Ag Groups Discuss What They Want in the New Farm Bill03/08/2017
The dynamics leading into the next farm bill debate are remarkably different than the last time around, as the farm economy now struggles with low commodity prices, depressed farm income and a global supply glut.
Over the past three years, farmers have seen a 46% decrease in net farm income, the largest three-year percentage drop since the Great Depression. At the same time, the U.S. economy has improved considerably since 2014, putting more people back to work.
Discussions on the farm bill have already started to take root, especially among traditional farm groups looking to get their messaging consistent, as work on Capitol Hill gets underway later this year on formulating the next farm bill.
One thing ag leaders have heard is congressional members do not want to be the referees among different ideas, so the need for a consistent message is paramount.
With farmers identifying the current farm bill as an inadequate safety net, it will become all that more important to make the right changes to secure solid footing ahead. Three main areas include adjustments to the dairy, cotton and revenue protection programs.
Chuck Conner, president and CEO of the National Council of Farmer Cooperatives, says the current farm bill is clearly not working well for cotton and dairy producers. “I do not think a simple extension is possible. The equity among different facets of the industry dictates otherwise,” he says.
Some believe the Agriculture Risk Coverage-County (ARC-CO) program provides an adequate safety net, and others believe it needs to be modified or eliminated and replaced with a different safety net program.
Farm organizations are concerned whether payments under ARC-CO would be equitable if county yields are different – USDA National Agricultural Statistics Service data versus Risk Management Agency data in adjacent counties.
National Milk Producers Federation CEO Jim Mulhern says the dairy Margin Protection Program, created in the 2014 Farm Bill, is still the right program for the dairy industry’s future, even though it has yet to “live up to its intended potential” amid a struggling dairy economy. He says NMPF is committed to determining the necessary adjustments – such as restoring the margin feed cost adjuster to the level NMPF originally intended.
Conceptually, MPP is a solid idea, but it is a national program that doesn’t appreciate the regional differences that exist within the dairy industry. Legislation has been introduced to use regional margin calculations, rather than a national average in the MPP.
Cotton producers wanted an insurance program called STAX in the last farm bill debate. That has not panned out as well for them, and they’re looking to get back to the more traditional price loss coverage.
“STAX, like any revenue crop insurance policy, is not designed to provide protection against long-term, multiyear price declines, which is the market situation the cotton industry has been faced with since 2014, coinciding with the implementation of the current farm bill,” says Reece Langley, National Cotton Council vice president of Washington operations.
“In the next farm bill, cotton needs an enhanced safety net that provides greater support in times of depressed market prices. This will be a major focus for the cotton industry as development begins on the new farm bill.”
Under the Trump administration, Conner expects a “pro-farmer” farm bill if the grass-roots populism comes together. “I believe the success or failure of the next farm bill may well depend on our ability to tap into grass-roots populism,” he says.
He adds a key reason for the victory within the GMO debate was agricultural groups’ ability to tap into powerful rural advocacy.
During the GMO debate last summer, 1,400 groups came behind a common effort. Although the farm bill is a more diverse set of issues, it can be done in the same united fashion with similar results, Conner says.
John Gordley, director of the American Soybean Association’s Washington, D.C., office, has been one of the leaders pulling groups together in 2016. The goal is to come up with policy solutions and to fix the imperfections, rather than throw everything out and start from scratch, he says.
“We have to be vigilant to keep our organizations together better than we did the last farm bill,” Gordley says, adding there is a lot of work to strengthen the alliance between anti-hunger and conservation groups.
“It is clear from stakeholder discussions that the agriculture community as a whole has little interest in slogging through a farm bill debate without working closely with those in the nutrition community,” Conner says.
Ben Mosely, USA Rice vice president of government affairs, says it’s important for commodity and other farm groups to come together ahead of farm bill negotiations. “Reaching consensus will be a challenge, but we’d all be better off if we have a united front going into the farm bill,” Mosley says. “At the same time, I believe that it’s equally important to stay in your own lane and really focus on what’s best for your organization without getting caught up in someone else’s priorities, or the type of safety net that works or doesn’t work for them.”
No doubt there will be attempts from outside groups such as the Heritage Foundation – which has advocated for a split of the traditional farm programs from the nutrition title – to again insert their influence on the next debate.
Matt Herrick, former director of communications under former Ag Secretary Tom Vilsack and senior vice president at Story Partners public affairs, says, it is an open question on how influential they’ll be in shaping the federal budget, but that will become clear when Congress negotiates a new budget in April, as the current short-term fix expires.
Herrick says if the coalition between these budget hawks and the White House, as well as House Speaker Paul Ryan, proves effective, “it may go after key titles in the farm bill: commodity payment programs, crop insurance and nutrition.”
Based on the Congressional Budget Office’s January forecast, ARC and the Price Loss Coverage programs are on track to cost about $60 billion over 10 years, which is billions more than the original estimated price tag when the bill was passed. At the same time, the money USDA spends subsidizing producers’ crop insurance premiums and other program costs is projected to total about $80 billion over the next decade, billions less than originally projected.
Joe Outlaw, co-director of Texas A&M’s Agricultural and Food Policy Center, says do not count on any new money flowing into the next farm bill since it is under budget by several billion dollars.
“What you are trying to do with the safety net is provide the last line of defense before major bankruptcies. When there’s less money available, that safety net has to be a little lower, so things have to get a little worse before government help [begins],” Outlaw says.
Outlaw says he continues to hear how commodity groups continue to say that they’re going to work together. “The reality is this: They’re going to try to, but it’s all going to come down to money.”
The Farm Bureau and its policy platform often play a key role in shaping the farm bill with Congress; however, Herrick expects the relationship between AFBF President Zippy Duvall and Sonny Perdue to have an “outsized influence this go around.”
When Duvall was asked the role he perceives Perdue will play in the farm bill process, he expects him to sit on the sidelines unless lawmakers or farmers ask him to get more involved. “I think he’ll let the process work, because he understands that from his time as governor as well as anyone does,” Duvall shares.