Keep a good grip on the farm bill
By Larry Combest
© Copyright Agri-Pulse Communications, Inc.
“Your life lies in your own hands, Thomas, as it always has.” “Is that so, My Lord? Then I'll keep a good grip on it”. ..The Duke of Norfolk to Sir Thomas More followed by the future Martyr's response.
Telling the truth in Washington is known as the “Kinsley gaffe”, named after the liberal columnist who essentially observed that telling the truth in this town is a gaffe.
Well, gaffe or not, given the incredibly high stakes this week, I am going to tell you how the cow ate cabbage. I do so in hopes that you might roll up your sleeves and put your shoulder into helping achieve a successful outcome.
This week is the make or break week that will decide whether the House and Senate Agriculture Committees determine the amount by which policies under their jurisdictions will be cut and the policy changes to achieve those cuts - or whether members of the Super Committee will make those decisions.
This week is the make or break week that will decide whether we have a 5-year Farm Bill in place by the time the current law expires - or face uncertainty as to when Congress will pass a Farm Bill.
This week is also the make or break week to decide whether we are going to be insulated from sequestration.
The good news is, the life of U.S. farm policy may very well lie in our own hands. And, importantly, in contrast to the case of Saint Thomas More, we are not being coerced to commit heresy in the bargain. What we are being asked is to accept a sound 5-year Farm Bill in exchange for meaningful budget cuts.
If we ourselves let loose our grip on this opportunity to pass a good Farm Bill now, then we may very well not see another opportunity till 2013 - and that would come after enduring a gauntlet of cuts made by the Super Committee or sequestration or both, leaving us to pick up the tattered remains of the policy and budget for the Farm Bill and Federal Crop Insurance. And, note, that if Defense and Medicare are exempted from sequestration between now and January 2013, as some speculate, agriculture's cuts will grow impossibly deeper.
Yet, developments unfolding last week suggest that this may be the Russian Roulette some are playing. By putting impossible ultimatums upon friends on Capitol Hill, some are risking letting slip away the future of the sound U.S. farm policy that still lies within grasp. Perhaps not since William, Fanny, and Tip Dorrit made their way through Europe have I heard of such a display.
The bottom line is, if you believe, as I do, that all of agriculture ought to get behind the House and Senate Agriculture Committees in their bicameral, bipartisan effort to write a strong 5-year Farm Bill right now, now is the time to clearly communicate this message to every group and person that you believe may be seeking to influence this process in one way or another.
The sworn enemies of U.S. farm policy, along with their cash-and-carry-economists, know very well that the Super Committee process is a potential vehicle for passing a sound Farm Bill, provided it yields budget savings, and that is why they have engineered countless stories, editorials, and op-eds urging lawmakers to “Stop the Secret Farm Bill.”
Fortunately, for American agriculture, Congress is not buying it. A recent “Dear Colleague Letter,” written to all 435 House Members calling to “Stop the Secret Farm Bill,” was signed by only 27 House Members and, for the most part, these Members were simply meeting expectations.
Now, having said all of that, I will be the first to admit that this is most obviously a secret farm bill that only a trained, professional set of eyes like mine could detect after nearly 40 years of experience. What tipped me off?
Well, first, a great friend of mine from here in town told me the other day that he can always be relied upon to keep a secret… but it's the people he tells that can't be trusted. And, let's just say that there's been a lot of that going around. Some notable examples of the indiscretion I am talking about:
--I noticed the way the Senate and House Agriculture Committees were holding all of those hearings inside and outside of Washington, the kind that usually lead up to a Farm Bill;
--I noticed the extensive “audit hearings” on all the policies under the jurisdiction of the House Agriculture Committee;
--I noticed everyone under the sun was submitting and publicizing a Farm Bill proposal, with some even proposing more than one;
--I noticed a bunch of lawmakers introducing a flurry of Farm Bill proposals, almost as if they were trying to influence an imminent process.
--In the midst of all this, I also noticed that a whole bunch of articles were (and are) being written about the Farm Bill being written in the Super Committee, so many that when I searched for “Farm Bill” and “Super Committee” in my inbox, my machine told me that it turned up such a large number of results that I best narrow my search.
--And then, there were the kinds of subtle, between-the-line messages popping up all over the newspapers over the past several months that can only be deciphered by a professional like me:
“We are undertaking a monumental shift in federal farm policy - one that saves billions of taxpayer dollars by ending payments to farmers who don't need them,” Stabenow said in an email. “U.S. farm policy should be based on risk management and only help farmers when they are in distress, facing events such as natural disasters or sudden drops in price,” Stabenow said. “Farming is a uniquely high-risk undertaking that is vital to our economic and national security; we cannot afford to have farmers wiped out by a single disaster beyond their control. I am confident that this bipartisan effort, while difficult, will result in a vastly different and far more cost effective way to protect our nation's food supply.”
“We are war-gaming policy options,” Lucas said. “We're trying to look at every possible way to address these things, because if a window of opportunity appears, we need to pull everything together and make it happen. If I could tie down the resources that are available for a farm bill for the next five years, you bet . . . I'm going to jump through the narrowest crack and the tightest window to get it done.”
“The process is certainly unique and unprecedented, and it's very difficult,” Roberts said in an interview. He said that by proposing $23 billion in cuts and drafting the farm bill that makes the reductions, the leaders of the agriculture committees are trying to prevent the deficit panel from making “a meat-ax cut that could be very detrimental.”
“U.S. Rep. Frank Lucas, an Oklahoma Republican who chairs the House Agriculture Committee, has said the cuts would form a framework for a final farm bill and if adopted would “reflect a commitment from the leadership in Congress that ag's done its part for the next five years.”
