Framework deal offers glimpse of hope in farm bill negotiations

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In classic Washington form, it seems we may have reached an agreement without reaching an agreement on ending months of failed action in farm bill negotiations. This week we might be able to call it a "breakthrough" as leaders from the House and Senate, as well as key White House administration officials, all seemed to agree (a relative term) on framework spending. The verdict is still out on whether this will break the stalemate. Senate leaders have questioned the basis of the framework and complained they weren't included in negotiations. And farm groups do not think it provides the needed safety net.

The House released a framework proposal that outlines a 10-year farm bill (2008-2017) with $6 billion more in spending, without increasing taxes. Early reports indicate the framework cuts overall spending by $12 billion from the earlier House-passed bill. The cuts include $6.5 billion from the Commodities Title, including $5.2 billion from eliminating direct payments in the ninth year of a 10-year bill, and $175 million from eliminating increases in marketing loan rates and target prices.

The plan also would require producers of all commodities, with the exception of cotton and rice, to lose beneficial interest in their crops in order to receive a Marketing Loan Gain or Loan Deficiency Payment (LDP).

The framework also does not include a revenue-based option approach - an idea that was initially included in both versions in differing fashions.

On the issue of payment limits, the framework states no commodity payments would be directed to individuals with an adjusted gross income of $900,000 or greater, averaged over a three-year period, excluding conservation payments. That compares to a $1 million "hard cap" in the House-passed bill and the $750,000 limit in the Senate-passed measure.

A major change in the conservation title is the size of the Conservation Reserve Program (CRP) to 32 million acres (down from the current statutory maximum of 39.7 million acres). The 32-million-acre cap would include land enrolled under the CRP continuous signup and Conservation Reserve Enhancement Program. In addition, it would prohibit any new general CRP signups before Oct. 1, 2009. Approximately 34 million acres currently are enrolled in the CRP.

Most of the adjustments in the House framework keep House farm bill provisions, except for in the energy title, which accepts many of the Senate's. This includes an extension of the 51-cent ethanol blenders credit.

Farm organizations wrote to Congressional leaders saying the $6 billion level seriously under-funds the bill, especially as the Commodity Title already experienced a 60% decrease in baseline spending. The groups say providing less than $12.5 billion in additional funding will "require the farmer safety net to bear the unfair burden of paying for increases in spending in other areas of the bill."

"It is easy for some to say that, in these times of good prices, the safety net for agriculture can or should be weakened. However, we should learn from the past. Markets move. During the life of the 1996 Farm Bill, generally good prices in 1995-1996 quickly turned to poor prices in 1999 and beyond. Combined with the dramatic increases in farm input prices already faced by agriculture producers today, a downturn in commodity costs could prove disastrous for American agriculture. For this reason, it is imperative that prices today not be used as a justification to erode the future safety net for agriculture," the groups write. Read the full letter.

Negotiations are ongoing this weekend, and reports indicate a hard agreement on exact spending levels needs to be accomplished by Sunday so staffers can work out details next week during the President's Day recess.

Friday afternoon the Senate proposed its own spending options and submitted it to the House. It calls for spending $12.3 billion above baseline and better "meets the needs of this farm bill without having to cut back on the critical investments made by the Senate-passed bill in renewable energy, conservation, nutrition, rural development and better diets and health for all Americans." 

A statement from Senate Agriculture Chairman Tom Harkin and ranking member Saxby Chamblis said, "The goal now is to reach agreement with House negotiators and the White House so we can identify funding mechanisms to support these investments that the White House, Senate and House can agree upon."

Time is ticking as March 15 rolls along, and if nothing is passed by this time, it will revert back to the 1949 farm law.

 

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