When you anticipate a rough ride or a sudden jolt you tend to buckle your seat belt. And there may be many farmers who are buckling their seat belt in preparation for a slew of legislation that will have a major impact on their profitability, as well as a potential impact on the way they farm. It is all part of the trio of legislation that will soon see the light of day, as well as lights on the voting panels in the US House and Senate Chambers. Some may think it is Thanksgiving and Christmas wrapped in one, and other may look back a few weeks and consider a bad Halloween trick. Buckle your seat belt for the latest crop of farm policy, a la Washington.
There are three pieces of legislation that will guide the future of agriculture in the near, intermediate, and long term.
In the near term is the Ag Appropriations bill for Fiscal year 2012. Both the House and Senate had their separate versions of the annual funding bill, so the final piece had to be approved by a conference committee of the two, and that compromise will be voted on prior to Friday when the current funding agreement for USDA and other agencies expires. The Conference Committee voted 38 to1 in favor, which indicates strong bi-partisan support for the $136.6 billion spending plan. That is $4.6 billion less than the White House request.
The spending plan is House Report 112-284 and is expected to be approved. One of the lightning rod issues in the 2012 Ag Appropriations bill is the restriction on further spending to revise the GIPSA (Grain Inspection and Packers and Stockyards Administration) rules on governmental involvement in the livestock markets, and stops implementation of a year-long effort to implement new rules defining competitive injury between producers and packers. While Farm Bureau and Farmers Union criticized the prohibition, other organizations favored the legislation. Chairman Frank Lucas of the House Ag Committee said, “While this rule is intended to promote transparent and efficient markets, I’ve heard testimony from many industry leaders who argue that this rule will hurt the very producers it is purported to help.” The House language prevailed, since the Senate did not address the issue.
In the intermediate term is the next Farm Bill, which is surprisingly about 10 months early, and surprisingly has been written by just four lawmakers, who are the Chairs and the Ranking Members of the House and Senate Ag Committees. Following 15 House hearings and 8 Senate hearings on the Farm Bill, the leadership took matters into their own hands and thought they could hammer out a new five year Farm Bill in a few hours. Several weeks later, they are nearing completion and it may be released to their respective parties this week for a vote.
The yeoman effort was designed to take the offensive and create a Farm Bill and a ten year funding baseline before the Joint Committee on Deficit Reduction gave them a budget they could not accept. But the leaks from the meeting room have indicated a Farm Bill that is designed to make geographical interests happy, instead of a uniform national one-size-fits-all farm policy. Among the provisions ready for announcement:
1) No more direct payments that were designed to appease the World Trade Organization, which means US farm policy may be found to be trade distorting.
2) A farm program for corn, beans, and wheat that features “shallow loss” protection which crop insurance would not cover.
3) A different farm program for cotton, rice, and peanuts that has high target prices which may trigger trade complaints because it may distort planting decisions.
In the long term is the potential action by the Select Joint Committee on Deficit Reduction, which has to have a plan announced by November 23 and voted on by Congress by December 23, or automatic budget cuts would be implemented. The so-called Super Committee met behind closed doors with little coming out other than word of little progress being made. If the committee does not meet its minimum target of cutting $1.2 trillion from the 10 year budget, automatic cuts will be applied to all parts of government other than Social Security, Medicaid, civil and military employee pay and veterans’ benefits. The USDA budget is not exempt.
Remember that the Ag Committee leadership offered to cut $26 billion over 10 years from the budget, and has worked with that goal in mind. The Super Committee did not publicly accept the offer. One of the latest plans to leak out is an $800 billion plan for budget cutting by the current deadline with the promise there would be a $400 billion plan to raise tax revenue next year to meet the $1.2 trillion target. Agriculture would likely be in both of those initiatives.
Agricultural policy is being written this week in Washington in three significant ways. In the short term the annual spending plan will be approved, of which the most controversial element is a mandate against promulgation of rules affecting the meat packing industry. In the intermediate term is the release of a new Farm Bill that would not be implemented for another 10 months. In the long term is a 10 year budget cutting plan that would implement automatic cuts across the USDA budget if more selective trimming is not made or the Congress did not accept the offer by Ag Committee leaders to cut $26 billion over 10 years.