurance, research, rural development and all that--will have more than just 10 percent cut. We're really hoping we don't get a reconciliation bill. We'll have to watch it very closely."
Among the cuts already being discussed, Wyant said, is $8.4 billion from compensation to companies managing federal crop insurance programs.
"I'm convinced crop insurance is going to take a pretty good hit in this renegotiation of crop insurance agreements," Thatcher said. "It could be somewhere south of $6.9 billion. We have to make sure that money doesn't just disappear and that Congress puts it back in the agricultural sector.
"We have our politician friends saying, 'Oh, good, we need more money for things like school lunch programs.' We'll have to be up there making sure it stays in crop insurance or goes into other commodity programs. I think we're at negative already."
Added Goule: "It's very important for all groups, not just the commodity organizations that are here but we in the general farm groups like Farmers Union and Farm Bureau, to come together to make sure the department and Capitol Hill understand that we need programs to assist our producers. It's going to be a fight because we are outnumbered by urban members of Congress."
Thatcher told the crowd to be aware that in baseline spending--that is, the funds available for USDA to spend--more money will be spent on crop insurance programs than on traditional commodity programs.
"That is a trend that will continue for the next five to six years," Thatcher said. "That's something to think about. Not only do we want to move away from direct payments and loan rates to crop insurance, but do we want to move money from one pot to the other to strengthen whatever you think will be the best risk management tool? I suspect you'll hear different answers from people in the South compared with people in the Midwest on that."
Added Goule: "As we go through this, another thing to think about is that target prices will likely go lower than they were in 2008. If your actual price gets that low, you're going to be so far in the hole that you won't be able to make any money anyway.
"It looks like crop insurance will be the primary safety net, and we need to protect that--make sure we can put more money into it to maintain a long-term safety net, because I think direct payments and target prices will be decreased."
Larry Dreiling can be reached by phone at 785-628-1117, or by e-mail at email@example.com.