The business-as-usual Farm Bill

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You're going to think I'm going soft when you read this, so I'll just say it: The House Farm Bill proposal was a far cry from what we need to bring ag policy into the modern world. And the Senate Farm Bill, now in debate, is going to be even worse unless someone on Capitol Hill comes to their senses and finds a way to get politics out of the way of common sense.

Yesterday USDA Secretary of Agriculture Chuck Conner neatly summarized the problems facing the farm bill - and his frustration over Congress ignoring USDA's thoughtful and well-calculated proposal from last February.

"Despite the call for reform coming from farmers and taxpayers alike, Congress we believe has responded with a business as usual Farm Bill," Conner (left) told a group of farm broadcaster in Kansas City. "Farmers have the right to demand more. They also have the right to a bill that is paid for in an honest and straightforward fashion, not with budget gimmicks, certainly not with more tax revenues coming into the U.S. Treasury."

Where does the senate farm bill fall short? Conner counted the ways in his press briefing. 

First, it fails to reform the rules of beneficial interest to put an end to what USDA describes as the "pick your price phenomenon." The Administration's proposal requires producers to give up their beneficial interest in a crop when they lock in their loan payment rate. That solution is fair, fair to taxpayers, fair to the producers, and it would save a billion dollars over 10 years.

Second, the Senate bill fails to go far enough in lowering the adjusted gross income (AGI) cap on participation in our farm programs. "We believe a $200,000 adjusted gross income averaged over three years is a fair limit," says Conner. "This would affect only 38,000 people who are among the wealthiest 2 percent of all Americans, and that of course would generate $1.5 billion in savings."

Third, the Senate bill increases target prices and loan rates on 80 percent of program crops. "That is a step in the wrong direction," Conner says. "It is on the wrong path. Loan rates should be tied, we believe, to actual market prices for those crops as we propose to do in our (USDA) Farm Bill. This will ensure that planting decisions are driven by market dynamics, not by government benefits.

"And ladies and gentlemen, if there's one thing that should be a keystone of 2007 is that we want our producers' planting decisions to be driven by the marketplace, not by government programs." 

Amen. Take a look at 2007 as a powerful example of what can happen when the marketplace is allowed to talk. Ethanol plants went in, corn prices went up, and farmers planted more corn.  

Budget gimmicks The analysis performed by Congress's own budget experts reveals that the Senate Farm Bill contains nearly $22 billion of "pure budget gimmicks" and another $15 billion of new tax increases. The Senate increases Food Stamp benefits for the most vulnerable and then takes that increase away five years later in order to save money, ramping it up only to have it ramped back down.  It claims to provide permanent disaster aid, but eliminates that funding too in five years. These programs will then have to either be terminated or be brought back later on.

The $15 billion in new taxes in effect does ask other industries to pay for farm programs, and that is a monumental task, says Conner. Not since 1933 have new taxes been sought to pay for a Farm Bill. "How do we expect to maintain public support for our farm programs if we're asking other industries to bear the cost of program expansions... at a time when we are seeing record incomes virtually across the board?"

There is still some time to transform the Senate Farm Bill into one that can win the President's support if Senators do adopt real reforms. But knowing how Capitol Hill operates, I'm not holding my breath.

 

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