Sep 27, 2012  |  Today's News

Waiting until lame duck or even next year to pass a farm bill is part of the House’s tactic to force the target price program passed in the House Ag Committee and kill the revenue protection program you told us you wanted that was passed in the Senate.  In 2013, the Congressional Budget Office score will increase on the revenue protection program to include the higher priced crops we are now seeing as a result of the drought. 

In other words, you could be penalized in the next farm bill for the effects of the drought on your crop prices regardless of the sound farm policy philosophy you and your organization have espoused.  Read the following updates from Philip Brasher, CQ Roll Call for more information.

Your calls and pressure on your elected officials to get a farm bill passed before the end of 2012 could be the only thing allowing you to maintain the farm programs you now rely on in tough years.

Farm Bill Delay Could Give House Panel Upper Hand

by Philip Brasher, CQ Roll Call

Senate Agriculture Chairwoman Debbie Stabenow and several farm groups are expressing alarm at the possibility that Congress may not get around to passing a farm bill until next year. You aren't hearing the same concern coming out of the House Agriculture Committee. Here's why: If Congress doesn't do a new bill until after March of next year — a good possibility at this point — then the legislation likely will have be written using updated spending estimates that take into account this year's run-up in the price of corn and other commodities and higher price projections for the next few years. Those higher market prices would probably increase the cost of subsidizing farmers under the Senate bill (S 3240) while lowering the cost under the House's preferred approach (HR 6083), economists say.

Lucas: "Highly Improbable" Bill Could Pass Before CBO Update. The House bill's Price Loss Coverage plan would trigger subsidies in a year when commodity prices fall below levels set by the bill. So as market prices rise payments would be smaller, if they are made at all. The PLC plan "becomes cheaper" next year when higher price forecasts would be taken into account, House Agriculture Chairman Frank Lucas, R-Okla., told CQ's Ellyn Ferguson in an interview. " That’s part of why you see my friends in corn country, or should I say the folks who represent the organizations in corn country, part of why they are so frantic. They know their program becomes more difficult" when the Congressional Budget Office updates its baseline for farm programs in March with new price forecasts.

Lucas went on to say that passing a new farm bill in the new Congress before March is "highly improbable."

Peterson: Cost Estimates Could Kill Revenue Plan. The committee's ranking Democrat, Collin Peterson of Minnesota, was even more blunt in an interview with me. He would welcome higher cost estimates for the revenue program. "That's a good way to kill it off, because that's a bad idea." he said.  "I want target prices, and I don't want a revenue program." Farmers who feel they need the revenue protection the Senate plan would provide can buy an additional crop insurance policy, called the Supplemental Coverage Option, that both bills would authorize, he said.  The House bill's plan already got a boost in August when a study by Texas A&M University study found that the PLC option would be preferred over the Senate's revenue program by 60 of 64 representative farms that were analyzed.

But critics of the House program say the target prices could distort farmers’ planting decisions and fail to help farms in years when their crops are poor but prices are high. The National Corn Growers Association and the American Soybean Association, among other groups, favor the revenue-protection plan, such as the Agriculture Risk Coverage program that's featured in the Senate bill. But that kind of plan becomes more expensive due to the increase in market prices, because they get calculated into the average revenue levels off which payments would be made. The run-up in market prices would make ARC more likely to trigger payments, and hence more costly to taxpayers.

CBO’s current cost estimate for ARC doesn’t take into account this year’s soaring corn price, which rose above $8 a bushel as crops shriveled in the summer heat. CBO's March 2012 baseline assumes the price of corn would be just $4.96 this year and fall to $4.54 in 2013.

One-Year Extension Provides Certainty, Lucas Says. Because of the budget issue, the American Farm Bureau Federation and some other groups are likely to lobby Congress to extend farm groups only until March if a new farm bill doesn't get enacted in a lame duck session. Lucas said that's an understandable position for proponents of the revenue program to take, but he said a one-year extension would provides certainty to farm programs heading into a year when Congress to consider cutting federal spending across the board. "Even if you pass the farm bill and signed it into law anytime in 2012 in budget reconciliation everything is on the table," he said.