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Can New Ideas Revive Farm Bill?

DC Dialogue

Midwest commodity groups seek farm bill middle ground while potential dairy alternative scored better than controversial House and Senate options.

Published on: November 29, 2013

This Thanksgiving came without anything for farm bill negotiators to be very thankful for with another missed "deadline" of sorts to have more substantial progress made on the sticky issues of the commodity title, dairy program and how to tackle nutrition spending.

The top four farm bill principals spoke via conference call Monday evening, but reported no new progress. A spokeswoman just confirmed the "process is ongoing."

Frustrated by inaction, the National Corn Growers Association, American Soybean Association, and U.S. Canola Association wrote in a joint letter Nov. 26 that they hope conferees can find common ground that can be supported by producers of all crops in all regions of the country.

The previous week the three offered a compromise that would use a rolling average of recent-year plantings to determine base acres under both revenue and price-based programs. Their biggest concern is tying current-year planted acres to payments which in the 80s caused major planting distortions and caused market prices to plummet.

“If such a resolution is not possible, we would support a two-year extension of the 2008 farm bill including, if necessary, a reduction in direct payments to achieve savings equivalent to the bills passed by both the Senate and the House. While difficult, this approach would leave sufficient funding in the commodities title to write a new farm program at such time as consensus can be achieved.”

An extension won't be easy with opposition from Senate Agriculture Committee chairwoman Debbie Stabenow, D-Mich., and Majority Leader Sen. Harry Reid, D-Nev. It will be even more difficult to convince them to not totally do away with direct payments and allow just a reduction in order to use in later years.

In a joint statement issued Nov. 27, the USA Rice Federation, along with the National Cotton Council and Southern Peanut Farmers Federation, repeated our support for completion of a new farm bill and the importance of long-term policy to provide certainty to the agriculture sector.  

"Certainly every organization has the right to advocate for its position," the statement read, "but establishing intractable demands is a recipe for failure and a tactic that many believe has led to gridlock on key legislation including the budget, appropriations and immigration."

The statement concluded saying, "[t]he time for decisions is now - not next year or the year after that....We believe the current leaders of the Agriculture Committees can meet the challenge of reaching compromise on long term policy and we urge them to ignore any calls to abandon their effort."

The dairy camps remain deeply divided over whether to use the Senate's Dairy Security Act which offers an insurance program but also a stabilization program that kicks in when milk supplies increase, or the House's version which eliminated the stabilization component. The House farm bill’s dairy title is projected to cost $418 million above the baseline, according to a Congressional Research Service report released in October, while the Senate dairy program costs $302 million more over the next ten years.

But the two might not be the only options on the table. Ohio State University dairy economist and extension Cameron Thraen and his doctoral student John Newton have formulated a proposal for a new dairy policy alternative after hearing from farmers that they may not want to depart from the current milk program.

After publishing some of the suggested concepts, Thraen said Hill staff reached out to him and have developed legislative language of how it might work.

“Offering farmers a choice among an expanded ‘Milk Income Loss Contract’ program and a limited ‘Income Over Feed Cost’ margin insurance program would double the support of existing programs yet could according to their analysis cost 40 to 60% less than the current stand-alone margin insurance program,” Thraen said.

The Congressional Budget Office also favorably scored the compromise option. "Adding the insurance would provide a much more effective safety net at not much of an increase in projected cost," he stated.

Thraen "politically guessed" that some kind of agreement can be reached the week following Thanksgiving. "I think there's enough moderation in the middle that they can come to a compromise. I think they don't want to do an extension."