The House and Senate Agriculture committees faced the tough task of squeezing existing programs to find money to pay for other programs that the 2014 farm bill will leave unfunded when it expires Sept. 30.
Supporters of the programs that are slated for cuts - the targets differ sharply between the House and Senate bills - already are pushing lawmakers to spare the programs when committee leaders start negotiating the final version of the bill. The decisions on funding will be some of the most challenging that the negotiators will face in the House-Senate conference committee.
“It’s one of those things that always makes farm bills difficult,” said Senate Agriculture member John Boozman, R-Ark. “ The good news is that most people want to get this done. They realize the importance of getting that safety net so that farmers can continue to get the loans they need.
Rural electric cooperatives are angry that the Senate bill targeted the Cushion of Credit escrow fund that the co-ops use to pay off their USDA loans. Electric co-ops currently have about $7 billion on deposit, which can only be used to pay on USDA loans. The current interest rate they receive, set by law, is 5 percent. The bill would reduce that on average by about 1.4 percentage points. The Senate bill would bar new deposits and lower the interest rate on existing deposits, freeing up $2.35 billion over 10 years, according to the Congressional Budget Office. That money is used to extend and expand an array of expiring programs throughout the bill.
The White House applauded the co-op provision in the statement of administration policy on the Senate bill released Tuesday. But the National Rural Electric Cooperatives Association unsuccessfully appealed to the committee even before the committee released its draft bill June 8 to leave the fund alone.
“We would prefer to see it fixed sooner rather than later, but believe that it must get fixed before a final conference report,” said NRECA spokesman Stephen Bell. “We can’t support an approach that guts these escrow accounts without regard for the consequences.”
The Senate bill also tapped one unusual, outside source of funding: Merchandise processing fees collected on imports by Customs and Border Protection. The bill would raise the fees for three months in 2027 to produce $371 million in revenue.
Boozman, meanwhile, is working behind the scenes to reverse a cut to subsidies going to textile mills that use domestic cotton. That cut was offered as an amendment adopted during committee deliberations to provide mandatory for farm bill energy programs and to reimburse dairy producers for fees they paid for the Margin Protection Program.
Boozman hopes to get the cut reversed before the bill leaves the Senate. “We would like to see that fixed. Everybody realizes the program .. is one that is actually working.”
The House bill’s biggest funding source is the Conservation Stewardship Program, which would be eliminated under the bill to free up $12.6 billion over 10 years, according to CBO. Most of the savings would be used to shore up other conservation programs, with the remaining $800 million moved to other areas of the House bill.
The National Sustainable Agriculture Coalition is among the groups angry about the idea of eliminating CSP. “The House bill erases support for resource stewardship on 70 million acres (that’s an area the size of Nevada!) of working farm and ranchland,” the group said in a blog post.
The Supplemental Nutrition Assistance Program is also targeted in the bill - enrollment and benefits would be reduced by some provisions - but most of the savings is plowed back into the program and the rest is used for other forms of nutrition assistance.
The Senate bill doesn’t include the SNAP cuts and also would preserve CSP, although the program would be cut by $1 billion over 10 years in order to fund other conservation programs. The Environmental Quality Incentives Program would be reduced by $1.5 billion.
Here is a look at how the two bills shift money around:
WHERE THE BILLS FIND MONEY:
Rural electric co-ops Reducing interest rates on deposits, and prohibiting new deposits, in the Cushion of Credit fund used by rural electric cooperatives would save $2.35 billion over 10 years.
Customs fees: The bill would raise merchandise processing fees for three months in 2027 to generate $371 million.
Commodity programs: Economic Adjustment to Users of Upland Cotton, a subsidy program for textile mills, was cut by $464 million. Lowering the adjusted gross income limit for commodity programs saved another $263 million.
Conservation programs: The acreage limit on the Conservation Stewardship Program was cut to save $1 billion over 10 years and the Environmental Quality Incentives Program was cut by nearly $1.5 billion.
Supplemental Nutrition Assistance Program: Data matching to eliminate duplicate SNAP benefits would save $588 million and a quality control program frees up another $420 million.
Conservation programs: Eliminates the Conservation Stewardship Program to save $12.6 billion over 10 years. Most of that is moved to other conservation programs but $795 million is shifted to other areas of the farm bill.
Supplemental Nutrition Assistance Program: Some $9.2 billion in savings result from expanding work requirements for SNAP recipients. Eliminating the standard utility allowance used for calculating benefits would save $5.25 billion. Eliminating broad-based categorical eligibility, which effectively imposes a nationwide income eligibility limit on SNAP of 30 percent over the federal poverty rate, saves just over $5 billion over 10 years.
Energy programs: The Rural Energy for America Program is cut to save $495 million over 10 years.
Crop insurance: Cutting a farmer education program frees up $125 million.
HOW THE BILLS SPEND THE MONEY:
Commodity programs: Improvements to the Agriculture Risk Coverage cost an estimated $172 million over 10 years. Another $97 million is added to a new Dairy Risk Coverage program, which would replace the Margin Protection Program.
Conservation programs: Savings from CSP and EQIP are used to fund the Agricultural Conservation Easement Program, which protects wetlands and helps landowners keep land in farming, and the Regional Conservation Partnership Program, which funds environmental improvements in partnership with outside organizations and state and local governments.
SNAP: The bill earmarks its SNAP savings for a variety of priorities, with $401 million going toward continuing the expiring Food Insecurity Nutrition Incentive grant program, which helps SNAP recipients purchase fruits and vegetables. Another $235 million would go toward projects testing approaches to moving SNAP recipients into jobs.
Energy: Savings from cutting the textile subsidies would provide $375 million for extending farm bill energy programs, including biorefinery assistance and the subsidies for biomass crops.
Local and organic agriculture: A new Local Agriculture Market Program, replacing several existing programs, would receive $558 million in new funding. Organic agriculture research would receive $450 million.
Research: The Foundation for Food and Agriculture Research would receive $200 million in new funding.
Trade: Trade promotion programs would receive $515 million.
Commodity programs: Some $408 million is added to the Price Loss Coverage program, in part to help growers whose average yields were reduced by successive drought.
Conservation: Some $7.7 billion is put into EQIP by eliminating CSP and merging its incentives with EQIP. Another $2.2 billion is put into ACEP and $1.3 billion is earmarked for RCPP.
SNAP: Funding is shifted into employment and training programs and child support enforcement, and money also is used to ease asset limits and to fund nutrition incentives and education and emergency food assistance.
Trade: The bill would provide $450 million in new funding for trade promotion.
Animal vaccines: The bill would fund a new animal vaccine bank with $450 million.
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