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House Appropriations Committee caps farm payment eligibility at $250,000

House Appropriations Committee caps farm payment eligibility at $250,000
The House Appropriations Committee has side-stepped the Agriculture Committee and imposed a new payment limit ceiling on farm program payments. Amendments offered by Reps. Flake and DeLauro also could upend the settlement worked out between the governments of the United States and Brazil and expose U.S. businesses to $800 million in retaliatory duties. The two actions were accompanied by a number of other cuts in farm program and research and alternative fuel programs aimed at reducing the federal deficit.

The House Appropriations Committee has approved two amendments that will limit farm program payments to producers with incomes of no more than $250,000 a year, scuttle the settlement of the WTO case filed by Brazil and shift savings to federal nutrition programs.

The income test amendment was offered by Rep. Jeff Flake, an Arizona Republican who has targeted farm subsidies in the past but was never able to generate the support to get the language included in a five-year farm bill or an annual appropriations bill.

“Nobody is willing publicly to defend this kind of largesse,” Flake was quoted as telling reporters after the Appropriations Committee approved his amendment and a number of other spending cuts in farm programs and in research and alternative fuel programs conducted by the U.S. Department of Agriculture.

Another Flake amendment approved by the Appropriations Committee would have the effect of ending payments to Brazil that were negotiated as part of the settlement of the WTO case brought by that country’s government against the U.S. cotton program.

Means test

Officials with the National Cotton Council blasted both the new means test for farm program payment and the elimination of the appropriation that provides a fund of $147.3 million a year for the Brazil settlement.

A separate amendment offered by Rep. Rose DeLauro, D-Conn., would transfer the $147.3 million to the Women, Infants and Children (WIC) food assistance program, which had previously been cut by $832 million by the Appropriations Committee's Agriculture Subcommittee. The Center on Budget and Policy Priorities had estimated those cuts would force WIC to turn away 325,000 to 475,000 low-income family members in fiscal year 2012.

“As the House and Senate Agriculture Committees are beginning the process of developing the successor legislation to the 2008 farm bill, the House Appropriations Committee has undertaken a misguided approach to farm policy,” said Charles Parker, the NCC chairman and a cotton producer from Senate, Mo.

He said the combined effect of two amendments offered by Reps. Flake and DeLauro would violate the Framework Agreement established between the United States and Brazilian governments in June 2010.

The latter was negotiated to provide an orderly resolution of the WTO trade dispute involving the export credit guarantee programs and certain provisions of the upland cotton program. As part of the agreement, the United States committed to establish a fund of $147.3 million per year that would provide technical assistance and capacity building for Brazil’s cotton industry.

End to payments

The fund, which is subject to transparency and audits, was scheduled to continue until the next farm bill’s passage or a mutually agreed solution is reached. The Flake and DeLauro amendments would end those payments, thus putting the United States in violation of the agreement and exposing a broad range of sectors of the U.S. economy to more than $800 million in harmful trade retaliatory measures by Brazil.

Specifically, the Flake amendment would reduce upland cotton direct payments by the amount necessary to fund the Brazil Cotton Institute. The amendment is the latest in a long line of attempts to undermine or alter the Framework Agreement achieved by the United States and Brazilian governments.

“It is unfortunate that Representative Flake’s amendment will divert funds from the most trade compliant provision in the farm safety net and also squarely places the burden of the dispute on upland cotton programs, even though export credit programs account for 80 percent of Brazil’s retaliation authority,” Parker said. “Representative DeLauro’s amendment goes a step further by diverting the funds away from the Brazil Cotton Institute, and thus violating the government-to-government agreement.

“Actions by the Appropriations Committee have violated the Framework Agreement that had already established a clear path to resolving the ongoing WTO trade dispute. Provisions in the Framework establish principles that will likely mean substantive changes to upland cotton programs as part of the 2012 farm bill. The U.S. and Brazilian governments negotiated a detailed process that will resolve the trade dispute and Congress should let that process come to fruition.”

Halves or thirds

Flake’s amendment to lower the adjusted gross income (AGI) test to $250,000 from the current farm law’s $750,000 in on-farm income and $500,000 in off-farm income would affect farmers participating in all farm programs, not just cotton.

“In the 2008 farm bill, Congress went through a lengthy debate before imposing tighter eligibility requirements. It is anticipated that the Agriculture Committees will debate eligibility provisions in the next farm bill. Any debate or changes to those provisions should only be done by the authorizing committees as part of the next farm bill.”

In the past, farm organizations would turn to the Senate where leaders of the Committee on Agriculture, Nutrition and Forestry would remove such language from the farm bill and force it to be resolved through a conference committee. Whether the new chairman of the committee, Sen. Debbie Stabenow, D-Mich., will take such a position is up for conjecture.

Parker also noted that row crop farmers have made investment decisions based on current law. Given the current budget-cutting mood in Congress, it’s doubtful the promises made in previous legislation will even be considered.

“The actions by the House Appropriations Committee undermine the critical safety net of farm programs in an uncertain economic climate,” Parker said.

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