Bill in Brief

What's up

If you are tired of left against right, Republocrats vs. Demicans partisanship in Washington, the farm bill might be just the legislation for you. In fact, some would argue that that is the problem with the farm bill—it has something for everybody, and too much of it.

The farm bill, the most recent incarnation of which is officially titled the Farm Security and Rural Investment Act of 2002 (USDA), isn’t really one bill, but is actually a package of laws covering everything from farm credit assistance (the farm and commodity subsidies typically associated with the farm bill), welfare provisions like food stamps and school lunch programs, and conservation measures including renewable energy (biomass fuels such as ethanol). The bill’s many rationales range from national security (according to some home-grown-food proponents) to bread price stability. All of that must fit into the larger US budgetary framework (HPJ) and jive within the legal contours of World Trade Organization agreements and other international trade provisions (DFP). It is, above all, a complex bill.

The 2002 version is due to sunset in September 2007, so Congress pulled on the boots and overalls and headed into farmland. The House passed its revamped bill in July, with the Senate following up in December. As of mid-February, 2008, the two chambers are nearing on a compromise bill to send to the president.

The Debate

Because the farm bill covers so many areas, it is hard to schematize the politics in a simple “for or against” partisan split. Rather, each politician, each state, and each interest group has a particular hobby horse or two that they hope to feed at the legislative trough. So, for instance, the National Sorghum Producers take keen interest in getting more dough for that crop (HPJ), while Arkansas rice growers (DFP) fret over the complexities of “counter-cyclical payments”—government subsidies made to farmers according to calculations based on the average national price of a commodity (not for the weak of math)—and the rest of the policyspeak in the bill.

The idea behind the farm bill seems sensible enough: farming is risky business, with a year's income depending on a lot of unpredictable factors like roller coaster commodity prices and the weather, but unlike other industries that involve risk a) the agriculture industry doesn't readjust as easily when the market throws it a curve and b) the ag business produces something we can't afford to mess with, that is, food. For those reasons, safety nets that minimize risk for farmers keeps our farms chugging and our food coming. Food stamps, which account for over half the price of the bill, also seem to be a straight forward way to help the poorest Americans eat.

The problem with safety nets, according to critics, is they tend to get out of control. As noted above, the handouts-for-everyone nature of the farm bill is a problem in many minds. Put billions in a legislative pot luck and you can just about ensure that lawyers and lobbyists will come a-runnin’—people will work harder divvying up the benefits of the bill than at real productive activities. Farm subsidies are also viewed, by some economists, as not making much economic sense; instead of propping up the agriculture industry, they distort it, weakening competition and so making us lose out on the world market. (See farm subsidies).

Some of the debates within the debate

• Foreign food aid: most agree that the US should go on providing food aid to the world's poorest nations, but there's rising disagreement over where that food aid should be bought. US farmers prefer that the feds keep buying from them (as US law requires), while the administration and a growing number of congresspeeps say it'd be cheaper to feed the poor by buying food closer to their home. (NYT & GAO)

• Disaster aid: some lawmakers would like to make farmer disaster aid (which follows floods, droughts, winds, etc.) to be a little less random. Funds for disaster aid aren't factored into yearly planning, but are voted on by Congress in "emergency" bills as needed. Congress may tinker with a way for the USDA to tinker with funds without going to Congress for emergency pay packages.

USDA's proposal

Mike Johanns, the Secretary of the US Department of Agriculture, proposed to update the farm bill by beefing up conservation programs and trim subsidies to mega-farms.

The two most significant shifts in the farm bill proposal are an increase of $7.8 billion for conservation programs and a $1.6 billion boost in funding for renewable energy research, especially bio-energy studies. Other notable components of the proposal include increased funds for special nutrition crops, more direct payments for beginning farmers and ranchers, and disaster relief payments.

