Economist predicts November farm bill

A new farm bill could be passed in November, says Texas A&M economist Joe Outlaw, but not before cuts are made, possibly in fixed payments.

There has been talk in Washington, D.C., he adds, that short-term farm legislation will be added on to the continuing budget resolution that'll have to be passed for the government to continue operating.

“My guess is that we'll have the farm bill done sometime in November. The Senate is scheduled to be in session into December. They could get it done. At this point, there isn't anything that could come up that would prevent us from having something pretty close to what we have now. There's no money for anything different, and there's no one with the ability or influence to try and make it happen,” said Outlaw during the recent Southern Region Agricultural Outlook Conference in Atlanta.

If the Senate can't come up with enough money for renewable energy, fruits and vegetables, and federal food programs, then they'll have to find a place to make cuts, he says. “I think that will likely happen, although I'm not sure what form those cuts will take. The commodity groups I deal with on a regular basis are asking these questions — they want to know which cuts are going to affect them the least.

“I don't think there will be a farm bill if we don't have tighter payment limits. Tighter payment limits and tight payment limits are two different things.”

The current farm bill, says Outlaw, has been good for Southern agriculture. “I don't see how we could do much better than what we have right now considering the money we have. With high prices, there is a lot of sentiment against fixed payments. If I was going to bet where they would take money from, as we go forward, I would bet they would be looking at fixed payments,” he says.

“We know how much we can spend, and people are asking if we can do a farm bill with the amount of money we have,” says Outlaw. “We can do the same exact farm bill we have now with the money that's now available. It's a pretty good farm bill and provides a reasonable safety net that most people think is good.”

Whenever you start thinking about changing the farm bill, you start talking about more money, he says. “I don't believe any thinking person believed it when the Budget Committee promised that if you can find offsets from someplace else, you can have more money for the farm bill. The problem is that you can't have the budget offsets without strings attached,” he says.

Turning to the politics of the new farm bill, Outlaw says the new majority in Congress must be seen as doing a good job. “That means they have to be passing laws because that's how they are measured. Otherwise, we already would have gotten an extension of the current farm bill. A number of people don't want an extension. But frankly, with the money they have, they can't do much different from what we now have,” he says.

It won't make much difference, says Outlaw, that there's a new secretary of agriculture. “The acting secretary (Chuck Conner) is cut from the same cloth as Mike Johanns. Our President doesn't have too many people in his inner circle who don't march to the same beat he does. There won't be much difference. If they go with Chuck Conner, it'll be about the same. If they put someone else in his place — the President doesn't put anyone in place that he doesn't control,” he says.

In terms of World Trade Organization talks, Outlaw says the fact countries are singling out cotton doesn't bode well for other crops. “If you think this is not the first step in singling out the next commodity, you're kidding yourself,” he says.

Looking at the different versions of the farm bill, Outlaw says the Bush Administration's version essentially changes payment limits and changes CCP to a revenue income plan. “The House version changes payments a little and gives people an option of a revenue plan. We've been looking at revenue plans for the past couple of months, and whether it's a state plan or a national plan, how you set the targeted revenue is all that matters.

“Setting it high means a lot more money than setting it low. Setting it low with the option of moving up with inflation is better than setting it fixed,” he says.

Sen. Tom Harkin of Iowa, chairman of the U.S. Senate Agriculture Committee, initially said that he would favor cutting direct payments in favor of other things in the farm bill, says Outlaw. “He got crushed on that issue and came back to say that direct payments would not be touched. But in recent days, he has said that something might have to be done about direct payments,” he says.

If a committee chairman doesn't have the votes to get a bill out of committee, then he takes a long time with the bill, and that is what has happened with Harkin, says Outlaw.

“It is a big deal when you ‘roll’ or run over your chairman. Senators Lincoln from Arkansas and Conrad from North Dakota are not with him on what he wants to do with the farm bill.”

Sen. Max Bacchus of Montana (chairman of the Senate Finance Committee) says he found $8 billion to $10 billion to give to the farm bill, but $5 billion already has been spent on a permanent disaster program, says Outlaw.

“There are 21 people on the Senate Ag Committee and two Democrats are gone. You can have your basic party split, plus Republicans, and you'll never get anything out of committee that doesn't look like this current farm bill,” he says.

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