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Lobbyist: Be Patient on Farm Bill

Lobbyist: Be Patient on Farm Bill

Washington insiders say budget 'mini cliffs' must be managed first

Forget all those urgent stories you've read about a new farm bill, quoting USDA secretary Tom Vilsack or Senate ag committee chair Debbie Stabenow. The Farm Bill may not get acted upon until after May, and more likely between September and December – if at all, says a leading farm policy voice.

Mary Kay Thatcher, senior director of congressional relations with American Farm Bureau Federation, says there's only a 25% chance of getting a farm bill before the end of the year. "It may even expire, but the last time it did no one really noticed other than dairy," she told a group of executives at the annual meeting of the Crop Insurance and Reinsurance Bureau.

Washington insiders say budget 'mini cliffs' must be managed first

Thatcher rattled off an impressive list of 'mini' fiscal cliffs congress must wrestle with before the farm bill gets its time in the sun.

March 1 – Sequestration - cut $85 billion in 6 months. The best news for ag would be a deal that exempts the farm bill as long as leaders met a set amount of cuts, in exchange for a deadline to pass a bill. The senate has passed a farm bill, but the house has refused to take it up.

Mar 15 – CBO baseline that "counts" she says.

Mar 27 – Continuing Resolution expires

April 15 – Budget due from Congress – resolution and reconciliation process. "What if the republicans come back by april 15 with a plan to balance the budget by 10 years instead of 40 years? That will be a very painful number," she says.

May 19 – Debt Ceiling reached again. She expects Congress to enact some kind of extraordinary measure to go into place until August.

There's little sense of urgency to finish the farm bill, says Thatcher. "Farmers are apathetic right now, as are congressional leaders. (House speaker John) Boehner doesn't care, he's worried about the budget. Obama's focusing on gun control, immigration, climate change – the farm bill is not a hot item. If farmers don't push their congressmen, why should they bother?"

Crop insurance bull's-eye

Thatcher and fellow speaker Jim Weisemeyer, senior vice president for Informa Economics, both agreed that political polarization and budget pressures could cause trouble for crop insurance in coming years.

"I have never seen such a discombobulated process in my 35 years as with this farm bill," says Weisemeyer. There's a lot of commodity groups and farm state lawmakers who are fighting behind the scenes. I'm afraid it's going to come back to nip crop insurance now and in the future."

Thatcher agrees. "If someone asks me today what would I least like to be in 2014, it's crop insurance," she says. "There's way too much light shining on the crop insurance industry."

One reason is farmers made a lot of money last year, especially with crop insurance payments. In fact, crop insurance will make up about 11% of total U.S. net farm income in 2012. Now that direct payments appear dead, crop insurance is the main focus of any government risk management safety net. So it will get attention.

"If you ask, why do you rob a bank, it's because that's where the money is," says Thatcher. "If I'm in congress, where do I go to cut? Crop insurance, because that's where the money is. Specifically they will be looking at cutting premium subsidies, but underwriting gains aren't necessarily off the table."

The good news is, congress for the most part understands that income support is out, but risk management is in. "Fortunately it's a good story to tell urban lawmakers because you can explain that farmers have skin in the game with crop insurance," she says. "But, we will also see more payment limits and means testing, and eventually it will catch up on crop insurance."

If means testing comes to crop insurance, it means the program is now a target for budget cutters, adds Weisemeyer.

"It's low hanging fruit," he says. "Sooner or later when you ask for too much, it comes back to haunt you."

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