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Expectations tamped down for 2012 farm bill passage?

Will a farm bill pass this year? Lawmakers have recently been tamping down chances for passage. Chuck Conner, current president of the National Council of Farmer Cooperatives and former Deputy Secretary of Agriculture, lays out co-ops' concerns and priorities for new farm legislation. Also: MF Global's impact, crop insurance and why Cuban markets aren’t fully open to U.S. farm commodities.

Will a farm bill pass this year?

Despite a series of House Agriculture Committee hearings and an expectation that the Senate Agriculture Committee will begin writing the legislation in mid-April, lawmakers have recently been tamping down chances for passage.

“We will struggle with the farm bill over the next few months,” said Texas Rep. Mike Conaway at the recent Plains Cotton Growers annual conference in Lubbock. Congress faces “a lot of struggles with the resources we’ll have available to write the farm bill. We also have a political environment that will make it difficult to do a stand-alone bill.”

Conaway said if a new farm bill doesn’t pass then current law – set to expire in September -- will be extended “probably for a year, which has been done in the past.”

For more of Ron Smith’s coverage, see here.

Conaway’s views on a new farm bill’s chances were then echoed by New York Rep. Bill Owens, who largely blamed election year politics.

Chuck Conner, president of the National Council of Farmer Cooperatives,is well aware of the maneuvering and elbow-swinging required to write and pass a farm bill. Conner, who served as Deputy Secretary of Agriculture under President George W. Bush, spoke with Farm Press on Wednesday about policy positions taken by cooperatives, how MF Global has impacted co-ops, crop insurance and why Cuban markets aren’t fully open to U.S. farm commodities. Among his comments:

What about the MF Global collapse? A lot of co-ops were hit with that bankruptcy.

“There’s no question that a number of farmer-owned cooperatives that have customer funds tied up in the unraveling of all the assets of MF Global.

“Many of the co-ops have come (to Washington, D.C.) and several have appeared before Congressional committees to lay out their plight. This is obviously an issue of strong concern to them and they’re hoping that through the (investigations) the source of the customer funds is identified and full restitution of their dollars, of their margin accounts, can be returned to them.

Although, from our conversations, I don’t think they’re expecting this to happen with great speed.”

For more on the MF Global collapse and fallout, see here.

On the regulatory side – do you believe there is a need to tweak or put new regulations out regarding the comingling of funds? Or should the law just be enforced as it is?

“I think it’s too early to tell from our standpoint. The (Commodity Futures Trading Commission) is conducting a full investigation.

“Based on that, a couple of questions arise. How was that money transferred? If so, were laws broken as part of that?

“To the extent that laws were broken, it’s pretty hard for securities and financial laws in this country to completely prevent those who are simply determined to break the law.

“In this case, there are a lot of investigations and, I assume, there will be a lot of consequences associated with a number of these actions.

“But if it turns out that was not the case – that the customer funds were able to be used legally and certainly not in a way they were intended to be by those who owned those customer funds – Congress will be looking at what they need to do to make sure this doesn’t happen again.”

In the last few days, there have been (lawmakers) warning farmer constituents it is unlikely that a farm bill will be passed in 2012. Your thoughts since you obviously know the political rigors and what’s required behind the scenes? Will we just extend the (2008 farm bill) for another year?

“It’s a tough call.

“No farm bill has ever been easy. I’ve been involved in every farm bill very directly since 1981. In each one, I can tell you that more often than not, people were saying ‘there is no way we’re going to get this done. There are too many obstacles.’ But they always seemed to find a way to get decent farm legislation passed.

“So, I never bet against farm bills.

“However, this one in particular will be really challenging. You can’t be optimistic about it even though you can remain hopeful that the process is somehow completed so producers and those in agri-business can have some idea of what the rules of the game will be for an extended period. (Only) knowing the rules for the next six months is pretty hard to plan by, to run a business by.

“So, we remain hopeful but the obstacles are enormous. It is an election year – that in and of itself is a huge obstacle. Congress typically does very little in presidential election years.”

Top priorities for the co-ops for the next farm bill?

“First, we’ve been working hard to ensure there are adequate resources for the farm bill.

“It seems no matter where you go when people start talking about cutting the deficit, farm programs are the first thing mentioned. Our membership favors big deficit reduction but, at the same time, they want some acknowledgement that farm programs and agriculture programs are not the contributing factor to this. As a matter of fact, these programs have come down in cost very substantially. Today, they’re less than 8 percent of the entire USDA budget.

“So, our first priority is ‘Please, treat us like we should be. (Farm programs) are not the cause but we’re willing to contribute our fair share.’”

On a second priority…

“Second, we’ve got a big interest in the specialty crop portions of the farm bill.

