Chance of major farm bill changes not very likely

Joe Outlaw, a Texas A&M University economist who has analyzed farm policy for two decades, says modestly that only an “idiot” would make predictions about the future farm bill, so it might as well be him. Outlaw, who was the featured speaker during a recent series of 2007 Ag Forecast breakfasts held throughout Georgia, doesn’t expect many changes in the upcoming legislation.

His assessment should be sweet music to the ears of farmers throughout the Southeast. USDA Secretary Mike Johann’s “listening sessions” of this past year, with their theme of WTO compliance, left many growers understandably uneasy about future prospects.

The Bush Administration’s farm bill proposal was predicted to be “dead on arrival,” says Outlaw, because there were earlier threats about how far it might go. “But most elected officials have said there are parts of the proposal they like, so they won’t dismiss it out of hand. In total, it’ll never happen.”

There’s one thing, he says, that’ll shape a new farm bill more than anything else, and that’s the budget baseline. “We’re not making payments, and we’re not expected to make payments under current policy, which is what sets the budget baseline. How do you change policy with less money in payments? It’s hard to do. There just won’t be much in the baseline to craft the new policy — that’s really the story.”

Essentially, says Outlaw, you only get to spend what current policy would have spent. There may be a couple of ways around it, but that basically is how it works, he says.

Turning to international trade issues, he says it always has been fashionable in Washington, D.C., circles to be pro-trade. “Every president since the beginning of time has been pro-trade, and at this point in time, there are more non-agricultural reasons to get a trade agreement. There is a lot of pressure on the president from the business and financial sectors to get a trade agreement. Brazil is complaining that we haven’t fully complied with our loss in the WTO cotton case, and honestly, we haven’t fully complied,” says Outlaw.

The U.S. agricultural community really likes LDP’s, he says, but they’re first on the list of things that the rest of the world would like to see us eliminate. “We’re trying to get everything in the ‘green box,’ so that we’ll be WTO compliant. There are some interesting ideas in the administration’s proposal, and most of them have to do with the United States more fully complying with its trade agreements.”

The Bush plan proposes revising marketing loan rates based on five-year market average prices, says Outlaw. “That would lower loan rates for a number of commodities, making us pay less in LDP’s, which in turn makes it less trade distorting. On the other side, it increases direct payments, and the rest of the world really loves that,” he says.

The administration’s proposal also would streamline conservation items and put more money into the Conservation Security Program, something that definitely will happen, he says. “I also fully expect that planting restrictions on fruits and vegetables will be eliminated, and I’ve expected that since the cotton case.”

A lot of people — including environmental groups — will be jockeying for a place at the table when the farm bill is hammered out, he says.

It’s still a bit early to tell with any degree of certainty how the new legislation will turn out, but Outlaw thinks there’s probably less than a 25-percent chance that lawmakers will change the basic structure of the current farm bill, including loan rates, LDP’s and direct payments.

“I can say that pretty boldly. I do believe we’ll have something very similar to what we now have. And if we have less money, it’ll be even harder to make changes. The leadership is comfortable with the current structure, and the people who actually care about agriculture don’t want to change the program very much,” says Outlaw.

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