ME.  Well Professor, the Senate Committee on Agriculture, Nutrition and Forestry passed their Agriculture Reform, Food, and Jobs Act on May 14th by a vote of 15 in favor to 5 opposed.  Not to be left behind, the House Committee on Agriculture followed suit on the following day by passing their Federal Agriculture Reform and Risk Management Act (FARRM) of 2013 by a vote of 36 in favor to 10 opposed. 

BF.  The Senate Committee proposal reduces spending by $23 billion over 10 years, including sequestration.  The House Bill reduces spending by $39.7 billion over 10 years, including sequestration.  That’s a big difference to iron out in floor debate and a conference committee.  But, these actions are the first two steps in the process and Congress takes one step at a time. 

ME.  The spending on the food and nutrition title represents the biggest difference in the two farm bill proposals.  The Senate Committee reduced spending by $4 billion for the Supplemental Nutrition Assistance Program or SNAP formerly called the food stamp program. The House Committee reduced food and nutrition spending by $20.5 billion.  Perceptions may depend a lot on the improving economy and declining unemployment rates, however nearly all of the SNAP recipients are low income people and about half goes to feed low income children.

BF.  SNAP eligibility was expanded with the Great Recession stimulus package and now that economy appears to be improving the prevailing view on the two Committees is to move back toward the previous level of eligibility.  More than three-fourths of the farm bill spending goes to food assistance and nutrition programs.  If Congress is going to reduce farm bill spending to meet deficit reduction goals, they cannot avoid looking at food and nutrition programs.

ME. Given the $16 billion difference in spending levels between the House and Senate Committee proposals, food assistance will certainly be one of the more contentious areas of floor debate and in the Conference Committee before final passage.  At the same time, groups representing agricultural interests have been hard at work in ironing out some of the differences from last year and to build broader coalitions for passage of something.  Both the House and Senate Committees have included a “target price” option in addition to crop insurance.

BF.  Aside from the backwards economics and the lack of understanding that a target price is much less of a safety net than a target revenue, adding the target price option apparently eliminated a previous “bone of contention” between Southern and Northern agricultural interests. In the Senate, this is due to the replacement of Roberts by Cochran. Cotton peanuts and rice won the day over corn, beans and Northern wheat growers. However, it is still important to recognize that the second largest areas of cuts will impact agriculture due to the elimination of direct payments to farmers, conservation program consolidation, and other farm and risk management program reforms.  And these are on top of previous spending reductions accepted by agriculture in recent years.  Press reports suggest that the Senate Committee reductions total about $12 billion for agriculture, while the House Committee reductions are pegged at $13.8 billion. 

ME.  Last year, I suggested that Conservation Compliance might be something seen as too important to be left out of the farm bill.  Well, the crop insurance industry, agriculture interests, environmental and conservation interests finally got together this year. A conservation compliance requirement for crop insurance was included in the Senate Committee bill.  Farmers who don’t wish to implement conservation compliance plans can still purchase crop insurance but they forego the government support for crop insurance premiums.  Now we will see if it gets added to the House Committee bill on the floor or in Conference Committee.

BF. One area that bit the dust was the Administration’s proposal to reform foreign aid by substituting cash payments for foreign assistance in place of using U.S. commodities as the source of foreign food aid. An academic argument can be made that transportation costs of getting food aid from the U.S. to the hungry peoples of the world dramatically increase program costs in comparison to costs and regional benefits from buying food in closer proximity to the hungry peoples.  However, the U.S. supply chain involving agriculture, shipping interests, and labor are organized and they vote.  We won’t likely hear any more about that issue in the debate.

ME.  Historically the Senate Committee has always looked more favorably on Rural Development programs than has the House Committee.  Rural water, broadband and community facility programs, in addition to business, cooperative, and value added enterprise development programs, and loan guarantees, micro-enterprise, and other loan program are important tools for sustaining economic vitality of rural communities and many rural people.  Rural America has about 16 percent of national population but it manages most of the nation’s raw materials, natural resources, and supply chain for production of food, manufacturing, forest products, and energy. 

BF.  Well Rural Development may be important to some, but it has always been regarded as the step-child in farm bill debates. Food, agriculture, environment and conservation interests have historically been better organized and better funded.  In the past decade, reducing energy dependence on imported oil focused rural development attention on advancing renewable energy for the benefit of the nation. But now that prior level of importance has waned to some extent with all of the cross-currents among energy sectors and effects of the drought. 

ME.  I’m glad you mentioned renewable energy.  The Senate Committee included mandatory funding for Renewable Energy whereas the House Committee bill does not. Gasoline prices shot up more than a quarter in Midwest last week due to a couple of Chicago oil refinery shutdowns. The Biofuels Research & Development Initiative is important for commercializing new technologies to keep energy costs down.  New technologies are sitting on the shelf, even though they show promise of competitiveness without government subsidies. Loan guarantees and cost sharing programs are critical tools in de-risking promising technologies for attracting investment to initial commercial demonstrations that are in the longer term public and national security interest.   Our national food and energy needs have historically been addressed because agriculture and government worked together to achieve remarkable advances in productivity due to new technology innovations and commercialization. We now face dramatic growth in food and energy needs on a global scale. More innovation and commercialization will be needed in the future—not less.



*  Edelman is a professor of economics at IowaState University and Flinchbaugh is professor emeritus of agricultural economics at Kansas State University.



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