Administration keeps fighting for reforms

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The current farm bill expires March 15 and now it looks like Congress will have to extend it until mid-April before anything is finalized. Over the weekend negotiations continued between the White House and House leaders. The White House made some lofty requests in what House Agriculture Committee Chairman Collin Peterson sees as "dictating" what would be in the farm bill.

The Administration released a 3-page position paper outlining the terms to which it could agree to spend up to $10 billion more than budgeted for the 10 year life of the farm bill. Key among the 10 demands is one that would end farm program eligibility for participants who pay income tax on an adjusted gross income (AGI) of more than $500,000 annually. The Administration originally sought a hard cap of $200,000 AGI.

Nine other reforms were also listed as "contingent" to the Administration's agreement to a farm bill spending level of $10 billion over the current baseline. The Administration's position has been backed up for months by a veto threat. The proposed spending, over the lifetime of the bill, is in addition to the estimated $570 billion already slated for food stamps, conservations, energy, farm programs, and rural development, which are all part of the massive bill.

Reforms sought by the Administration include:

  • No increase in the current loan rates, target prices and Milk Income Loss Compensation payment rates. (Currently both the House and Senate increase rates. Many observers feel the Administration wants to keep rates steady to remain compliant in the WTO and keep the door open for a potential Doha deal.)
  • The elimination of new subsidy programs and the exclusion of commodity storage payments.
  • Reforms of the marketing loan program on the "beneficial interest" in commodities used to secure loan deficiency payments.
  • A counter-cyclical payment program that is revenue, rather than price, based. It must have a guarantee cap and not duplicate crop insurance, according to the position paper.
  • Authority for USDA to continue to adjust dairy component prices ("tilt") to limit build up of Commodity Credit Corporation dairy stocks.
  • Elimination of a proposed "sugar-to-ethanol" program.
  • A prohibition forbidding crop insurance companies to "collude" during the renegotiation of the standard reinsurance agreement.
  • Elimination of the prohibition of planting fruits and vegetables on farm program base acres. (This would make the US compliant with the WTO cotton ruling.)
  • Authority for 25% of U.S. food aid to be delivered through local purchases in the region of the countries in need, while eliminating any restrictions on emergency food aid.

The Administration did not propose slashing direct payments, which is one idea the National Corn Growers Association said they'd be willing to explore in order to have a revenue assurance option included in a final bill.

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