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.
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
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.
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
* Edelman is a professor of economics at
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