Farm Bill 200_ Update

Farm Business Management Update, April 2008 - May 2008

Jim Pease (peasej@vt.edu), Extension Economist, Farm Management, Agricultural & Applied Economics, Virginia Tech

I left the year of the new Farm Bill blank, because during this strangest of all Farm Bill dramas, we can’t be sure what year will be used, nor even what year the next Farm Bill will be signed. As of this newsletter date, no clear resolution is in sight.

Let’s review what has happened so far in Farm Bill 2007 development:

• January 2007: USDA presents the Administration proposals for the new Farm Bill after holding listening sessions throughout the county. It is very unusual for the presiding Administration to jump out ahead of the Congress in presenting proposals, particularly the detailed proposals unveiled by USDA.
• July 2007: After months during which it seemed that neither side of Congress was interested in discussing and developing a new Farm Bill, the House Agriculture Committee presented a Bill that was accepted on the floor and passed by 231-191. The Agriculture Chair (Peterson, Dem MN) and the minority ranking member (Goodlatte, Rep VA) were united in supporting the new bill.
• December 2007: After the end date of the 2002 Farm Bill on September 30, 2007, the Senate seemed to make no progress at all on developing legislation, with the Agriculture Chair (Harkin Dem IA) on a very different track from his committee members, and even from his party compatriot heading the crucial Senate Finance Committee. Nevertheless, a bill was finally sent to the Senate floor, and was passed 79-14 on December 14. Fears of reverting to permanent legislation were eased by extending the expiration of the 2002 Farm Bill until March.
• December 2007-present: Did I mention that President Bush repeatedly stated that he would veto both the House and Senate bills? It seems as if the President was impressed by the commodity and other payments reported by the Environmental Working Group (www.ewf.org), and he took a stand for lower payment limits in the Farm Bill commodity programs. He also objected to the “increased taxes” used to finance the bills, and it is hard to argue that the budgeting methods used to offset baseline budget increases are not stretching the Democrats “pay-go” principle at least to its limits.
• In February and March, the House Ag Committee has been engaged in negotiations with the White House seeking to reach a compromise on their bill. The mid-March deadline for Farm Bill passage has come and gone with no end to the process in sight. The new “deadline” of April 18 approaches, with sparring between the President, the House and Senate committee leadership, and the respective Finance Committee leadership over the general outline of plans that fit within a generally expected $10 billion limit over the budget baseline. You wouldn’t think that $10 billion would cause such a conflict among political colleagues, but 2008 is an election year, and there are points to be made by making the other side look bad.

The latest offerings involve a proposal by the Democratic Chairs of the Senate Finance and House Agriculture committees for cuts in research ($1.25 billion), the House-proposed Average Crop Revenue Program ($0.4 billion), and crop insurance ($3 billon), while food and nutrition programs would be increased by $10 billion. It is unclear whether such a proposal would be acceptable either to the White House or to Congressional Republicans.

There are three major options that could occur between now and the April 18 deadline: passage of a new 2008-2017 bill, an extension of the 2002 Farm Bill to 2017, and a one – or two-year extension of the 2002 program. At this point, anything could happen, but I think the odds would lean towards a short term extension, making future legislation the problem of the next Congress and next President. Other observers have suggested that an agreement on a new Farm Bill is closer than it looks. Watch carefully for the House naming its representatives, because anew bill will then be only a week away.

If you’re frustrated reading about this, you’re not alone. One agricultural policy specialist remarked recently, “that this has certainly been a unique farm bill process, starting with the absence of proposed bills in 2006, the lack of any clear objectives in 2007, the bills proffered by non-agriculture committees, the reluctance of the agriculture committees to work with the White House (and their own committee members) during bill development, the absence of a conference committee, and now the casting aside of major elements of the bills in order to reach some kind of agreement. If there is an agreement and a new Farm Bill this year, we can be virtually sure that it will not move in the direction of prudent agricultural policy.”

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