By Stu Ellis
The first of three steps have been taken toward a new Farm Bill, a 2014 version that will last through 2018 in all likelihood. The initial step occurred Tuesday and Wednesday of this week when the Agriculture Committees, first in the Senate, then the House, approved their version of farm and food legislation. The second step will be chamber approval, which could come as early as next week in the Senate. However, floor approval in the House has not been set, but could be in June. Finally, a conference committee of House and Senate members will meet, likely in July, to merge the divergent measures so Congress can pass a new Farm Bill prior to the August Congressional recess. The members do not want to return to their districts for a third consecutive year and report inaction to an angry constituency. They will already be campaigning for re-election by that time. So what have the House and Senate Agriculture committees cooked up to serve agriculture and consumers?
Multiple resources can be found at the websites of the House and Senate Agriculture Committees, which include the formal bills as well as summaries. The following is distilled from a variety of sources.
- Costs of the legislation will be approximately $100 billion per year with about 80% used for food aid and nutrition programs. The Senate claims about a $2.4 billion per year cut from the 2008 Farm Bill. The House claims a $4 billion per year cut from the 2008 Farm Bill. However, the House includes more cuts in food aid programs and also claims credit for phasing out direct payments.
- Commodity programs no longer include direct payments, ACRE, and SURE, which have been eliminated by both the House and Senate. The House offers a choice of two programs which include a target price program (see prices below) called a Price Loss Coverage (PLC) program that is designed to cover multiple year price declines, compared to crop insurance which is only year to year. The target prices would generate a payment to producers should commodity prices be below the target for the first five months of the marketing year.
Senate’s Adverse Market Payment Proposal
House’s Price Loss Coverage Proposal
Alternatively, the House offers producers a Revenue Loss Coverage (RLC) program also known as “shallow loss” coverage for additional crop insurance protection.A producer must have a 15% loss before it becomes effective, and is based on county-wide losses.PLC and RLC apply to planted acres up to total base acres on a farm.
The Senate’s version of a commodity safety net program also has two choices, which include the Agriculture Risk Coverage (ARC) program that is a crop insurance supplement with further choices of either farm or county-level coverage. The Senate’s target price program, Adverse Market Payment (AMP) pays on historic base acres and not on production that would run counter to global trading rules. It requires conservation compliance and the target, or reference prices as called by the Senate, are less than the House. The Senate contends the program is designed for risk management, and not as an income transfer program.
Payment limitations in the Senate Bill specify that no payments from commodity programs go to anyone with an adjusted gross income of more than $750,000, and that payments cannot exceed $50,000 per entity. The House replaces the two income limitation test (farm and nonfarm income) with a single $950,000 adjusted gross income limitation for commodity and conservation programs.
Crop Insurance is maintained at a level, which the Senate says is “strengthened” with coverage extended to fruit and vegetable crops not previously covered. The Senate bill also “addresses the declining Actual Production History (APH) yield problem by increasing the county transitional yield.” The Senate and House both create the Supplemental Coverage Option which allows producers to purchase additional coverage that would enable certain producers to receive indemnity payments for if losses were as small as 10%. The House increases the “plug” yield to 70% from the current 60% if information is missing. The Senate also increases the so-called “transitional yield.”
Both the Senate and the House bills convert the USDA policy into law that pays higher subsidy rates for crop insurance premiums for enterprise units. And both allow enterprise units coverage to be available for either irrigated or non-irrigated fields.
Conservation elements in the Farm Bill are consolidated into fewer programs with the Senate claiming a $5 billion savings over 10 years. While many typical programs are retained, the Conservation Reserve is reduced in scope. The Senate summary says, “Over the next two years, the contracts on over 10 million acres will expire. The bill lowers the acreage cap through a multi-year step-down to 25 million acres, allowing for the re-enrollment and prioritization of the most highly erodible, sensitive acres.” However, the House bill gradually reduces the size of the CRP from the current 32 million to 24.5 mil. in 2018.
The major controversy between the House and Senate’s versions was the handling of reforms in the Supplemental Nutrition Assistance Program (SNAP). The House claimed to have cut over $20 billion from SNAP over the next 10 years, while the Senate cut much less. The Senate bill eliminate lottery winners from receiving SNAP benefits, along with college students but does allow eligibility for those in basic trade and vocational programs. The Senate also eliminated liquor stores from participating and required participating stores to sell fruits and vegetables and other fresh foods. Program eligibility is determined in the Senate using both income and expenses, including utilities. The Senate does not allow automatic eligibility for those receiving utility payment assistance.
In the House bill, recipients must also pass a financial means test with automatic eligibility limited to those on Supplemental Security Income (SSI) and Temporary Assistance to Needy Families (TANF). Referral to those programs would not create eligibility, nor would utility assistance. States would no longer be paid for program administration; lottery winners would be ineligible, along with traditional college students. Funds could not be used to promote the program, illegal immigrants would be denied benefits, and states would be controlled in the implementation of restaurant type meals for the homeless and the disabled.
The House and Senate Agriculture committees have approved their versions of a new Farm Bill. While there are many differences, there are many similarities. However, the next step for each is a vote within the respective chamber, and amendments could take the bills on divergent paths.
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