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Peterson: White House intransigence could return permanent law

House Agriculture Committee Chairman Collin Peterson says Congress may be forced to allow farm programs to revert to “permanent” law if the Bush administration remains unwilling to forge a compromise on the 2008 farm bill.

Acting Agriculture Secretary Chuck Conner and other USDA spokesmen have said they will recommend President Bush veto either of the House- and Senate-passed farm bills because both would raise taxes and neither contains needed payment limit reforms.

“All three of us — the House, the Senate and the administration want to get this done,” said Peterson, who has met with Conner and other administration officials several times in recent days. “The White House says it wants a bill ‘sooner rather than later. But it has not been willing to move on these key issues.”

Speaking to reporters on a telephone conference call Tuesday (Jan. 22), Peterson said that if the House-Senate conference committee reconciles the House and Senate bills by March 15, the date the extension of the current law runs out, he would prefer not to send the bill to a certain presidential veto.

As a result, he said, House and Senate agriculture committee leaders have been looking at other options aimed at breaking the logjam that threatens to prevent farmers from having a new farm bill by planting time for the 2008 crops.

“We believe that a long-term extension of the current law — the 2002 farm bill — would not be good because of issues with the decline in the baseline,” he said. “So we’ve been investigating the possibility of going back to permanent law.”

Peterson was referring to the fact that if Congress takes no action on commodity support before the beginning of the 2008 harvest, the nonexpiring provisions of the Agriculture Adjustment Act of 1938 and the Agriculture Act of 1949 take effect.

That’s because each of the farm bills that has been enacted since the 1940s, including the Farm Security and Rural Investment Act of 2002, have been passed as amendments to those two acts; that is, the permanent farm law.

Under the acts of 1938 and 1949, loan rates for some of the row crop commodities must be set as a percentage of parity, a term used to describe a formula that gives a unit of the commodity the same purchasing power it had in the 1910-14 time period.

Nonrecourse loan rates, which are the chief price support mechanism in those acts, could be as high as 90 percent of parity but not less than 50 percent of parity for wheat, 65 percent for cotton and 50 percent for corn, according to a paper prepared by the Congressional Research Service.

(Although parity has not been used in farm bills for years, USDA is required by law to calculate parity prices for each crop. As of November 2007, the parity price for wheat was $11.10 per bushel; rice, $30.10 per bushel; corn, $8.24; sorghum, $7.90; and cotton, $2.10 per pound.)

The law would require acreage allotments and marketing quotas be implemented for wheat and corn. Under the parity formula, loan rates for eligible commodities would be significantly higher than current loan rates and until recently for the market prices for the program crops.

“The loan rate for wheat would be $8.32 per bushel and for corn $4.12, which are actually below the current markets for those crops,” said Peterson. “The only eligible crop that doesn’t fall into that category would be cotton, which would have a loan rate of $1.32 per pound.

“But the time for a referendum on establishing the acreage allotment for cotton for the 2008 crop has passed so that would not come into play immediately,” Peterson noted.

“If we get pushed against the March 15 deadline, we would send the farm bill to the White House, and the president would sign it or we would go to permanent law,” the Minnesota congressman said. “It would be as simple as that.”

Row crop farmers currently are making decisions based on the markets and not on farm programs, said Peterson. Thus, passing a farm bill in time for planting the 2008 crops is not as time sensitive as in previous years.

“Cotton prices are not faring as well as the other crops,” said Peterson. “But many cotton farmers are looking at switching to corn and soybeans instead.”


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