farm bill crop insurance management tool

NCC President and CEO, Mark Lange, left, and Joe Outlaw, Professor and Texas AgriLife Extension economist, discuss farm bill progress during a break at the recent Concho Valley Cotton Conference in San Angelo.

Timing of new farm bill has become a guessing game

• Those  who don’t like agriculture will come after the direct payment and crop insurance. • Ryans's budget proposal is "problematic" for agriculture. • Crop insurance will become the basis for a farm safety net.

Guesswork is not the typical purview of economists — but predicting when the U.S. Congress will pass a farm bill and trying to evaluate the possibility of yet another farm bill extension has devolved in something of a guessing game, says Joe Outlaw, professor and Texas AgriLife Extension economist.

“My best guess is that Congress will get the farm bill done by the end of the fiscal year,” he said at the Concho Valley Cotton Conference at San Angelo. “Some think there is a possibility of another extension, but I doubt it — for now. That’s a guess, though.”

He hopes the bill is done this year. “I’ve been working with it for three years now. Another extension could be good for some farmers because they would receive another direct payment. It would be smaller, but it would be guaranteed. Last year, I’d have said the direct payment would be gone this year, but if we don’t get a farm bill this year, farmers will get it again.”

Farm programs will change, Outlaw says. “Agriculture policy will be different. Farmers will still have a safety net, but we have no expectation that the safety net will be as good as what we have now. We’re moving toward a program where crop insurance is the risk management tool. Insurance coverage doesn’t have a floor. Farm bills like we used to have are over.”

A lot of those in Washington see “no reason why farmers should have a safety net,” he says. Those who don’t like agriculture will come after the direct payment and crop insurance — that’s what they talk about cutting.”

The delay has already had an impact, he says. The estimated savings included in both House and Senate proposals has already been reduced as conditions and baselines have changed. The House bill, which estimated $35 billion in savings is now down to $26 billion. The Senate bill, which earlier this year purported to save $23 billion, is now down to just $13 billion in savings.”

Both proposals, especially the Senate, may need to go back to the drawing board. But Outlaw expects the bills offered by each house will be similar to those already worked up.

Conference will be necessary

Mark Lange, president and CEO, National Cotton Council, says the bills are different enough that a conference will be necessary. “We can expect a dust-up,” he says.

Timing remains a question, but Outlaw notes some possibilities. The agriculture committees and staffs are supposed to be ready by the end of April or early May. If that goes as planned and other elements fall into place — and if compromise committees are not too contentious — the bill could become law by the end of the fiscal year.

“But reality is that the farm bill is in a holding pattern in Washington,” he says.

Legislators will also have less money to craft a farm program. “The amount of money spent on agriculture is insignificant in the overall budget. But spending will still go down. A safety net for producers, which kicks in when things go bad and keeps them farming the next year, will remain. There will be enough money for a safety net, but not as much as before.”

The amount of money for conservation, commodity titles and crop insurance “pales in comparison to money spent on nutrition programs.”

Lange says the agriculture committees will work with a budget that meshes with the sequester. “With Congress, budget setting comes first.”

The Paul Ryan budget “is problematic” for agriculture, he says, slicing $31 billion out of commodities and $18 billion out of crop insurance.

Lange is also concerned that Congress do nothing to jeopardize the framework agreement with Brazil that has at least delayed retaliation for their case against the U.S. cotton program.

If the agreements are not honored, he says, Brazil will not have to impose measures, but the U.S. Chamber of Commerce will step in and pressure Congress to take action against the cotton program.

“Jurisdiction will be in the House Ways and Means committee,” he says. “It will not be under the jurisdiction of the agriculture committee.”

That’s the reason the NCC came up with a separate program for cotton — STAX, an insurance-based program that producers can buy on top of their regular crop insurance product. Farmers would have several levels of coverage available.

Southern farmers, especially those raising peanuts and rice, are not happy with the Senate proposal, Lange says. “The Senate responded by adding a reference price.” He agrees with Outlaw that “crop insurance will become the prevalent means to address the safety net issue. We will be in a time of shifting sands through this fiscal year,” he said.

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