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Keith Good Farm Policy: House Budget Puts Snag in Farm Bill Work

Mike Christensen
By Mike Christensen March 30, 2012

Farm Bill Issues

Naftali Bendavid and Damian Paletta reported in today’s Wall Street Journal that, “The House approved a Republican budget Thursday after a heated two-day debate that underlined the nation’s political divide and forecast a battle at year’s end over an array of scheduled spending cuts and tax increases.”

The article noted that, “The plan almost certainly won’t become law, given opposition by President Barack Obama and Senate Democrats, but both parties say it will help frame the campaign for the White House and control of Congress. Each side is counting on the November election to give them an upper hand in the debate.

“The vote was 228-191, with all Democrats and 10 Republicans opposing the GOP budget.”

Jonathan Weisman reported in today’s New York Times that, “Under the Ryan plan, spending would be cut $5.3 trillion below President Obama’s budget through 2022. Medicare would be reduced by $205 billion. Medicaid and other health programs would be cut $770 billion. Other entitlement programs, including welfare, food stamps, agriculture subsidies and transportation, would be cut by nearly $2 trillion.”

The New York Times editorial board indicated today that, “The [Ryan] budget would cut 17 percent of the SNAP budget, or $133.5 billion over a decade. … For a struggling family of four, that would mean a loss of $90 worth of food a month.

“Already, most people who get SNAP benefits use them up in the first two weeks of a month, and many turn to food banks by month’s end. Cutting benefits so sharply would lead to a significant increase in hunger, particularly among children, which would quickly create dangerous ripples through the health and education systems.”

Also on the Ryan budget, David Rogers reported yesterday at Politico that, “And the first casualty could be the House Agriculture Committee, trying to write a bipartisan five-year farm bill and now diverted into what promises to be a divisive fight over food stamp cuts.”

news release from the House Agriculture Committee Democrats yesterday stated that, “The budget cuts $179.4 billion from Agriculture Committee programs over ten years. Additionally, the budget includes reconciliation instructions which require the Committee to provide legislation cutting agriculture spending by $33.2 billion by April 27. [House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn.] voted against the resolution.

“‘Passing a farm bill this year was already going to be difficult but the Republican Budget approved by the House today lowers the odds significantly. … [I] also don’t see how we could extend the current bill without making some of the cuts called for by the Majority.”

Meanwhile, DTN Ag Policy Editor Chris Clayton reported yesterday that, “DTN Political Correspondent Jerry Hagstrom reported in the Hagstrom Report that [Sen. Ag. Comm. Chairwoman Debbie] Stabenow, D-Mich., and Sen. Pat Roberts, R-Kan., ranking member of the Senate Ag Committee, held a meeting Wednesday to lay out plans to hold a mark-up on a farm bill in committee by the end of April.

“The Senate could move a bill operating under the premise of $23 billion in budget cuts over 10 years while the House may face having to cut $33 billion because of the budget-reconciliation process being pushed by House leaders.”

In a separate DTN article yesterday, Chris Clayton reported that, “A day after members of the Senate Agriculture Committee met to make plans for marking up a farm bill by the end of April, members of the committee offered their own proposals for commodity and energy programs that should be in the legislation.

“Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., told DTN on Thursday the committee members want to have a bill passed out of committee by the end of April. The House and Senate were wrapping up business on Thursday for their Easter break that will extend until April 16.”

The article indicated that, “Sens. Kent Conrad, D-N.D.; Max Baucus, D-Mont.; and John Hoeven, R-N.D., introduced a shallow-loss commodity program on Thursday called the ‘Revenue Loss Assistance and Crop Insurance Enhancement Act of 2012.’ Conrad said the bill ensures a strong safety new while saving $16.4 billion over 10 years.

“‘It’s a shallow loss, fits hand-in-glove with crop insurance,’ Conrad said in an interview. ‘It’s very well designed to help deal with the risk of downturn in price or production. It is a revenue approach but it is based on a farm determination, not a crop-reporting designation, as is ACRE (the Average Crop Revenue Election program).’

“The big difference between this program and others that have been proposed is it is a farm-loss program rather than a crop-reporting district or statewide program. Conrad noted that in North Dakota there are only nine crop-reporting districts and there is tremendous variation.”


