Published 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 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. Of that $23 billion in savings projected over next 10 years, $4 billion comes from food stamps.
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.
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. That plan is the framework as the Agriculture Committee's draft of the massive bill, which 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.
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.
"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.
The main focus of the Senate debate on the 900-page bill will be reaching a consensus on the future safety net for commodities. Under the draft, direct payments, now costing $5 billion a year, and which pay farmers even for land they don't plant, are eliminated. Instead, it introduces a "shallow loss" program that would pay farmers when modestly decreasing yields or declining prices on land actually planted 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. The Obama administration had proposed cuts in those subsidies for farmers and payments to insurance companies, but the draft maintains subsidy levels.
Corn and soybean farmers applauded 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 under which target prices are set and farmers are compensated when those prices aren't reached. The draft eliminates counter-cyclical payments but does create a revenue guarantee program for cotton.
Craig Cox, senior vice president of Environmental Working Group, also criticized the plan for replacing direct payments with the new revenue guarantee program and said his organization was disappointed the plan "failed to require that farmers protect wetlands, grasslands and soil health in exchange for insurance subsidies."
Agriculture Secretary Tom Vilsack said his office was reviewing the bill and said he was optimistic lawmakers would try to pass legislation. "Farmers, ranchers and the men and women who live in rural communities deserve to know what the rules will be moving forward."
If no deal is reached by September, Congress will need to extend the existing bill, and that too will not be easy. "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.