“Asked what the best potential outcome of this extremely complex situation is, Roberts said that currently, it is "not to go into a sequester, which would decimate national security, doctors, hospitals and agriculture. You don't want to get into a sequestration situation. You want to be part of the answer, not part of the next problem."
You can almost visualize the finger to the lip and hear the shhhhhhhhhh that undoubtedly ensued after each of these comments.
In short, I am eagerly awaiting Frank Luntz to confirm through the use of focus groups that there is substantial if not total overlap between those people who believe the Farm Bill rewrite is a secret and those people who are still waiting for Chris Christie to stop beating around the bush about his 2012 presidential ambition.
It's one thing for critics to use the secret Farm Bill nonsense. But, it's quite another to hear it from friends. So, slap ‘em upside the head when you hear it.
So the Farm Bill process is not such a secret, but what about the substance?
First, I will tell you, I don't recall the authors of any Farm Bill I have been a part of ever inviting everyone in for a drafting party. There has always been some level of mystery as to how everything will shake out, save only to those who hold the pen. This is no different. As in the case of past Farm Bills, we must have a certain level of trust in our allies on the Hill to do the right thing. That means, we won't know every detail until it is out.
But, as another friend from El Campo, Texas observed just the other week, if one even casually read the news stories he doesn't have to be sitting in a smoke-filled negotiating room to know what the Senate and House Agriculture Committees are considering, which is essentially as follows if media reports are correct:
--elimination of Direct Payments, Countercyclical Payments, ACRE, and SURE and elect in lieu thereof one of the following options:
--Option 1: The current Marketing Assistance Loan-Loan Deficiency Payment program; a price-based countercyclical program that triggers at higher levels than the current countercyclical program so producers have a much more effective safety net when prices fall; and enhanced crop insurance. Based on reports, the countercyclical program would be paid on planted acres up to base and on historical yields, and crop insurance improvements would include an option to buy area-wide coverage on top of individual coverage to cover a portion of the producer's deductible. Pay limits and AGI rules on the countercyclical program would be manageable. The details are not complete in this paragraph but the gist can still be understood.
--Option 2: The current Marketing Assistance Loan-Loan Deficiency Payment program; a county-based revenue countercyclical program where if the county's actual revenue for a crop falls below target revenue, a payment is made on planted acres up to base; and the same crop insurance improvements noted under option 1. The revenue target would be the Olympic 5-year average of the county revenue, with yield and price plugs used where necessary to take out some of the volatility. Payments would kick in when revenue reaches a certain percentage below the guarantee, though there would be a maximum payment of a certain percent of expected revenue. Again, pay limits and AGI on the countercyclical program would be manageable. Again, this paragraph does not address every question, but it is safe to say that the program generally follows the legislation introduced by Senators Thune, Brown, Lugar, et. al., with some non-earth-shattering modifications.
--Option 3: For cotton producers, generally, the current Marketing Assistance Loan-Loan Deficiency Payment program, with an adjustment; a 90% GRIP policy with a 65 cent price plug that has a maximum payment of 20% of target revenue; and improved crop insurance. The new GRIP policy would be delivered by RMA through private insurance companies and agents, with cotton producers receiving stronger premium assistance since they are not eligible for anything other than the loan under Title I of the Farm Bill. Again, while this paragraph does not spell out each detail, the Committees are clearly showing deference to the NCC proposal in order to address the Brazil case and that proposal can be accessed on the NCC website.
So, with neither the Farm Bill process or substance a big secret, what's the problem then?
Well, I suspect that there are still legitimate policy issues and details to work through, as there would be at this stage in any Farm Bill process, but then there's also the man-made drama, the kind of drama that can kill a Farm Bill just as it killed old William Dorrit.
Usually, the drama involves the drawing of arbitrary lines, making impossible ultimatums, demanding win-lose outcomes, and general overreaching. The kind of things we regret when we realize we went too far, like the man hollering at the porter over his lost luggage only to be told by the porter that there are only two persons in the entire airport who give a damn where your luggage is and one of them is rapidly losing interest.
We should strenuously avoid that kind of drama (that we witness with disgust from time to time at airports and other public places) in favor of mature, thoughtful problem-solving to ensure a successful outcome to the week ahead.
As an example of the kind of issues the Committees must work through, a recent article suggests that Option 1, above, might influence planting decisions due to the combination of reference prices and making payments based on planted acres up to base. I don't dismiss the concern out of hand and don't expect lawmakers are either. But, as one farm journalist has reported, it seems daily, the same issues present themselves under Option 2. As one farm policy expert asked me yesterday: what is the difference between a set numeric price that lawmakers choose verses hand picking market prices that are near record highs as the set price? Some folks may be throwing rocks in a glass house. Truth be known, according to economists I talk with who don't have a dog in the fight, the case in regards to both are overstated.
In any case, in the spirit of cooperation and comity and recognizing that we may all have to work to pass and then defend a farm policy involving either or both approaches, I have taken the stance that discretion is the better part of valour. No need to tie a false noose that farm policy critics will try to hang us all with.
Obviously, in writing this piece, I am writing to the good guys, I am preaching to the choir. But, I also know that your voice carries well beyond these walls and I hope you will use it to convey to everyone concerned about getting a Farm Bill that cooperation, comity, unity, and discretion are the ways to get the job done.
The life of the Farm Bill and Crop Insurance may truly be in our own hands. We can either keep a good grip on it this week… or watch all our heads roll later. We can do this. Please use your good influence and do what you can to help.
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