Strategy for Next Farm Bill

Ag Groups Begin Discussing Issues Facing Industry

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Farm programs have paid out different ways than were originally projected when Congress wrote the 2014 farm bill. That can affect the available funding for any program changes in the next farm bill.

WASHINGTON (DTN) -- Forget the presidential election. Farm groups are looking ahead to 2018 and the next possible farm bill.

General agricultural groups and commodity organizations are starting to meet and discuss various issues facing individual commodities and regions of the country.

Agricultural groups weren't on the same page when the push began for what became the 2014 farm bill. The eventual 2014 farm bill started as a rushed effort in late 2011 to insert the legislation into a grand deficit-reduction bill that was expected to come from the Joint Select Committee on Deficit Reduction, or the so-called super committee. The super committee failed in its mission, but the farm-bill language became a blueprint that lawmakers, farm groups and other would argue over until compromise was reached at the very end of 2013.

"We were woefully and poorly prepared when the last farm bill came along and we spent three years haggling over things and if we want things to come out any differently the next time around then we need to prepare for it," said John Gordley, chief lobbyist for the American Soybean Association and other oilseed groups.

Gordley wrote a column late last month highlighting some of the issues that have cropped up with the farm bill and how the costs have shifted just since 2014. He stressed the importance of better coalition building next time around. "We need to get ourselves better prepared than we were before the last bill and troubleshoot things," Gordley said.

Chuck Conner, president and CEO of the National Council of Farmer Cooperatives, is chairing the ad-hoc gathering of farm groups. Conner said the first few meetings have largely been educational with various agricultural sectors summing up the situation for farmers of their various commodities.

"It's not too early to talk about how the current bill is functioning and serving our members, particularly as you went around the table ... and hear everyone's assessment," Conner said. "There really has been a dramatic turn of events in American agriculture, just in income and the general outlook that is out there."

The days of $7-a-bushel corn are gone and no one is thinking that the good times are going to return soon, Conner said.

The early meetings thus far have highlighted that cotton and dairy producers effectively are operating with little or no safety net at the moment. In the meantime, the high reference price for peanuts, combined with the generic acre base created for southern producers, has led to an oversupply of peanuts. Then there are the growing disputes over disparities in the Agricultural Risk Coverage payments from county-to-county. At least some farmers have been asking for a new signup seeking to change their program choices.

The intent of the process is to discuss all of the various aspects of the farm bill and what has been happening in those various programs. That includes looking at nutrition programs, for instance. On Wednesday, the ag groups discussed the ins and outs of crop insurance and an upcoming meeting will focus on the state of conservation programs.

Conner said he hoped the discussions over the next year would create a little more unity among agricultural groups. "It would help us get a good farm bill across the finish line sooner than would otherwise be the case than if we all ignored each other and worked totally independently," Conner said.

Roger Johnson, president of the National Farmers Union, noted that grassroots members drive the policy positions for nearly every agricultural group, but it is important to understand the problems or flashpoints facing different organizations or industries. Johnson added that some programs haven't worked out the way they were intended in the 2014 farm bill. Dairy producers, for instance, have seen almost no benefit from the Margin Protection Program. Since the program is paying out very little in funding that will erode the authorized dollars for a dairy program in the next farm bill, meaning any changes would require taking dollars from elsewhere.

"That's going to be a real problem because I don't think you can write a farm bill without a dairy program," Johnson said.

Conner said he believes there's an understanding in Washington that farmers are at a point where policy decisions can be the difference between continuing to farm, or not. That mindset should place a greater emphasis on making sure critical analysis goes into any policy changes, but also that Congress acts on new legislation in 2018.

"Washington policymakers do understand there's been a dramatic change in the farm economy," Conner said. "When we wrote the last one there were record farm prices. The urgency of knowing the success and failure of a farm can often turn on the policy decisions that we make does put a different perspective on things."

Farm policy also has become more prescriptive as Congress has placed demands on USDA and the agriculture secretary to implement programs while restricting flexibility to change program parameters. Conner pointed to issues arising over payment disparities under the Agricultural Risk Coverage program (ARC-County) as one where if the secretary had more latitude then the payment disparities wouldn't be so broad.

"This is one, clearly, I think if the secretary had some discretion you would see some of the spreads in those payments narrowed quite a bit," Conner said. "But it doesn't seem like there is the ability to do that right now in that county-by-county circumstance."

The House Agriculture Committee has been holding hearings on the state of the rural economy, but Rep. Collin Peterson, D-Minn., the committee's ranking member told reporters late last month that it was probably too early for hearings on a new farm bill. Such work would not begin until next year after a new Congress reconvenes.

Gordley's column also highlighted how spending has shifted in food and farm programs compared to 2014. The $16.5 billion in savings that were projected in 2014 have dropped to $14.7 billion in expected savings when compared to the costs of the 2008 farm bill.

Commodity programs, once projected to reduce spending by $14.3 billion over 10 years, now are projected to cost $22.1 billion more than forecast in 2014 because of the decline in the farm economy.

Meanwhile, nutrition programs now are projected to cost less over 10 years because of improvements in the overall job market and a decline in the number of people on food aid. Nutrition programs now are showing a projected cost savings of $35.5 billion compared to when the farm bill was passed.

Overall costs for crop insurance are projected to decline $1.5 billion over 10 years, but those savings are skewed mainly because few farmers are buying the insurance program created for cotton producers called STAX. So little use is expected for STAX that the lack of participation now credits a $3.1 billion in savings over 10 years. That decline in STAX costs will translate into further eroding the budget baseline if cotton groups seek an improved safety net in the next farm bill.

At the same time, the safety net for peanut has increased roughly basically by the same volume that the cotton baseline has shrunk. The peanut safety net now has a bullseye on its back. The Washington Post has come out in recent weeks and criticized the safety net for peanuts. http://dld.bz/…

Gordley also stressed the importance of rebuilding the coalition of farm, conservation and nutrition groups that had been able to work effectively together until the recent political battles over nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP). The farm-and-nutrition coalition worked pretty well until the last farm bill came to the House floor. House Republicans sought to break SNAP away from the farm-bill programs and the battle tied up the legislation.

"There used to be a pretty effective coalition between rural and urban and it made sense to everybody," Gordley said. "If you take SNAP out of the farm bill, you aren't going to be able to pass it in the House."

Gordley's column on farm-bill programs: http://dld.bz/…

Chris Clayton can be reached at chris.clayton@dtn.com.

Follow him on Twitter @ChrisClaytonDTN.

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Chris Clayton