American Soybean Association (ASA) and other farm organizations have been urging Congressional leaders to provide additional funds to the Agriculture Committees so they can write a new farm bill in 2018 that responds to the difficult times farmers are facing. In the absence of outside assistance, however, the Committees and groups that support enactment of the farm bill are facing some tough decisions over the next few months. We will need the active support and participation of all farm bill sectors to get the best possible legislation during what can be described as highly uncertain times for production agriculture in the United States.
There are a lot of scenarios floating around Washington about how and when the 2018 Farm Bill will get done. Just last week, a proposal to cut spending in the farm bill was dropped during negotiations on a Budget Resolution for FY-2018. However, several bills have been introduced that would slash the crop insurance program by reducing the premium subsidy, capping indemnities, or means-testing participant income. With opponents of farm legislation on both the left and the right working together, it is essential for supporters – from farm organizations to conservation groups to the anti-hunger community – to have each other’s back.
Working against efforts to collaborate is the fact that, despite the sharp fall in crop prices and farm income since 2013, the official spending baseline for the farm bill maintained by the Congressional Budget Office (CBO) reflects declines in outlays under crop insurance and SNAP, and less spending than initially expected for the cotton and dairy programs. The baseline projects estimated costs if current programs are continued, so no additional funding would be needed if the 2014 Farm Bill were simply extended. However, any change that would raise a program’s cost would be a “zero-sum” exercise, where the increase would need to be offset by a cut somewhere else in the bill. This is the scenario we all are trying to avoid – one that has more potential to pull the farm bill apart than any efforts by our opponents.
Let’s look at the cost of some of the changes to current law that ASA and other farm organizations are supporting. As a result of lower farm prices in recent years, there is concern that the county ARC program will provide less support against future declines in revenue, and that it needs to be strengthened. Possible changes include decreasing the deductible from 14% to 10% or lower, raising the “floor” price by 5% or 10%, increasing the band of coverage from 10% to 15%, and using RMA trend-adjusted yields, among others. However, the cost of a combination of these changes to ARC-CO, according to CBO, would total $1.5 billion over ten years, compared to the current baseline.
A second policy supported by ASA would give producers the option to reallocate their crop acreage bases to average plantings in more recent years, as they were allowed to do under the 2014 Farm Bill. This would keep bases as current as possible, while continuing to encourage planting decisions to be based on market signals rather than on the prospect of receiving government payments. Unfortunately, CBO has determined that another base reallocation would cost $2.0 billion over ten years.
A third priority for ASA and other farm organizations is to double annual funding for the Foreign Market Development (FMD) program and the Market Access Program (MAP), currently at $34.5 million and $200 million, respectively. Funding for these export promotion programs hasn’t been increased for over ten years and, in the absence of TPP or negotiation of new trade agreements, they will be even more important in opening new markets and growing existing ones. However, CBO has scored the requested increases in FMD and MAP at $2.2 billion.
In addition to these proposals, cotton growers are asking for a new Title 1 program, dairy producers want to make their Margin Protection Program more effective, and wheat farmers are seeking an increase in their PLC reference price from $5.50 to up to $6.50 per bushel. 60 organizations, including ASA, are supporting a doubling of spending on agricultural research. And there are 37 programs that have no baseline at all – including several in the Energy Title that ASA supports – each of which have vocal stakeholders and all of which could cost another $3 billion.
All told, demand for new spending in the next farm bill is $15 billion or more over the CBO baseline. And very few programs have been identified where savings can be made to offset any of these costs. Unless Congress provides additional funding, the House and Senate Agriculture Committees and groups that support enactment of the 2018 Farm Bill are facing some tough decisions in the next few months.
About the Author: John Gordley is director of the American Soybean Association’s Washington office.