When congressional agriculture committees start hammering out details of the 2012 farm bill, “We aren’t going to be able to just make a carbon copy of the 2008 legislation,” says Tara Smith, director of congressional relations for the American Farm Bureau Federation.
“We can’t just change the numbers, change the years, and have a 2012 farm bill that will get passed,” she said at the Mississippi Farm Bureau Federation’s Winter Commodity Conference. “We’re facing by far the worst budget situation we’ve ever been in when writing a farm bill, and I think it will dominate the discussions going forward. From here on out, the budget is going to overshadow everything related to the farm bill.
“There’s going to be less money available, and any changes we want to make to farm programs are going to have to be paid for by taking money from other farm programs — which means agriculture is going to have some very tough choices to make as we write this next farm bill.
“Looking at the budget numbers is really depressing. But, it’s an issue that is driving voters, and in the recent mid-term elections we saw a lot of members of Congress elected on the basis of their fiscal conservatism. They’re going to be expected to deliver on their campaign promises of budget cuts and changes to the budget environment.”
One of the challenges agriculture is going to face, Smith says, is that 38 programs in the 2008 farm bill have absolutely no budget. If we want to continue those programs — and rest assured, there is a constituency for every one of them — money will have to be taken from someone else to do it.
“There’s a chance we’ll have to go through a budget reconciliation process in 2011 and 2012 before we even get into writing a farm bill, which means agriculture could have to take cuts as early as this year.”
Nation's financial situation is serious
Former House Agriculture Committee Chairman Collin Peterson, D-Minn., said last year: “The financial situation facing this country is serious and we’re going to have to live within the budget we currently have when we write the next farm bill. I will not ask for money outside the farm bill budget.”
“One of the problems we’ve already seen with the 2012 legislation,” Smith says, “is that we’ve already had some money ‘stolen’ from the farm bill budget. The standard reinsurance agreement took $6 billion; a random piece of legislation on teachers jobs took $11.9 billion; and $2.2 billion was taken for child nutrition programs.
“Why should we care? Well, you can be sure the nutrition groups and others who lost funds are rallying their troops to try and insure that that money is replaced — and one of the places they’ll try and get that money is from farm programs.
“When we wrote the last farm bill, we got $10 billion extra from the Finance and Ways and Means Committees, most of which went for nutrition programs. We just aren’t going to have that this time. All the low hanging fruit — the easy pickings to fund farm bill programs — is gone.”
Many challenges facing agriculture funding
The budget situation is going to pose a lot of challenges for agriculture in devising a new farm bill, Smith says. Among the questions:
• Is the SURE (Supplemental Revenue Assistance) disaster program worth saving?
“I think I know the opinion of Farm Bureau’s membership. We just went through our annual meeting and came up with sort of a wish list of things we’d like in the new farm bill — and I can tell you, SURE was not on that list.
“But I expect Sen. Kent Conrad, D-N.D., and Jim Miller, who wrote the program and just left USDA to go back to Sen. Conrad’s office to help write the farm bill, will want to save that program. There’s going to be a battle over saving SURE and where the money will come from, $5 billion over five years.
“One of the biggest beneficiaries of SURE is Iowa, but even they have been less than happy with the program. There was a problem with the calculation of payments, and we’ve had farmers in Iowa getting notices from the government that say, ‘You have to pay back $60,000 or $70,000 in SURE payments and, oh, by the way, you have to pay it within 30 days with interest.’
“The program works OK if you buy high levels of crop insurance and you only grow one or two crops. But if you’re a diversified farmer and you don’t buy a lot of crop insurance, it’s just not going to work.”
• “Are you willing to give up direct payments? If so, how much are you willing to give up? Where do you want the money to go if we can save it?
• “There’s talk of improving the ACRE (Average Crop Revenue Election) program to try and attract more farmers, particularly southern farmers. Is that even possible? If so, where do we get the money?
• “There’s going to be a lot of discussion, I think, about fairness — fairness to different commodities, fairness to different regions of the country.
“And as we’re engaged in all these discussions,” Smith says, “we’re going to have the Brazil cotton case hanging over us, as well as WTO compliance.”
Can't balance budget on agriculture's back
The reality in the budget discussions, she says, “all comes down to an often-made statement: You can’t balance the budget on farm programs.
“Less than one-half of 1 percent of the federal budget is farm programs. We can’t balance the budget on the backs of farmers, nor should we even try. There are some big pieces of the budget pie that are hard to ignore — Medicare, Medicaid, etc. — and we can’t talk about balancing the budget without addressing those.
“We all know that the majority of the farm bill budget goes for nutrition programs and that there isn’t actually a lot in farm programs to cut.
“Within farm programs, the big pots of money include 77 percent for Title 1 direct payments. You could eliminate countercyclical payments and make the marketing loan program go away completely, and it just wouldn’t save a whole heckuva lot of money. The bulk of the money for agriculture goes for direct payments.
“If you look at crop insurance, $89 billion, the majority of that money is for farmer premium subsidies. It’s going to be very difficult to get more money out of the crop insurance program without starting to have an impact on farmers and the premiums that they pay.”
Conservation programs likely facing cuts
Spending on conservation programs such as the Conservation Reserve Program, the Environmental Quality Incentives Program, and others is about $65 billion, Smith notes.
“I think we’ll see conservation on the table this time when they’re looking for things to cut. We’ve seen large increases in spending for conservation programs over the last decade or so; I think that kind of growth is going to be tough to maintain and that we’ll see some cuts.”
Six months ago, she says, there was a lot of talk about starting to write the farm bill in 2011.
“Chairman Peterson talked about wanting to start drafting language in May or June, but given the changes we had in the November elections, I think that just isn’t realistic.
“I expect were going to see a lot of time spent with hearings in 2011 and that they won’t really start writing the farm bill until 2012 — which is going to be a tough environment, given that it’s an election year, and a presidential election year at that.
“We have new chairs and new ranking members for both the House and Senate Agriculture Committees, and that’s going to slow things in terms of the new farm bill, particularly on the Senate side, where they haven’t even started hiring staff.”
On the House side, Smith says, there’s already staff in place, but there are a lot of new members coming in.
“The majority of the Republicans on the House Agriculture Committee are new to Congress and lot of time will be spent in 2011 educating them on procedures and on the farm bill, plus holding hearings on the farm bill.”