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Rep. Peterson: crafting a farm bill

During his latest weekly press conference, Rep. Collin Peterson, chairman of the House Agriculture Committee, discussed progress on writing a new farm bill. The Minnesota Democrat spoke on the difficulties encountered, the approach by the Bush administration and the role of the South.

Among his comments:

On the proposal that farmers could use either the current counter-cyclical payment or a revenue payment...

“We had that scored and it came back fairly high. That surprised us and (USDA head Mike Johanns). Given that score we don’t have the money to do it.

“We’re still going back-and-forth with CBO to see if there’s any way we can get it into the realm of (possibility). We’re trying to work with them on things, but as I told (Johanns) yesterday, the committee will write the bill and we’re working to make our members comfortable with a bill that, in the end, the committee feels is good for U.S. agriculture and rural districts. The committee will work its will — and that’s the way it should be.”

On Johanns’ concerns about putting advance payments off for a year and tinkering with some operating/administration costs for crop insurance…

“I don’t know what the concern is. These are things the Republicans have used before, these reconciliations. The OMB and President Bush use these things all the time in their budgets.

“I told (Johanns) if he has such a problem, he needs to go talk to his boss about it. They keep doing it all the time.

“There was some press I saw yesterday where they said we’re just using these shifts. Well, our economists tell us over 70 percent of the offsets we’ve identified are actually cuts or reductions in the programs. So, I think we’ve done a better job than anyone else has in these kinds of situations.

Sen. Tom Harkin, an Iowa Democrat and chairman of the Senate Agriculture Committee, said the Senate committee would write a six-year bill. That will mean and going to out years of 2013 to 2017 to come up with extra funds to make it work. Harkin claims he’s not seeing much progress on the offset front. Peterson’s reaction?

“Concern about that has been raised by some Republican members. I don’t hear any concern from our side of the aisle.

“The way we view it is we believe the best thing we can do to ensure a successful outcome is to do the work, to put a good bipartisan bill together that we can get passed on the floor.

“If we have a good bill that can be done prior to the August recess, that helps a lot. And that’s a worthwhile goal that we’re still pursuing…

“What I’m concerned about is if this thing gets strung out too far, the pressure will mount to do an extension. And I’m not sure passing an extension will be easy. People assume it will be, but I’m not sure.

“A lot of the interests wanting to be included in this bill will be left out with an extension.

“In reality, the issue is that the South needs to have some certainty on this. The longer we string this out into the fall, the more difficult their situation is. They have to make decisions and the more they know earlier, the better.

“You could get beyond Sept. 30 for a while and it may not be a problem. But at some point, it does become one because the South needs to know what the situation is a lot earlier than we do.

“If we have a House bill and a Senate bill in September and we’re still not in conference, at least people would know kind of (what to expect to happen). The sooner we can get to this, the better.

“People just assume there will be an extension. I don’t know that they should do that.

“The 1949 law is still on statute. I asked (Johanns) about that yesterday, whether he was ready to implement the 1949 law if it becomes necessary. He got a startled look on his face. But that’s the underlying statute if nothing is passed.

“We hope to keep the pressure on, do the right thing and have a good bill.”

On the 1949 law…

“It’s based on parity… it also requires referendums and supply management. There are complications to it, but there are some who believe that wouldn’t be a bad idea. It goes back to parity and puts prices based on other commodities. If it ever is implemented, it would give us a heck of a baseline.”

On a potential six-year bill…

“That gets us nowhere. Our biggest problem in getting this bill under CBO/pay-go shape is the second five years. We’ve had a bigger problem (shaping) the second five-year pay-go than with the first.

“We have meet two tests: five-year and 10 years. The 10-year test has been harder.”

Sen. Harkin says his baseline is about $60 billion in the second five years and about $57 billion in the first…

“Yeah, but we still have to meet the pay-go rules in both timeframes. A lot of people miss that in the baseline for commodities — with the exception of cotton — there aren’t any counter-cyclical or marketing loan gains projected in the first five years. There’s considerable (amounts) projected in the last (portion) of the bill. That’s been an issue in making this work.

“There’s no way you can shift things without causing problems in the second five years. There are tails on all these programs and CBO scores some of them a lot higher later than they do now.

“From what I’ve seen, I’d think what (Harkin) is talking about would make things harder.””

What’s the real cost to the core of agriculture — the major commodities — if commodity title funds are shifted to other programs?

“It would depend. Clearly, if we go back to Freedom to Farm … it would have potentially devastating results. You’d eliminate the safety net.

“People say, ‘Well, we have high prices and that won’t be a problem.’ That’s exactly what we heard in 1996. I was here and I didn’t support Freedom to Farm even after hearing the arguments. It just didn’t work. Prices fell and there was no safety net in place. We ended up spending a huge amount of money to bail everyone out.

“One thing I know about farmers: if prices are good, they’ll overproduce. I have no doubt that if we continue to have $4 corn, at some point we’ll overproduce corn. That’s the history of farming…

“We need to have a safety net in place. The committee is trying to maintain that.”

On funding renewable energy…

“The idea has always been to use the HR6 money. We’ve been getting generally bad news from CBO. But in leadership meetings yesterday, it was reported that CBO has given HR6 a higher score. That’s the first good news we’ve had in a while.

“The indications are that they expect to provide offsets from HR6 for what I’ve put together on the energy title in the bill. The only question is how the timing works and comes together.

“(Speaker Nancy Pelosi) and I will meet this afternoon … I’ve told her, and she understands, that the sooner we get resolution on any of these things, the easier the committee’s job and the happier people will be.

“I think the energy thing will work out.

“The Senate is moving on this. There’s a possibility that they may take the work we’ve done and put it into an overall energy package and move it through separate from the farm bill. I don’t have a problem with that as long as pay-go is met, the language is in our control and the jurisdiction stays in our title and statute. If they want to package it with everything else, fine.”

But it’s all contingent on funding coming from HR6?

“Yes, that’s been the plan from the start. I think it’s clear the Senate will do something similar.

“Eighty to 90 percent of the public wants us to do this.”

On proposals for government-backed grain reserves…

“That’s been out there and comes from a number of sources. Some of the meat industry people tell me of concerns about lowest stocks-to-use ratios in a while and whether we need some kind of reserve not only for ethanol but feed.

“We’ve been working with the Republicans and I think this is a non-starter with them. There haven’t been any really serious discussions about it.”


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