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A new farm bill by Christmas?
Ag committees looking for $23 billion in cuts By Sara Wyant For most of the years I've been covering farm policy, the changes have been more evolutionary than revolutionary. The one exception occurred in 1996, when political and budgetary pressures prompted lawmakers to scrap many decades-old supply management policies in favor of those that were more market-oriented and less trade-distorting. In many ways, it's beginning to feel like those forceful winds of change are blowing again, much like they did in 1996. The driving force this time is the Joint Select Committee on Deficit Reduction, charged with finding $1.5 trillion in government-wide spending cuts over the next 10 years. The committee is required to issue a recommendation by Nov. 23, and if they can reach agreement, their recommendations would be put to a simple up or down vote by Congress by Dec. 23. If members of Congress don't agree on a package of cuts, a so-called "trigger mechanism" would enact $1.2 trillion in automatic spending cuts to serve as the second installment of deficit reduction measures agreed upon earlier in the year when Congress raised the federal debt ceiling. These cuts would be split between the national security and domestic arenas, excluding some of the nation's biggest entitlement programs. With this kind of a backdrop, leaders of the House and Senate Agriculture Committees have been meeting privately in an attempt to find common ground on what agriculture's "fair share" contribution to deficit reduction should be. Recently, they decided the "magic number" would be $23 billion. After talking to the 12 Democrats and Republicans on the so-called Super Committee for Deficit Reduction, Sen. Pat Roberts, the Ranking Minority Member of the Senate Agriculture Committee, thought there might be some direction given for how much each authorizing committee would have to cut. The answer back was "No," he told me in an exclusive interview. "We said all along, please give us the number and we will use a scalpel as opposed to you using a meat ax." But that's not been the case, and Roberts, along with Senate Agriculture Committee Chairman Debbie Stabenow, D-MI, House Agriculture Committee Chairman Frank Lucas, R-OK, and ranking member Collin Peterson, D-MN, took a bold step and came up with their own target for cuts: $23 billion over the next 10 years. In a letter sent to the committee this week, the four principals pledged to send more detailed options for hitting that $23 billion target by Nov. 1. Finding $23 billion is substantially more difficult than the $15 billion net that would have been cut if the Simpson-Bowles deficit reduction committee's recommendations had been embraced last December, but less than the $33 billion in cuts proposed by President Barack Obama. So what will the farm safety net look like when all the recommendations are finalized? It's too early to tell, because the process is extremely fluid right now. Ideas that surface on one day are sometimes shot down for budgetary or political reasons the next. But that hasn't stopped some folks from predicting the scope of the changes. One of the folks looking at options, Ohio State Agricultural Economist Carl Zulauf, was one of the authors of the last major change in commodity programs, the Average Crop Revenue Election program, which was included in the 2008 farm bill. Congress is moving toward a revenue-based safety net that "covers shallow losses (less than 15 percent) with crop insurance covering deeper losses," said Zulauf, at a Farm Foundation forum recently in Washington. The program could be a combination of concepts already proposed by major commodity groups. For example, the National Corn Growers recently unveiled a modified version of the ACRE program called the Agriculture Disaster Assistance Program. The National Cotton Council is working on the "Stacked Income Protection Plan," or STAX, which is designed to complement current crop insurance policies by providing a cost-effective way to cover shallow losses. Other proposals, like the Aggregate Risk and Revenue Management Act, introduced by Sens. Sherrod Brown, D-OH, John Thune, R-SD, Richard Durbin, D-IL, and Richard Lugar, R-IN, and separate plans advanced by Sen. Kent Conrad, D-ND, and the American Soybean Association would cut direct and other commodity payments and create a new crop revenue program by borrowing concepts from existing programs. Looking at what's been proposed for the 2012 farm bill, Zulauf said that U.S. agricultural policy has come a long way in a short period of time. "This notion that we're moving from price to revenue, this notion that we're dealing with shallow loss, this notion that multi-year losses matter a lot--these are major changes in the farm policy environment. This wasn't even there four years ago," Zulauf explained. Of course, there is no guarantee that any farm bill changes will be made before the end of this year. First, the agriculture committees must agree on their recommendations by Nov. 1. Then the Deficit Reduction Committee must decide whether to accept, reject or modify those recommendations. The Deficit Reduction Committee has to craft a package of $1.5 trillion in cuts across the federal government that also must win the approval of the Congress. If that doesn't happen, the federal budget will be cut by $1.2 trillion through sequestration. Asked what the best potential outcome of this extremely complex situation is, Roberts said that currently, it is "not to go into a sequester, which would decimate national security, doctors, hospitals and agriculture. You don't want to get into a sequestration situation. You want to be part of the answer, not part of the next problem." Roberts said that farmers and ranchers have told committee members over and over again that their top priority is to reinforce the safety net through crop insurance. As part of the committee's package of farm bill recommendations, Roberts said it would be a "significant event" if we can achieve "the obvious need for crop insurance to be both preserved and strengthened." Editor's note: Agri-Pulse Editor Sara Wyant can be reached at www.agri-pulse.com.
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