The proposal has some other specific criticisms (Hill).
At the top of the list, a gripe from an erstwhile ally of the administration—the American Farm Bureau Federation. The AFBF opposes the proposal’s income-testing and payment limitations; as it stands, the proposal would eliminate subsidies to those whose adjusted gross income tops $200,000. The two sides debate how many people this limitation would affect.

Other topics of contention include the proposal’s smaller loan “safety nets” that link to crop price. The USDA claims that farmers often game the system by withholding crops when prices are low, but sell when prices rebound. Johanns’s proposal would also change the “counter-cyclical payments” to correspond to annual farm revenue rather than the current crop price threshold.
And it only gets more complex after that, as the arguments slide into WTO compliance and negotiation strategy.

The House Bill

While some medium-to-big-sized reform ideas were batted around Congress, the bill the House eventually passed in July '07 is about as business-as-usual as you can get. We hate to bore you, but to convince you how little "there" there is there, we list some of the changes that are being reported on:

• Adds funding to a cotton program to make up for losses that came from a World Trade Organization dispute - but doesn't do enough to settle that dispute, according to the WTO (NYT);

• Starts a sugar-to-ethanol program, where the feds buy sugar to convert to ethanol, making up for predicted losses to the sugar industry when NAFTA opens up the market to Mexican sugar - for a price of $1.4 over ten years (WP);

• Ups the minimum benefit for food stamps and sets food stamps to meet the rise of inflation, which will be paid for by a $4 billion tax increase (or closing of tax loophole) on foreign companies doing business in the US (WP);

• Requires meat get country-of-origin labeling by 2008 (WP);

• Adds funding for nature preservation (WP);

• Adds $840 million to foreign food aid (WP);

• Tacks on about $1.8 billion in subsidies over the next five years for specialty crops (NYT);

• Lowers the income ceiling over which farmers can't get subsidies - from $2.5 million to $1 million, saving about $226 million in five years (WP).

The Senate bill

The Agriculture Chair in the Senate also tried to take a thwack at subsidies, but the bill that was passed in December '07 ended up with minimal changes (WP, NYT). A number of senators tried to tack on amendments to limit subsidies to big-time ag businesses, but none stuck. What the bill would do:

• it would let farmers opt in to an alternative crop insurance program that could save the governmen $4b over five years (although according to some, it could cost the feds $4 billion over 10 years - WP)
• it would add on a $5b disaster relief fund (normally when weather disasters hit, Congress has to pass separate emergency funding bills to help out farmers)
• many other farm bill programs would get a hike in funding, including $4b for nutrition and $4b for conservation

Some of the amendments that didn't make it on include:

• farm households would be limited to a total of $250,000 in subsidies, including $50thou in direct payments, $50thou in countercyclical payments and $150,000 in marketing loan gains,
• farms that netted $750,000 in a year wouldn't be eligible for subsidies,
• it would rearrange how "countercyclical" payments are calculated, presumably to avoid farmers milking the system,
• alternative fuel mandates that would require gas companies increase their biofuel use six fold by 2022,
• an immigration bill for migrant workers,
• conservation subsidies would be limited to only farms that make under $2.5m - and to only $450,000 to each farm "over the life of the farm bill." (CongressDaily)

The Compromise

Both chambers started working on a final bill in early '08.

The president, meanwhile, is putting the pressure on to make sure their joint bill meets some of his requirements, namely that: all tax increases are clipped out; farmers whose income is above $200,000 should not be eligible for income subsidies; loan rates for crops aren't increased; and direct payments be increased in spite of how high or low crop prices are. The last two stipulations are meant to keep the US kosher with World Trade Organization rules.

A final compromise in the works looks like it'll add $6 billion (over 10 years) above Bush's baseline. 

Other good reads

• CQ Weekly report by Catherine Richert

• Farm Bill Blog

• If you’d like a thorough examination of the farm bill considerations (100 pages of thoroughness), read this CRS summary (pdf).

updated February 19, 2008

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