House Ag Committee releases farm bill draft

By Sarah Gonzalez

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 5, 2012- The House Agriculture Committee released its Farm Bill legislation today, the Federal Agriculture Reform and Risk Management Act (FARRM), to be marked up in the full committee on July 11. The measure is designed to save about $35 billion over the next 10 years, with about $16 billion coming from the Supplemental Nutrition Assistance Program (SNAP), about $14 billion from the commodity title and about $6 billion from conservation programs.
About 80% of the farm bill baseline is devoted to funding for SNAP and other nutrition programs.

“This bill is an investment in production agriculture and rural America,” said Chairman Frank D. Lucas, R-Okla. “Those of us in the agriculture community are quick to point out that our producers provide us with the safest, most abundant, most affordable food and fiber supply in the history of the world. We say it because it's true. This legislation is a commitment to maintaining that tradition.”

Keeping with Lucas's pledge to draft a bill fair for all commodities and all regions, FARRM takes a distinct philosophical departure from the Senate-passed version of the farm bill in the commodity title, reflecting the chairman's belief that, in addition to the public/private crop insurance partnership, there should be a strong price-based program delivered by the Farm Service Agency. Both the House draft and the Senate-passed version would eliminate direct payments. However, the draft released today provides two coverage options under the Commodity Title. One, called Price Loss Coverage (PLC), is designed to address deep, multiple-year price declines. The other, Revenue Loss Coverage (RLC), addresses revenue losses and is triggered after the producer experiences at least a 15 percent loss and is based on the county level. The Senate version provided both a county and farm level, with different payment levels.

Under the House Ag Committee's version, both price and revenue will pay on 85% of planted acres up to total base, but cannot exceed the total base. 

Producers would make a one-time choice up front for the life of the five-year bill on a crop by crop and farm by farm basis, so they can select different options for different crops and farms.

According to Agriculture Committee aides, the price coverage option works similar to the counter-cyclical program, and is based on a five-month national average market price. Producers also have the option to update their yield, either the maximum of their current counter-cyclical yields or 90 percent of the five-year average yield from 2008-2012. This change will help producers who have invested in biotechnology and seed varieties that have experienced yield gains which are not currently reflected in their yield calculations.

There is also a supplemental coverage option (SCO) in the crop insurance title structured like the Senate option, but available only for growers selecting the price loss coverage option. The House Ag Committee version also includes a version of the Stacked Income Protection Plan (STAX) that would be more favorable for cotton growers than the Senate version.

 

The loss threshold in the Senate's revenue loss plan, or Agriculture Risk Coverage (ARC) is set at 89%, but the House Agriculture Committee set it at 85% in the RLC- a level which leaders view as more politically defensible than the Senate version. According to committee aides, the calculations are based on the same model as the Senate's, but a producer needs to have an at least 15% loss to trigger the payment. Once it triggers, it will provide more substantial support, according to the committee. 

The House bill gives a 70% price plug to all commodities, while the Senate version gave a yield plug to only rice and peanuts. The following list includes reference prices included in the House bill. Most are similar to those proposed last fall to the deficit-reduction "Super" Committee. However, the barley price is higher than in 2008, because the price is now based on malt barley instead of feed barley to reflect today's market. 

Corn, $3.70/bu.

Soybeans, $8.40/bu

Wheat, $5.50/nu

Rice, $14.00/cwt.

Peanuts, $535/ton

Sorghum, $3.95/bu/

Barley, $4.95/nu.

Oats, $2.40/bu

Other Oilseeds, $20.15/cwt.

Dry peas, $11.00 cwt

Lentils, $19.97.cwt.

Raw chick peas, $19.04

Large chick peas, $21.54

 

Here are few other provisions.
The House bill sets an Adjusted Gross income (AGI) limit of $950,000, rather than the Senate level of $750,000.

Commodity program payment limits are set at $125,000 per person, with one limit per eligible spouse, plus separate limits for peanuts.

 

The crop insurance program is increased by about $9 billion over 10 years, while Title I is reduced by $23.6 billion, for a net savings of $14 billion.

The conservation title is similar to the Senate's, and consolidates 23 programs into 13. 

 

FARRM replaces the current dairy programs with a new, voluntary risk management safety net for dairy producers, modeled after a proposal by the National Milk Producers Federation.  Dairy producers will have the option to sign up for the basic margin program, helping them to better manage risk when milk prices and feed costs converge. Producers that sign up for the margin program would then be subject to supply management controls, wherein proceeds of milk sales normally received by the producer would be reduced for the production which exceeds an applicable percentage of their designated base. Funds collected by this program will be used by USDA to purchase surplus dairy products for donations to food banks and other programs.


The House bill does include H.R. 872, the Reducing Regulatory Burdens Act of 2011, a version of which failed to be incorporated in the Senate bill. The regulatory bill initially passed the House last year and amends the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Clean Water Act (CWA) to prohibit the Environmental Protection Agency (EPA) from requiring a permit under the CWA for a discharge of a pesticide from a point source into navigable waters.

“Congress needs to complete work on the 2012 Farm Bill before the current bill expires, otherwise we jeopardize one of the economic bright spots of our nation's fragile economy,” said Ranking Member Collin Peterson, D-Minn. “The legislation released today brings us yet another step closer to achieving this goal and I am pleased to have worked with the Chairman in this effort. We have a commodity title in place that will work for all parts of the country as well as continued support for the sugar program and my Dairy Security Act.

 

“There will be challenges ahead, but we will pass the bill out of Committee next week and, if the House leadership gets this right and brings the bill to the floor, we will ultimately finish the bill in September,” Peterson concluded. For a summary of the bill from the House Agriculture Committee, click:

 

 
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