Mr. Clayton stated that, “The $16.4 billion saved over 10 years exceeds the $15 billion in cuts from commodity programs that Stabenow was seeking in savings. Stabenow said she welcomes the proposal.

“‘It’s very similar to what Sen. Roberts and I have been working on,’ she said. ‘Having that out there for folks to be able to respond and have input is very helpful.’”

“Backers for Southern crops have been championing increases in target prices rather than a shallow-loss program. The Conrad-Baucus-Hoeven plan doesn’t include that. Stabenow acknowledged that some difficulties remain in smoothing out the commodity title,” the DTN article said.

news release yesterday from Sen. Conrad explained in part that, “The legislation creates the Revenue Loss Assistance Program (RLAP), an initiative that combines Supplemental Agricultural Disaster Assistance (SURE) and Average Crop Revenue Election (ACRE) into one simpler and more effective program.  RLAP works in conjunction with crop insurance to provide farmers with assistance for losses between 12 and 25 percent of their average historic revenue.  An eligible loss can be due to any combination of decreased yields, declining prices or quality discounts.  RLAP is based on individual farm performance, rather than an area trigger, and assistance is provided on a commodity specific basis.

“RLAP is designed to address two of the primary shortcomings of the federal crop insurance: program deductibles that greatly exceed the operating margins for a crop and the lack of adequate coverage during multi-year price declines.”

Also yesterday, an update posted at the DTN Ag Policy Blog stated that, “Former Agriculture Secretaries Dan Glickman and Ann Veneman wrote a letter to House and Senate leaders on Thursday supporting the push by conservation and environmental groups to attach conservation compliance to crop insurance premium subsidies and any shallow-loss program created in the new farm bill.”

Recall that this issue came up on Wednesday’s AgriTalk radio program when Mike Adams interviewed House Ag Committee Chairman Frank Lucas (R., Okla.).  Chairman Lucas indicated that, “You know, Mike, my perspective has always been that farmers and ranchers are the original, the best conservationists in the world, and that voluntary conservation, providing the resources to enable producers to make the decisions about how to steward their land is the right way to go. If you want to turn a farm bill into nothing but instructions on how farmers and ranchers should farm, how they should do everything, then I guess you can tie strings to every component. But from my perspective, farm bills should be about raising food and providing incentives so that producers can practice sound, solid conservation and other practices, too.”

Also on Wednesday’s AgriTalk program, American Farmland Trust president John Scholl spoke a length with Mike Adams about the potential link between conservation compliance and crop insurance, a replay of this discussion can be heard here (MP3- eight minutes).

news release yesterday from Sen. Pat Roberts (R., Kan.) stated that, “[Sen. Roberts], Ranking Member of the Senate Committee on Agriculture, Nutrition and Forestry and U.S. Senator Debbie Stabenow (D-Mich.) Chairwoman of the Committee, today introduced legislation to establish a foundation to solicit private donations to enhance research for the most pressing challenge facing U.S. agriculture – meeting exploding global demand.”

The release added that, “The bill, The Foundation for Food and Agriculture Research (FFAR), authorizes the establishment of a 501(c) 3, a non-profit organization, and includes provisions outlining the duties and structure of the foundation, including an appointed Board of Directors representing the diverse sectors of agriculture. It also requires annual financial audits and good governance procedures for increased accountability and transparency.  This model serves as a useful tool to foster new public-private partnerships among the agricultural research community, including USDA research agencies, academia, private corporations, and non-profit organizations.”

A related news item from the American Soybean Association (ASA) stated that, “The [ASA] applauds the leadership of Senate Agriculture Committee Ranking Member Pat Roberts (R-Kan.) and Chairwoman Debbie Stabenow (D-Mich.) for their efforts to establish a Foundation for Food and Agriculture Research (FFAR), an organization designed to encourage greater investment in research, public/private research partnerships and other ventures that foster innovation in the industry.”

