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Long and winding farm bill road may have a few more twists and turns

If farmers think the debate over the current farm bill has been interminable, they should walk in the shoes of Rep. Frank Lucas, R-Okla. Lucas, the chairman of the House Agriculture Committee, has been trying to get a farm bill passed for more than three years.

The same could be true for commodity group leaders like John Owen, chairman of the USA Rice Producers Group and chair of the USA Rice Federation Government Affairs Committee. Owen, who farms near Alto in northeast Louisiana, talked about the farm bill process at the USA Rice Outlook Conference in St. Louis Dec. 5.

“Mr. Lucas doesn’t have one grain of rice in his entire state,” said Owen. “But he has fought for three or four years to see that we were represented fairly at the table. Mr. Lucas understands the importance of diversity in American agriculture.”

Owen said Rep. Mike Conway, R-Texas, chairman of the House Agriculture General Farm Commodities Subcommittee, and Rep. Colin Peterson, ranking member on the House Ag Committee “have been right there with him the whole way.”

On the Senate side, Owen singled out Mississippi’s Thad Cochran for his efforts to make sure rice farmers’ interests were represented. “Without Mr. Cochran, who has been our champion for over 25 years, our story would not be told nearly as well in the Senate.

'Well-heeled enemies'

“I don’t know where we got them, but rice farmers and really all farmers and ranchers in this country have sure got our share of high-powered, well-heeled enemies. But we also have some pretty great friends, and I know many of you in this room have worked hard to cultivate those friendships over the years, and it is vitally important that we keep building on your accomplishments.”

(Owen didn’t mention any names, but a number of conservative organizations including the Club for Growth, the American Enterprise Institute and the Heritage Foundation have worked hard to persuade Congress to eliminate farm programs in recent months.)

“Our detractors are not going away,” said Owen. “But our purpose is as great as it has even been and our needs for a strong farm safety net have never been greater.”

In his remarks, Owen said Americans have much to be thankful for, including what painter Norman Rockwell labeled the Four Freedoms. “We in agriculture can be proud of the role we play in providing Americans with one of Mr. Rockwell’s Freedoms, Freedom from Want.

“We feed and clothe Americans in a manner that is unrivaled in any country in human history. Our contributions to the economy and the jobs we create are considerable. But equally important is the role we play in keeping the country closer to its roots, connecting past, present and future generations through a time-honored tradition.”

Fought good fight

Throughout the ups and downs of the farm bill fight, Owen said he has been comforted by his belief the fight is worth it.

“In this debate, have we as an industry not fought good fight and have we not fought way above our weight? We have stood and faced some really powerful folks inside and outside the farm community, on and off Capitol Hill, and we as the rice industry are still standing.”

Owen said he believed the conference committee that is now trying to reconcile the House and Senate versions of the farm bill will act later this month and that Congress will vote on a new farm bill. (His words may prove to be prophetic because Rep. Lucas has said he would file for an extension of the current law in the hope a new farm bill will be passed in January.)

The House is scheduled to break for the holidays on Dec 13, and the Senate is scheduled to break on Dec. 20.

While the House had said it will bring an extension of the current bill to a vote, the Senate has said it would not pass an extension, particularly one that would allow USDA to make direct payments again in 2014, which could be problematic for rice farmers.

“The longer that we go without a farm bill, the more difficult it is going to be for producers to make plans for 2014,” said LSU AgCenter economist Mike Salassi. “The uncertainty about what farm policy may look like will make this planning more difficult. And the likely elimination of direct payments will cause difficulty for some farmers to acquire financing.”

Meanwhile, several large issues will complicate the completion of any new farm legislation, observers say.

The House proposal calls for reducing funding for the nutrition program by $40 billion over a 10-year period while the Senate proposal calls for a $4 billion reduction. Some members also want to alter the payment-limit provisions that were included in the 2008 farm bill – both in the amount that an entity can receive as well as how entities are defined.

'Actively engaged'

In previous legislation, a person had to be “actively engaged” in an operation to be eligible to qualify for a payment. Proposed new wording redefines “actively engaged,” which could limit who within an agricultural operation would be eligible for a separate payment.

Under these proposed rules, the number of family members in a farming operation who receive payments could be drastically reduced. “The end result is that if these new regulations make it into the final legislation, it could mean fewer total payments for an operation. It also could affect how agricultural operations are structured and organized,” Salassi noted.

One area of debate revolves around how base acres are used in calculating payments.

“It appears that the latest movement has been to favor using historic base acres,” said Kurt Guidry, LSU AgCenter economist. “In many operations, having to use the historic base acres would mean a lower revenue guarantee and, therefore, lower potential government payment levels.”

Removing direct payments could lead to some adjustments in rents paid for agricultural land and in the value of the land itself, Salassi said. In instances where direct payments are significant, eliminating those payments is going to have to eventually be reflected in the rents and land values.

“How much and how long it takes for these adjustments to occur will likely depend on the programs that replace direct payments,” he said.

For some crops, eliminating direct payments is going to make projecting positive cash flow more difficult, Salassi said. “This may cause some adjustments to the crop mix and force some operations to diversify their production.”

In the end, it appears farm bill negotiations are moving toward programs that offer minimal market distortion, the economists said.

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