“Many of the risk management programs have been fine-tuned over many years to help Midwest row-crops, in particular. But they haven’t necessarily been fine-tuned to the point where they’re good for all regions and good for a lot of the specialty crops grown in this country. We’ve been working with our membership to make sure that those risk management tools are available to you whether you’re growing corn, cotton or grapes.”

Having seen the various programs since 1981 are you on the crop insurance bandwagon, right now? That seems to be the way things are shaping up…

“There’s no question that as I’ve traveled the country – and I’ve been all over in the last year meeting with co-ops and co-op farmer/owners – they tell me time and again that crop insurance is their Number One risk management tool.

“The (pro-crop insurance) message that seems to be strong in the farm bill debate is not being generated out of Washington. I think this is Washington clearly hearing a lot of producers.

“We’ve been hearing that for a while from the corn, soybean and wheat growers. But we’re hearing it more broadly now.

“I tell audiences that if crop insurance isn’t working for your commodity or region of the country, you need to come see us. You need to work with us to try and make it work for you. I believe, down the road, crop insurance will be the Number One risk management tool that USDA administers and the second will be a distant second.”

Rice, Cuba, labor

That leads to questions that come up in the Mid-South every farm bill – cotton and rice and the specific issues they bring to the table. Can a crop insurance product for rice be developed that is satisfactory to the producers?

“I was in Jonesboro, Ark., within the last month and said that crop insurance seems to be the wave of the future. I heard strongly from them that crop insurance is difficult to make work for the rice industry.

“There isn’t the same production peril because you have more control (over production like irrigation). Other factors provide the risk for rice production.

“There will always be unique circumstances. My experience with farm bills is that Congress is always willing to address those truly unique circumstances…

“Crop insurance is not just about indemnifying production today. Most of the plans being marketed are revenue-based. Can these be tailored to better fit the rice industry? Particularly the rice industry in the Mid-South? I think those are open questions, at this point.”

If you’ve talked to rice farmers, I’m sure you heard about their desires to see the markets in Cuba opened. With your history, what you saw at USDA, what was going on behind the scenes regarding that issue? Where are the major pressures being exerted from that are preventing the Cuban markets from being opened?

“Within each and every administration, there are people whose responsibility is national security interests. They don’t see right or left. They see straight-ahead security interests. Those people say that the current regime in Cuba is not a friend of the United States and, therefore, we shouldn’t do anything to encourage them in any way. (They) interpret that in the broadest possible sense.

“I understand where they’re coming from because they’re very singularly focused – and on a good cause.

“At the same time, I remember when I was working in the Senate when Reagan was president. He took (the stand) that ‘we’re willing to sell the Soviet Union anything they can’t shoot back at us.’

“From a trade policy-standpoint that really should be an important factor in trade with Cuba. It’s a humanitarian issue. It’s not a threat to national security. And certainly for industries like rice it could be hugely important markets that could boost our economy at a time when everyone agrees we need that boost.”

For more on NCFC’s view on Cuba policy, see here.

On farm labor and immigration issues following laws passed in the Southeast…

“We favor comprehensive immigration reform that will ensure there are legal workers available to, as we say traditionally, ‘harvest the crops.’ However, now in agriculture it isn’t just harvesting specialty crops any more. We have (migrant labor) needs on many, many farms, dairy operations. Many crop and livestock farms are in need of this labor force.

“It impacts all of agriculture and we favor an immigration policy in the country that would legally provide access to those workers.

“We’ve been debating this issue for so long. And we’ve often talked about the fact that if this isn’t straightened out then food will be left (in the field) and not be utilized. That happened in 2011 in (the Southeast) when, literally, there were precious food commodities that could have fed someone that were left out because there was no one to harvest them. That screams for a need for a change.”

Conservation programs versus farmer programs in an environment of shrinking funds? How do you divide the baby?

“That’s a great question. I think if there is a Title I significant cut in price support of commodities, others will have to bear a similar burden. You can’t just single out the Title I farm support commodities for cuts and leave everything else unchecked. That would include the Conservation Title, include a lot of our Trade Title, even the Nutrition Title to some extent.

“There must be some sharing of the burden. It can’t all occur in one title.

“Those who follow the Conservation Title should prepare for that. I sense they are. I do believe there will be a smaller CRP after the next farm bill passes. That would provide sizable savings.”

Anything else?

“One of the issues we continue to talk about independently – but particularly in the context of the farm bill – is if there will be cuts to the farm safety net, direct payments or something else … don’t, in addition, come back and through the regulatory process do things that will add to the farmers’ costs of doing business. That would be a double-whammy they simply couldn’t withstand.

“You can’t just cut their safety net and then come back saying ‘oh, by the way, here’s all the things we expect you to do. Things we consider to be good practices. They’ll increase your costs but you’ll just have to absorb those increases.’

“We’ve been pushing very hard that there should be some kind of a time-out on the regulatory process so we aren’t increasing producers’ cost of production, cost of doing business, at the same time we’re potentially removing a large chunk of their safety net.”

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