The House Committee on Agriculture passed a new five-year farm bill—the Federal Agriculture Reform and Risk Management (FARRM) Act of 2013—this week just after the Senate Committee on Agriculture, Nutrition and Forestry earlier approved its own version—the Agriculture Reform, Food and Jobs Act of 2013.
This Congress will not have any easier a time than the last passing a final bill — consensus is split as some demand major reform to subsidies and food assistance programs.
“It’s often said that farm bills are written in conference,” said Sen. Mike Johanns (R-Neb.). “So, we’ll see. That may be the case. The House bill gets passed, the Senate bill gets passed, and you try to work out the differences in the conference committee.”
A bipartisan deal, the Federal Agriculture Reform and Risk Management Act of 2012, cleared both the Senate and the House Agriculture committees in July 2012, but the deal never had a vote on the House floor during the final leg of a fiscal-cliff-marred Congress. Instead, most programs in the expired 2008 Farm Bill were extended through 2013.
“The Farm Bill is like Christmastime for central planners … it’s a nightmare for anyone with free market principles,” said Daren Bakst, fellow in agricultural policy at the Heritage Foundation. The pork and “bloated nature” of the legislation is unnecessary for an industry that is doing well, said Bakst.
In a new Farm Bill primer released by the foundation, Bakst calls attention to the bill’s “misleading” title, as 80 percent of the spending in the last Farm Bill was dedicated to food stamps and other nutrition programs, not assisting farmers.
The House bill is projected to cut spending in farm and nutrition programs by nearly $40 billion over the next 10 years. More than half, $20.5 billion, would come from cuts in the Supplemental Nutrition Assistance Program (SNAP).
“I am particularly disturbed by the impact these cuts will have to children who participate in free or reduced lunch,” said Rep. Gloria Negrete McLeod (D-Calif.). “In the district I represent, a majority of school-age children are on free or reduced lunch programs. As many families struggle to put dinner on the table, most of these children rely on their school lunch. These children deserve to eat. These cuts are deplorable and will have an impact on our future generations.”
Some on the Senate side are also up in arms.
“Just as important as the health of our agriculture industry is the health and nutrition of our children and families,” said Sen. Kirsten Gillibrand (D-N.Y.). “I am deeply concerned with the drastic cuts this bill makes to SNAP that will literally take food away from hungry children, while protecting corporate welfare for insurance companies based in Bermuda, Australia and Switzerland who don’t need it. These are the wrong priorities.”
The number of people receiving SNAP benefits is at a record high, reaching 46.6 million as of December 2012, according to the USDA.
According to Heritage’s primer, talk of de-politicizing agriculture programs and welfare policy is met with stiff resistance. For example, Sen. Thad Cochran (R-Miss.) recently told the North American Agricultural Journalists group that food stamps should continue to be included in the farm bill “purely from a political perspective. It helps get the farm bill passed.”
The primer goes on to say that subsidies are often referred to as a “safety net.” But subsidies produce a perverse double-whammy: taxpayers are hit with underwriting the costs and consumers are slammed with higher prices on groceries. Meanwhile, rather than stabilize crop prices as proponents claim, subsidies promote overproduction and downward pressure on prices—thereby increasing subsidy payouts.
The Heritage Foundation is calling to limit subsidies to include only farmers with adjusted gross incomes below $250,000 and to eliminate the direct payments program altogether. The direct payments program pays producers making less than $750,000 annually regardless of whether a farmer’s land is fallow or they sell their product for high prices. “There is no justification for subsidizing farmers who do not grow crops, or to subsidize farmers regardless of their income. Both the House and Senate bills last year would have eliminated direct payments—evidence of broad recognition that these programs should be eliminated,” the primer reads.
Heritage also wants to cap the crop insurance program and separate food stamps from agriculture programs.
“We’re subsidizing, left right and sideways,” said Andrew Moylan, outreach director and senior fellow at the R St. Institute. “We’re talking about a bill that’s as big as Obamacare.”
“We have near-record farm incomes, commodity prices. … We have very low farm failure rates, … And we have near-record fiscal challenges,” said Moylan. “And what is the response of Senate and House Ag Committees … peanuts.”
The Congressional Budget Office estimates that direct spending authorized by the House version would total $940 billion during 2014-2023.
The split within the Republican Party grows stronger as the Farm Bill inches closer to law.
“Farmers and ranchers need the certainty that comes from a five-year Farm Bill,” said Cochran, ranking Republican on the Senate Agriculture Committee. “We have tried to be fair to those affected by this bill, as well as to those who pay the bill.”
“This draft, in my judgment represents a step backward for Ag policy,” said Johanns. “Instead of moving forward with a free market type system, what this farm bill does, is it doubles down on something called, target prices, which is really a subsidy for certain commodities. … The government should not be involved in setting prices for commodities. The government should not be involved in raising target prices, which is exactly what’s happening.”
Sen. Rand Paul (R-Ky.) introduced a bill that would permanently suspend the application of agricultural price support authority to certain commodities, particularly milk and the “dairy cliff.”
“In the upcoming weeks, the Senate will be pressured to yet again pass a Farm Bill in an effort to avoid another ‘cliff’,” said Paul. “With my legislation, we can avoid passing bills contingent upon ‘cliffs’ and scare tactics. Instead of rushing to pass laws in order to avert public panic, we can focus on making bills better.”
Two amendments to the House version that made it into the bill were from Rep. Steve King (R-Iowa). One would prevent states from enacting laws that place conditions on the means of production for agricultural goods that are sold within its own borders, but are produced in other states.
“The Constitution of the United States reserves the regulation of interstate commerce to the Congress, not the states,” said King.
Rep. Bob Gibbs (R-Ohio) voted against the committee bill.
“As past president of the Ohio Farm Bureau, I believe that agriculture policy should be based on market-driven principles,” said Gibbs. “Including language for dairy farmers that effectively equates to supply management is the exact opposite of a free market system. Ohio dairy farmers need to be able to grow with the market, and artificially setting limits on the milk they can produce will only keep them more dependent on government subsidies.”
But Moylan thinks there is a chance to secure “real reforms” from committee to the floor where amendments can be added. “When you look at the federal budget, there is no lower-hanging fruit. There is a long decades-old consensus to agricultural reform.”
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