New proposals on the horizon for 2002 farm bill

A new president, a new congress, a new secretary of agriculture...a new farm bill can't be far behind.

As the dust continues to settle from 2000's historic election, proposals for a new farm bill soon should be in plentiful supply. And, as government support continues to make up an ever larger percentage of farmers' income, the next farm bill could be the most important ever. Congress has enacted more than $24 billion in farm bail-outs since October 1998, doubling the cost of the 1996 farm bill.

What can we expect from the George W. Bush Administration? Well, like most politicians, he hasn't been too specific on farm policy. Generally speaking, we know he supports science-based bio-tech, ethanol research and use, trade with China and direct payments to farmers. He doesn't favor using food as a weapon, he doesn't favor supply control and his choice of Californian Ann Veneman for secretary of agriculture probably was more a nod towards diversity than a statement on future farm policy intentions.

Conventional wisdom inside the Beltway says that internal pressure for change and attempts to appease farm belt voters likely will supply sufficient pressure to change Freedom to Farm or, as some of you affectionately refer to it, Freedom to Fail.

Pressure exists for a farm bill before 2002, but Auburn University Extension economist Jim Novak says the chances of that happening are "nil to none."

"However, proposals for the new farm bill now are being discussed, and it's worth considering the alternatives being proposed," says Novak, adding that peanuts and tobacco are on their own.

The impact of the federal budget has been a very important part of the debates over past farm legislation, he says. "The budget likely will be a part of the current debate but not a serious part. Whatever is developed, most of the emphasis probably will be to shore up farm revenues and to keep farmers in business."

There are numerous uncertainties for 2002, says the economist. "Lots of money has been provided during the last couple of years. But 2000 was an election year, and Congress willingly provided. This is an off year, and they may be less willing. Another uncertainty is that the budget surplus may evaporate," says Novak.

Looking at expectations for 2001, environmental groups have been unusually quiet, he adds. "Are OMO's taking up most of their time and energy? Are they biding their time? Or, are they getting what they want? Rural community advocates have been trying, but they haven't been very successful. The attitude in Congress among some is that these programs are a waste of money. Input suppliers just want to get paid, landlords just want their rent and livestock producers want more aid but no interference."

The leading contenders for policy options in 2002 include counter-cyclical payments, higher loan rates, continued FAIR Act payments, reverting to old policies and upgrading crop insurance, says Novak. Counter-cyclical payments would pay farmers whenever crop prices fall below a "trigger level," he explains. Loan rates may be increased by a given percentage from FAIR Act levels to achieve targeted budget impacts.

Farmers generally are happy with planting flexibility, and this provision probably will be maintained in a new farm bill, he predicts. However, recoupling payments to set-asides is unlikely under current thinking.

So, what is Novak's guess for a 2002 farm bill? "We might see county-level SIPP or Supplemental Income Payments for Producers. The loan program will be preserved because it's just too popular. We may see higher loan rates, and loans coupled to conservation compliance."

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