April 20, 2012
WASHINGTON — The Senate has begun laying the groundwork for a half-trillion-dollar farm and food bill that would end unconditional subsidies to farmers, but House Republicans’ resolve to cut its biggest component — food stamps — by $13 billion a year dims its prospects of passing Congress.
The current five-year farm bill expires at the end of September, and the Senate’s agriculture committee on Friday released a draft of its plan to redesign safety nets that help farmers weather bad times while achieving some $23 billion in deficit reduction. The full committee is to vote next week on the plan, which consolidates conservation programs and takes several steps, such as stopping lottery winners from getting assistance, to make the food stamp program more accountable.
But before getting a bill to the president, lawmakers must satisfy multiple constituents with different agendas — northern corn growers, southern cotton farmers, insurance companies, banks, nutrition groups and environmentalists. Most difficult will be narrowing the gap between the Democratic Senate and House Republicans taking aim at the food stamp program that comprises some 80 percent of the bill’s spending.
Farmers are also cursed by their own successes. With farm incomes as high as they’ve been in decades, it’s harder to convince lawmakers that they still need strong protections for future disasters and market downturns.
Most give chances of success at no better than 50-50, which frustrates farm groups seeking some certainty in government policy. There’s still seven months to work on a bill before the presidential election, said Jon Doggett, vice president for public policy at the National Corn Growers Association. “Our membership is getting extremely concerned to hear members say we can’t pass a farm bill this year. There are a lot of growers who are really very very angry.”
The Congressional Budget Office says that at the current spending pace the Supplemental Nutrition Assistance Program, or food stamps, would spend about $400 billion over the five-year life of a farm bill enacted this year. Crop insurance subsidies would average about $9 billion a year, commodity subsidies $6.6 billion and farm conservation programs $6.5 billion.
Last fall, when the congressional supercommittee was making its futile attempt to come up with a long-term deficit reduction plan, Senate agriculture committee chairman Debbie Stabenow, D-Mich., and her Republican colleague in the House, Frank Lucas of Oklahoma, came up with a plan to cut $23 billion from farm and food aid over the next decade while replacing direct payments to farmers with a new revenue insurance program. That plan is the framework as the agriculture committee’s draft of the massive bill that also includes such areas as energy, forestry, rural development and international food aid.
The Barack Obama administration in its budget proposal this year outlined a similar plan, calling for cuts of $32 billion and also eliminating direct payments, a subsidy that farmers collect based on a land’s production history but not connected to crop prices or yield.
But the GOP-led House sees farm and food aid as a prime source for deficit reduction, and the budget of Budget Committee chairman Paul Ryan, R-Wis., that cleared the House last month requires almost $180 billion in cuts from farm bill programs over the next decade. That included $134 billion, or an average $13.4 billion a year, from the food stamp or SNAP program.
As part of that, the House agriculture committee on Wednesday approved $7.7 billion in reductions for next year, or $33 billion over a decade, to the SNAP program to help avoid automatic cuts in defense and other programs next year.
Republicans argued that spending for SNAP, which has grown from 17 million recipients in 2001 to more than 46 million today, is bloated by waste and fraud and can be reduced without taking food away from the needy.
But Democrats are strongly opposed to anything more than marginal cuts to the food stamp program and saw the Ryan budget as a major deterrent to getting a farm bill this year. “Passing a farm bill this year was already going to be difficult but the Republican budget approved by the House today lowers the odds,” the top Democrat on the House agriculture committee, Collin Peterson of Minnesota, said after the budget vote.
“Farmers and ranchers are fiscally conservative and definitely want to contribute as much as they can to deficit reduction,” said Chandler Goule of the National Farmers Union. But he said the entire farm bill with nutrition is still only about 2 percent of the federal budget and farmers are already bearing more than their fair share with the $23 billion in cuts proposed last year. “The government needs to go somewhere else to find additional money … that’s what our producers think,” he said.
House committee chairman Lucas voted for the Ryan budget, but said in a statement that he “would caution people about reading too much into the numbers or policy proposals in either the president’s budget or the Ryan budget …. they are only suggestions.” He stressed on Wednesday that his committee’s proposed cuts in SNAP “would improve its integrity so that families most in need can continue to receive nutrition assistance.”
The main focus of the Senate debate on the bill will be reaching a consensus on the future safety net for commodities. Direct payments, now costing $5 billion a year, are likely to be replaced with some form of “shallow loss” program that would pay farmers when modestly decreasing yields or declining prices result in a farmer’s revenue falling below historic averages.
For more serious losses, crop insurance kicks in. An average 60 percent of crop insurance premiums are subsidized by the government.
Corn and soybean farmers are strong advocates of this approach, which would help maintain their current economic prosperity, while southern growers of rice, cotton and peanuts prefer the more traditional counter-cyclical payments where target prices are set and farmers are compensated when those prices aren’t reached.
If no deal is reached by September, Congress will need to extend the existing bill, and that too will not be easy. Both the 2002 and 2008 farm bills were passed after one-year extensions, and Congress has had to extend the transportation bill, another huge piece of legislation that has defied compromise, nine times since the old act expired in 2009.
But most agree that the House would not extend the farm bill without exacting cuts in existing programs. “I strongly suspect there will be some kind of penalty price to be paid,” said Mary Kay Thatcher of the American Farm Bureau Federation, saying that that could come in the form of cuts to direct payments or food stamps.