USA - Can we develop a new farm bill without regional divisions?
Philosopher George Santayana once said that, “Those who cannot remember the past are condemned to repeat it.”
Even though the last farm bill was signed by President Obama just three years ago, it’s amazing how much has been forgotten. In part, that may be because it was such a tortured process.
One aspect of the process that was not completely forgotten – but also not widely reported – was how some of the policy discussions easily split along regional “fault” lines. It’s the essence of part three of our new series, “The seven things you should know before you write the next farm bill.”
Farm bill veterans know that some of the biggest fights in farm policy usually fall along regional rather than party lines. Depending on who is in the House and Senate committee seats, farm bill strategies need to vary in order to pass a bill out of committee that can meld those different interests.
During an interview with Agri-Pulse, Sen. Roberts – who previously served as Chairman of the House Agriculture Committee and now chairs the Senate Agriculture Committee – recalled advice that he got from former House Agriculture Committee Chairman Kika de la Garza, D-Texas, when he first took over the helm of the House Agriculture Committee in 1995.
“He said, ‘You aren’t going to have any problems with our side. I’ll take care of our side. You know where we are coming from and you can deal with that. Where you are going to have problems is on your side’”
“And it’s true because a lot of your friends expect you to do things for them that you cannot do or you shouldn’t do.”
In many ways, regional divisions are expected because farmers across the U.S. grow a lot of different crops and raise livestock under a variety of different conditions.
The production risks involved in producing a bountiful crop, milking healthy cows, birthing cattle, pigs and lambs, are almost too numerous to count. On any given day, a producer might wonder: Will it rain? Will it rain too much? Will my animals be killed in a freak blizzard? Will my chicken flock get struck by disease and have to be destroyed? Will my vegetables be hit by an early frost?
Depending on how the production varies – both in the U.S. and around the world – there is also the price risk. Prices can respond quickly and dramatically – up or down – if you are a corn and soybean farmer and a major player in terms of global production. For example, U.S. producers benefit when South American corn and soybean farmers have a drought – falling short of market expectations – and vice versa.
But for cotton, where the U.S. had such a small share of the market, a bad U.S. crop won’t be much of a blip in global trading.
There are also a multitude of financial risks: What if market prices skyrocket but a farmer doesn’t have any crops or livestock to sell? What if interest rates shoot up and he or she can no longer repay loans on assets or operating loans? What if other countries manipulate their currencies in a way that make it more difficult to export U.S. agricultural products?
And finally, one can’t rule out the political risks that have battered farm incomes around the globe over the years. What if the president declares a grain embargo, as President Jimmy Carter did in 1980 to respond to the Soviet Union’s invasion of Afghanistan? Grain prices plummeted as a result. Almost two decades later, the Russian government shut off exports to the world in response to drought and wildfires at home, sending commodity prices soaring.
Essence of the farm safety net
Since the Great Depression in the 1930’s, the federal government has often responded to disasters on the farm in an attempt to better manage risk, but some of the responses have worked better than others. In modern-day times, the Congressional Research Service noted that there is a collection of programs that make up the “farm safety net. These include:
1. Farm commodity price and income support programs under Title I.
2. Federal crop insurance under the Federal Crop Insurance Act of 1980
3. Disaster assistance programs under Title XII of the 2008 farm bill.
By the end of the 2008 farm bill, it was widely accepted that “ad hoc” disaster programs were not effective. Often times, Congress lagged for years in making payments and farmers sometimes went out of business during the wait. The complicated Supplemental Revenue Assistance Payments Program (SURE) was not viewed as very helpful or popular either.
Farm bills are usually more evolutionary than revolutionary, but the budgetary environment in 2011 was ripe for reform. With lawmakers focused on deficit reduction, direct payments – made whether or not farmers planted a crop – were a big reform target for many Republicans and Democrats. And the super-committee process later in the year made it clear that political support for direct payments was waning.
But if direct payments were going to be cut, what type of farm program would replace them?
Corn and soybean growers rallied behind a shallow-loss risk management program that eventually became known as the Agriculture Risk Coverage (ARC) program. Rice and peanut growers were more concerned about longer-term price risk and advocated for a program that paid when prices fell below a certain “reference price” level.
The first version of the Senate Ag Committee’s farm bill, with Sen. Debbie Stabenow at the helm and Sen. Roberts serving as ranking member, delivered a shallow-loss revenue protection program favored by corn and soybean growers.
House Agriculture Committee Chairman Frank Lucas, R-Okla., made clear that the yet-unwritten House bill will include a price-based alternative to meet the concerns of Southern growers. The House version would indeed include a “Price Loss Coverage,” plan based on new “reference” prices. But it didn’t happen without some rather testy exchanges with those who opposed setting commodity specific price support “reference” prices.
“The behind closed door debates between Midwestern and Southern lobbyists and staff were philosophical, regional, and often very personal,” recalls a source who was involved in the discussions. And they often involved other aspects of the commodity title like payment limitations and whether payments should be calculated on planted versus base acres.
“On price risk, it goes to the heart of the fixed price vs. rolling average benchmark that underlies the Price Loss Coverage versus Agricultural Risk Coverage fight. Do farmers need a floor price protection that does not change or one that adjusts and expects them to also adjust management when prices are sustained at relatively low levels,” the source explained.
In some respects, the debate also reflected the future outlook for commodity prices. Corn, soybeans and wheat were hitting record highs during most of the time period when the farm bill was being written.
But Chairman Lucas, who farms in northwestern Oklahoma, reminded his colleagues as he opened up the House Agriculture Committee markup in 2012 that “I know how risky it is to be a farmer….I know at a moment’s notice a dream crop can turn into a disaster.” And as he had frequently reminded his fellow lawmakers, “A safety net is written with bad times in mind. These programs should not guarantee that the good times are the best but, rather, that the bad times are manageable.”
Ultimately, it took an almost Herculean effort over three years to finally pass a bill in the House –albeit without the nutrition title – and then conference with the Senate in a way that could gain final approval in both chambers and be signed by President Obama on Feb. 7, 2014.
Regional fights weren’t the only reason for delay, but farm bill veterans say the lack of unity among commodity groups didn’t help improve an already complicated and controversial farm bill debate, sources said.
So as farmers and ranchers look ahead to the 2018 farm bill, it’s not surprising that farm organizations leaders have already been meeting for months, trying to find areas of agreement on the commodity title and other provisions.
“It’s not likely that regional divisions will cease to exist, but perhaps they can be minimized,” noted one of the leaders involved in those discussions.
Failure to work together could mean that risk management tools like crop insurance – where there is already strong support from across the country – could also be targeted.
“I think our biggest challenge is going to be, be unified when we go forward with a farm bill,” emphasized American Farm Bureau President Zippy Duvall during his organization’s annual meeting earlier this year. “We’ve got to find common ground in that to make sure that everybody has that safety net that covers them.”
Source - http://www.farmforum.net/
