The plot thickens in the farm bill saga, although one economist stresses we are far from a final version of the legislation.
What is certain is that the current debate reflects the deep ideological difference that has intensified among policy makers in the last two decades, says James Novak, an Alabama Cooperative Extension System agricultural economist and Auburn University professor of agricultural economics.
Late in 2011, the House and Senate Agricultural Committees’ leadership put together a “2011 farm bill” that reportedly would have resulted in modest cuts to farm programs. However, Novak says this bill “died on the vine and the contents were never made public.”
In 2012, the House voted on and passed the 2013 House Budget Resolution (the so-called Ryan plan) with what is estimated to be slightly more than $181 billion cuts in agricultural programs in a 10-year period. Among numerous cost-cutting provisions in this bill, direct payments would be reduced by 33 percent, saving a projected $12 billion.
Crop insurance premium subsidies would be capped at the 75 percent coverage level, saving an estimated $15.5 billion. Commodity export programs would be reduced by more than $3.5 billion.
Conservation cuts include caps on CRP enrollment and the elimination of the CSP program for $16 billion in savings.
Food and nutrition programs did not escape the budget ax. Under the plan, SNAP (formerly known as food stamps) would be administered through block grants to the states, saving an estimated $122.5 billion.
Many policy makers assume that cuts in traditional farm support programs would be accompanied by a greater emphasis on crop insurance and risk management protection, but this doesn’t appear to be the case, Novak says.
Crop insurance cuts
Proposed cuts in crop insurance add to the multi-billion dollar cuts to the program sustained in 2010.
Some policy makers and farm groups advocate an approach that integrates crop insurance with farm income support. “That may be where we’re heading,” Novak says. “Recently, there has been a lot of sentiment expressed for a revenue loss program that sits on top of crop insurance, and we’ll see where that goes.”
According to Novak, Rep. Collin Peterson, ranking minority member of the House Agricultural Committee, has indicated it may be easiest to satisfy competing farm program interests by offering them a choice of programs. The choices may consist of a STAX-type program, the current counter-cyclical payment system or a shallow-loss revenue program.
In some respects, the budget cuts and farm bill debate reflects 1930s thinking about the New Deal versus the free market. Although seemingly divided on an ideological and partisan level, GOP and Democratic members of both the House and Senate Agricultural Committees do not seem that divided over the shape of the next farm bill. However, Novak says, “The shape of the next farm bill will be affected by the upcoming presidential and congressional elections.”
“Deck chairs on the committees may be significantly scrambled,” he says.
For his part, Novak has been struck by the widespread disillusionment among voters for congressional incumbents, noting the recently organized and well-funded “super PAC” known as the Campaign for Primary Accountability, which is urging voters to throw out all incumbents.
“If they’re successful and we get a whole new crop of lawmakers, all bets are off on the type of farm bill that ultimately will come out of the ag committees,” he says.
Meanwhile, Novak says the cuts in the proposed 2013 House Budget Resolution seem to reflect the consensus of the House.
On the other hand, the Senate has not yet assented to the House Budget Resolution and, if reports are accurate, is unlikely to do so.