Lawmakers have reached agreement on new assistance for cotton and dairy producers, potentially clearing the way for House and Senate Agriculture committees to begin moving a new farm bill before Easter.
The provisions, part of a sweeping, 652-page budget deal being added to a stopgap spending bill that passed by the House on Tuesday, would make cotton eligible for the Price Loss Coverage program, reduce the cost of the Margin Protection Program for dairy producers and lift an underwriting limit on revenue insurance products for livestock.
The broader spending package, which also will include a two-year congressional agreement on spending limits, still must be approved by both the Senate and House. The House-passed continuing resolution must be passed by midnight Thursday to keep the government funded.
The agriculture provisions, drafted by the Senate Appropriations Committee, which is chaired by Thad Cochran, R-Miss., also include $2.4 billion in aid to farmers hurt by last year’s hurricanes and additional improvements to existing USDA disaster programs for livestock producers, fruit growers and others.
The changes to disaster programs would be retroactive to the beginning of 2017. The package would:
-Lift the $125,000-per-producer payment cap under the Livestock Indemnity Program and allows payments to producers who “sold livestock for a reduced sale price” due to natural disaster. The payment cap forced USDA to reduce payments to ranchers harmed by the 2017 wildfires in Kansas.
-Remove the $20 million annual cap on the Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish Program;
-Double payment acreage for the Tree Assistance Program from 500 acres to 1,000 acres.
The budget agreement also would revive retroactively for 2017 the $1-a-gallon tax credit that subsidizes biodiesel. The tax incentive lapsed at the end of 2016.
The dairy provisions would essentially create $1.2 billion in new funding for the farm bill, according to a Congressional Budget Office estimate, relieving pressure on the Agriculture committees to find a way to pay for expanding dairy assistance. A quirk of congressional rules allows appropriators to increase spending without offsetting the cost as long the extra spending falls outside the fiscal year covered by the bill, in this case, fiscal 2018.
The cost of the PLC payments for cotton, estimated to total $3 billion over 10 years, would be offset by re-assigning generic base acres, former cotton acreage, and reducing participation in the Stacked Income Protection (STAX) revenue insurance policy for cotton, according to CBO.
The Agriculture committees in both chambers plan to begin debating farm bills before the Easter recess, based on the new CBO cost estimates.
The cotton-dairy provisions “would make it much easier to get it (a new farm bill) done,” said House Agriculture Chairman Mike Conaway, the Texas Republican who has been leading the congressional effort to make cotton eligible for PLC.
“We’re going to solve some problems in dairy and cotton and actually create some baseline for the farm bill, so it’s a good deal," said the ranking Democrat on the Senate Agriculture Committee, Debbie Stabenow of Michigan.
Jim Mulhern, president and CEO of the National Milk Producers Federation, said the dairy provision will help producers “immensely by making much-needed improvements in the Margin Protection Program and expanding additional risk management tools for dairy farmers.”
Dale Moore, executive director of public policy for the American Farm Bureau Federation, praised the overall package. “On behalf of our cotton, dairy and livestock producers, Farm Bureau very much appreciate the collaborative efforts of our agricultural leaders in Congress to provide needed relief for these farmers, and we strongly support Congress ensuring these provisions are included in the final version of the spending bill under consideration," Moore said.
Cotton growers opted not to participate in PLC during debate on the 2014 farm bill, believing that relying on the STAX insurance program would make it easier to avoid fighting another trade case with Brazil over their subsidies. However, after cotton prices slumped the STAX policies provided relatively little assistance to producers.
The new provisions would make seed cotton, the unginned combination of fiber and seed, eligible for PLC at a reference price of 36.7 cents per pound. Payments would be triggered when the average seed cotton price falls below the reference price. This year’s crop would be the first one eligible for PLC, but the first payments to growers would not go out until fiscal 2020, which begins in October 2019.
The MPP reforms for dairy, which are similar to what was included in a Senate appropriations bill last summer, are intended to make the program more responsive to dips in prices and reduce the cost of higher coverage levels.
Potential payments would be calculated on a monthly rather than a bimonthly basis, which is the case under current law.
Premiums for small and medium-size farms would be eliminated on $4.50 and $5 coverage levels and sharply reduced at all higher levels.
The lower premium rates would apply to the first 5 million pounds of a farm’s historical production, up from the current limit of 4 million pounds. That higher limit represents the production of about 223 cows. The current limit of 4 million pounds is the equivalent of about 185 cows.
Industry experts say they see larger operations relying more heavily on revenue insurance, which will be easier to obtain without the cap.
A disaster bill that passed the House in December included the cotton provision and an increase in the underwriting limit for the livestock provision but omitted any changes to MPP, a top priority for Stabenow and the ranking Democrat on the Appropriations Committee, Patrick Leahy of Vermont.
The National Cotton Council nearly convinced Congress to include similar PLC provisions in a fiscal 2017 spending agreement that passed last April, but the top Democrats on the Senate Agriculture and Appropriations committees insisted that the legislation also include reforms to MPP.