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House Republican Farm Bill Boosts Reference Prices and Commodity Support

By Jerry Hagstrom

The chairman of the House Agriculture Committee on Friday released a comprehensive farm bill text that would increase Title I farm subsidies and crop insurance premium subsidies by between $50 billion and $53 billion over 10 years.

The House Republican bill raises reference prices more, allows all producers to obtain new base acres and makes other, bigger improvements to the farm safety net than the Senate Democratic bill written by Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., according to a chart released by the House Agriculture Committee Republican staff.

The 942-page bill offered by Rep. Glenn "GT" Thompson, R-Pa., outlines programs and authorities at USDA for roughly $1.4 trillion in spending over the next decade.

The bill would offset some of that higher spending by suspending the Agriculture Secretary's authority to use the Commodity Credit Corporation Charter (CCC) Act, Republican committee aides told reporters at a briefing on Thursday.

The current cost of the Title I commodity programs over 10 years is about $50 billion and crop insurance is about $100 billion.

Earlier, Republicans had proposed taking budget authority from the Supplemental Nutrition Program (SNAP) and the conservation programs in the Inflation Reduction Act to increase funding for the commodity programs and crop insurance, but Thompson has decided to bow to Democratic demands not to use those programs to increase farm subsidies, the aides said.

COMMODITY PROGRAMS

The bill would increase the statutory reference price for crops by 10% to 20%. Boosting the statutory reference price will then boost the calculation used to create the effective reference price.

Corn would go from $3.70 a bushel per acre to $4.10 bpa, nearly an 11% increase.

Soybeans would go from $8.40 bpa to $10 bpa, up 19%.

Wheat would increase from $5.50 bpa to $6.35 bpa, up 15%.

Rice reference prices would increase from $14 per cwt to $16.90 per cwt, up more than 20%.

The $900,000 adjusted gross income limit also would not apply for farmers, as well as persons in pass-through entities in which the farmer or entity draws more than 75% of income from farming, ranching or forestry. Farmers who can show 75% or more of their income is tied to farming would see their payment limits increased from $125,000 to $155,000.

The Agricultural Risk Coverage guarantee would increase from 86% to 90% of benchmark revenue. The payment rate for ARC would increase to 12.5% of benchmark revenue.

The maximum payment rate for ARC-County and ARC-Individual increases to 12.5% of benchmark revenue.

For dairy, the bill would boost Dairy Margin Coverage (DMC) from 5 million to 6 million pounds. It provides a 25% discount for farmers that enroll in DMC for the life of the farm bill.

The bill restores the "higher-of" formula for Class I fluid milk until the Federal Milk Marketing Order changes are ratified.

The bill offers a one-time opportunity to add base acres to farms. The bill language has rules over the five-year planting on the farm and caps the total number of acres that can be added. The provision would allow up to 30 million more acres and USDA would set a pro-rata reduction to ensure base acres do not increase beyond 30 million acres.

CHANGING CCC

Right now, the Congressional Budget Office is still calculating just how much could be saved or moved around from the suspension of Section 5 of the CCC Charter Act.

The suspension of Section 5 would mean if former President Trump is re-elected and imposes tariffs on China that lead to retaliation against U.S. farm products, as happened in his administration, he would not be able to use the CCC to make payments to farmers, as he did. The Trump administration spent $23 billion under the Market Facilitation Program, which used CCC funds and was not authorized by Congress.

A Republican committee aide said the use of the CCC authority to make payments to farmers to make up for the loss of sales to China was "a get-out-of-jail card for a trade war" and that changes to trade policy should "require a conversation with Congress." The aide said the payments had not made up for the entire loss of sales to China.

Agriculture Secretary Tom Vilsack has said he opposes restrictions on the secretary's use of the CCC authority, but that he is willing to work with Congress on ways to use the CCC to provide additional funding for farm programs.

USDA under the Biden administration also used $3.1 billion last year to create more than 130 pilot projects for climate-smart practices, a move that Thompson and other congressional Republicans have criticized.

Vilsack has spent $1.2 billion to create the Regional Agricultural Promotion Program (RAPP), which was done after leaders on the Senate Agriculture Committee wrote Vilsack asking for the program.

SNAP DEBATE

The House bill would shift $27 billion for other uses that would have gone to increase benefits under the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps. Of the expected $27 billion in SNAP budget savings, $12 billion to $16 billion would be spent on a variety of nutrition program initiatives.

Some of the changes in food aid include overturning a law that prevents convicted felons from being eligible for SNAP benefits, coupons for senior citizens to make purchases at farmers markets, incentives for buying fruits and vegetables, tribal programs, the Healthy Food Financing Initiative and the Emergency Food Assistance Program (TEFAP), a federal food distribution program that supports food banks, food pantries, soup kitchens, and other emergency feeding organizations serving low-income Americans.

Another provision would increase the nutrition block grant for Puerto Rico and encourage the territorial government to prepare for the day it could become eligible to participate in the SNAP program.

But a wide range of anti-hunger groups -- including the Alliance to End Hunger, Feeding America, Food Research & Action Center (FRAC), National WIC Association, Save the Children, and Share our Strength -- have announced their opposition to the bill if it prevents the Agriculture Department from using reevaluations of the Thrifty Food Plan to raise benefits in the future.

CONSERVATION

The bill would move the approximately $20 billion in conservation money in the Inflation Reduction Act into the farm bill, but without the guardrails that require that money be spent on conservation programs to address climate change.

Some farm and conservation groups have come out in opposition to removing the climate-related guardrails on the IRA conservation money, but a Republican committee aide said those groups do not represent farmers.

The conservation provisions would minimize requirements that the IRA money go for conservation practices that help reduce greenhouse gas emissions or sequester carbon.

The Conservation Reserve Program (CRP) payment limit would increase from $50,000 to $125,000 a year. There would be more incentives to enroll marginal land, but the bill maintains the CRP acreage cap at 27 million acres and requires some adjustments on state allocations of acreage based on historical allocations.

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