And on conservation issues, a news release yesterday fro the National Association of Conservation Districts (NACD) stated that, “[NACD] President Gene Schmidt sent letters to Reps. Tim Holden (PA-17) and Bob Goodlatte (VA-6) today in support of their bill, H.R. 4153, the Chesapeake Bay Program Reauthorization and Improvement Act (CBPRIA). H.R. 4153 seeks to improve the health of the Chesapeake Bay through a locally-led approach.”

On a separate Farm Bill issue, a news release yesterday from the National Farmers Union (NFU) stated that, “[NFU] supports the 2012 Farm Bill Energy Title marker bill, introduced today in the Senate by Sen. Tom Harkin, D-Iowa, and co-sponsored by Sens. Al Franken, D-Minn., Amy Klobuchar, D-Minn., and Kent Conrad, D-N.D. The bill would reauthorize and provide mandatory funding for programs such as the Rural Energy for America Program (REAP), Biomass Crop Assistance Program (BCAP), and Biorefinery Assistance Program (BAP).”

Agricultural Economy

The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated in part that, “The corn price, at $6.48 per bushel, is up 20 cents from last month and 95 cents above March 2011 [related graph], The soybean price, at $13.10 per bushel, increased 90 cents from February and is 40 cents higher than March 2011 [related graph]…and… the price of March all wheat, at $7.24 per bushel, is up 14 cents from February but 31 cents below March 2011 [related graph].”

At a Senate Energy and Natural Resources Committee hearing yesterday on gas prices, the issue of market speculation came up.  In particular, Sen. Ron Wyden (D., Ore.) asked the panel of four experts about studies that have alluded to a “speculative premium” in the price of oil.

To listen to an exchange on this issue between Sen. Wyden and the panel (Dr. Howard Gruenspecht, Acting Administrator and Deputy Administrator Energy Information Administration; Dr. Daniel Yergin, Chairman IHS Cambridge Energy Research Associates; Frank Verrastro, Senior Vice President and Director Energy and National Security Program Center for Strategic and International Studies; and Dr. Paul Horsnell, Managing Director and Head of Commodities Research Barclays Capital), just click here (MP3- 3:45).


news release earlier this week from the Senate Environment and Public Works Committee stated that, “Today, Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works, joined Senators Jeff Sessions (R-AL) and Pat Roberts (R-KS), as well as Chairman John Mica (R-FL), Chairman Frank Lucas (OK), and Representative Bob Gibbs (OH) to send a letter to Cass Sunstein Administrator of Office of Information and Regulatory Affairs at the Office of Management and Budget asking that the document, ‘Guidance on Identifying Waters Protected by the Clean Air Act,’ put forth by the Environmental Protection Agency (EPA) and the Army Corps of Engineers not be finalized.  This guidance document seeks to give the federal government control over virtually every body of water in the United States, no matter how small.”

Meanwhile, Aaron Lucchetti and Julie Steinberg reported in today’s Wall Street Journal that, “Congressional investigators are looking into whether a $175 million transfer from an MF Global Holdings Ltd. customer account three days before the firm’s bankruptcy may have run afoul of Securities and Exchange Commission and CME Group Inc. dictates.

“The House Financial Services’ Subcommittee on Oversight and Investigations was told this week by Christine Serwinski, a former MF Global finance official, that she wouldn’t have done the transfer. Ms. Serwinski, who was on vacation when the move happened, cited concern that it may have put the brokerage firm in danger of having too little capital under its own guidelines, and closer to being undercapitalized under Securities and Exchange Commission rules.

“The subcommittee’s chairman, Rep. Randy Neugebauer (R., Texas), also raised questions at Wednesday’s hearing about whether the transfer should have been stopped until the firm could get approval from one of its primary regulators, exchange operator CME.”

And Alan Zibel and Jamila Trindle reported in today’s Wall Street Journal that, “The collapse of securities firm MF Global Holdings Ltd. has driven big investors to make sure their assets are better-protected against a trading partner’s potential failure, a Federal Reserve survey said.

“The central bank on Thursday released the results of its quarterly Senior Credit Officer Opinion Survey, a report introduced in 2010 that looks at credit conditions for big investors in the securities financing and derivatives markets. The report found that the October 2011 collapse of MF Global has sparked increased worries among investors.”

Mike Christensen
By Mike Christensen March 30, 2012