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Farm bill considerations: Crop insurance, target prices, SNAP funding

Farm bill considerations: Crop insurance, target prices, SNAP funding

Farm bill conferees continue to meet. Progress on new farm bill reported. Vilsack, backed by new report, pushes for quick action by Congress.

On Thursday, asked if the next few days are make-or-break for ongoing farm bill negotiations, Agriculture Secretary Tom Vilsack chose his words carefully.

“I think Congress is able to act very quickly when there’s a will and a way,” said Vilsack during a conference call. “But I also think that Congress acts best and acts most expeditiously when there are timelines…

“We’ve been trying to underscore the importance of getting the message to the countryside that we’re going to get a farm bill done this year. Why is the timing important? From my perspective … it’s for the farmer and rancher who is trying to make decisions and still don’t know precisely what the programs will be, doesn’t know what to tell his banker what the programs will be, doesn’t know whether to expand or buy an additional piece of equipment.”

There’s no question, said Vilsack, that farmers, “have taken a ‘wait and see’ attitude to (make) decisions that could help not just their own operation but spur the economy in general. … Nearly 5 percent of the (nation’s Gross Domestic Product) is tied in some way, shape or form to what happens on the farm.”

Mining the same vein, earlier in the day the Obama administration released a White House Rural Council report touting the importance of U.S. agriculture to the nation’s economic health. The timing of the release was surely aimed at pushing farm bill conferees to reach a deal quickly.

“This report lays out the significant priority that the president places on the passage of a (new farm) bill,” said Vilsack. “It makes a compelling case why it’s important and necessary for the nation, as a whole, that Congress act as quickly as possible to complete its work on a comprehensive food, farm and jobs bill.”

Among the report’s findings:

  • After adjusting for inflation, net farm income – at $120 billion for 2013 – now stands at its second-highest level since 1973.
  • Farm asset values are expected to rise 7.1 percent in 2013, as farmland values are expected to continue rising; farm equity is expected to increase by 7.6 percent in 2013.
  • In the 2013 fiscal year, exports reached over $140 billion -- exceeding the previous high of $137 in FY2011, and setting a new record.
  • The average volume of bulk commodities exported increased by nearly four million tons per year over the past five years.
  • U.S. farm exports have supported about 1 million American jobs.

Read the full report here.

Target prices

Vilsack was queried on the importance of target prices in a new farm bill considering the recent drop in commodity prices. He made clear that crop insurance should remain the conferees’ main focus.

“At the end of the day, I think crop insurance will be the lynchpin for the safety net. It’s a process that Americans understand and appreciate – you minimize or mitigate your risk. … Obviously, crop insurance doesn’t pay or provide total coverage. It’s unlike auto or home insurance – it basically covers a portion of the loss and gets you a point where you can survive a difficult year…

“That’s why it’s important to complement and supplement crop insurance with additional programs. Obviously, the conference committee is grappling with the nature of that additional program.”

If a new farm bill isn’t passed would the USDA have any options other than allow 1949 permanent law to kick in?

“This isn’t a situation where you have a choice,” said Vilsack. “The reality is we have to have a clear indication from Congress that this will get done. Obviously, there are some who are skeptical about that given the fact that there’s already been one year with inaction.

“People say, ‘Well, we can always extend (the 2008 farm bill).’ The problem with an extension – and people don’t seem to be focused on this but should be – is that with an extension come costs. And you don’t get the reforms that the bill being considered by the conference committee will provide. (An extension won’t) provide the savings that are important to members of Congress as they deal with deficit reduction challenges. In fact, it would likely cost additional resources and would be difficult to identify those additional resources.”

Vilsack urged the conferees to “focus on getting the job done and understand that there is a consequence if the job isn’t done. That consequence is that, at some point, the USDA will responsible under the law … to begin instituting the policies of the 1940s. No one wants to do that.”

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 How might the wide gap between the proposed Senate and House food stamp funding cuts – some $4 billion versus $40 billion – be bridged?

“My suspicion will be one of the issues that will be last addressed. But I’m encouraged by the public statements from conferees that focus less on numbers and more on policy. I’ve been saying all along that if you get the policy right, you’ll get the number right.

“I think there are ways the program could be more efficient. There are ways we can encourage states to do a better job of … educating folks about work opportunities. But we must also understand that 92 percent of SNAP beneficiaries are senior citizens, people with disabilities, children, or people already in the workforce. The other 8 percent of able-bodied folks without dependents already have a work requirement. But (that requirement) is waived from time to time during tough economic times.”

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