UPDATE - Farm Payment Limits

- from the desk of Ferd Hoefner, Sustainable Agriculture Coalition, fhoefner@msawg.org

WEEKLY UPDATE - Budget Reconciliation - Farm Payment Limits

Budget-Induced Farm Bill Rewrite Blows Up: Last week we broke the news, long before most of Washington knew, that the Senate Agriculture Committee might markup the budget reconciliation bill to cut $3 billion from the farm bill. Well, the heads up was right – markup was scheduled for Thursday and Chairman Saxby Chambliss (R-GA) released his plan Wednesday morning at 10. By Wednesday night at 10:30 pm, however, the plan, at least for now, was dead.
But perhaps not for long – we expect a revised plan to be brought forth soon after the upcoming congressional recess week is over. With the deadline for reporting budget reconciliation plans approaching, we currently expect both the House and Senate Agriculture Committees to markup their respective farm bill spending reduction plans during the week of October 17.

Meanwhile, members are back in their state or district, and need to hear from constituents!

As expected, the Chambliss plan included the renewal of the dairy MILC payment program, which expired last Saturday. In Chambliss’ proposal, while renewed, the milk payment program was scaled back from a $1.3 billion cost to just under $1 billion. Even that proved too much for many groups to stomach -- including the Farm Bureau, the Wheat Growers, western dairy groups, and dairy processors -- and as a result several Republican Senators objected to the package.

Adding to the chairman’s woes, a couple of other GOP committee members resisted the $574 million cut to the food stamp program in the plan. Also very much in play in the collapse of the bill was a week of intensive back and forth between the chair and Senator Grassley (R-IA) over the payment limitations issue, still very much unresolved. Over on the Democratic side, there was uniform opposition with the sole exception of Senator Leahy (D-VT), who was prepared to vote for the package for the sake of securing the MILC extension.

The task of putting Humpty Dumpty back together began yesterday, with both a GOP members meeting and a meeting between the chairman and the commodity groups. Clearly, deep rifts exist that will not be easy to bridge. The one trump card in the chairman’s hand is the threat that if the GOP committee members do not restore ranks and work out a deal, they will forfeit to the Budget Committee the right to rewrite the farm bill. And the Budget Committee is chaired by Senator Gregg (R-NH), one of the most vocal critics of farm programs in Washington. No less important, the two notable agriculture leaders on Budget are Senators Grassley and Conrad (D-ND), both champions of payment limitation reform.

The Chambliss Cuts: Chairman Chambliss kept his promise made months ago to the food stamp and nutrition groups that he would include only one food stamp cut – the Bush proposal to eliminate categorical eligibility for food stamps for welfare recipients who receive only non-cash welfare benefits. With that $574 million cut in place, the next big decision wasincluding the milk payment extension, a decision that increased the total cut needed from $3 billion to $4 billion. The crop insurance industry successfully pleaded its case that no cuts should come from insurance subsidies, so the next place to turn was the Initiative for Future Ag and Food Systems, which was slated for a $338 million cut, considerably less than the $780 million if the program were terminated completely.

With those pieces in place, it came to the big show – commodity cuts and conservation cuts. Enter smoke and mirrors – $518 million of the commodity cuts came from a timing change in receipt of payments. Next up – the termination of the cotton step-2 export subsidy program, which according to the successful WTO case brought by Brazil should have been terminated
July 1. But wait, on this one the chairman proposed delaying termination for nearly another full year, a move which chopped the would-be $500 million in savings nearly in half. Needless to say, Brazil is not happy, and retaliation grows ever closer.

With payment limitation reform clearly not in the plan for southern Senators, these moves left two options – an across the board cut on commodity payments and slashing the Conservation Security Program. Chambliss chose a 2.5 percent reduction in commodity payments, and an $821 million cut to the CSP. Throw in small cuts to CRP, EQIP, and the sugar program, and the net grand total was exactly the $3 billion demanded by the congressional budget -- Q.E.D.

Lots of Press, Lots of Buzz: Needless to say, with a mini-farm bill debate in full swing, interest groups came out swinging, creating lots of noise in the press. We are happy to report that many of our farmers and organizations were quoted in the process. If you would like a copy of a collection of some of the stories and interviews that ran, send an email to fhoefner@msawg.org and we’ll send it your way.

for more information post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
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