House Ag Committee plugs away on farm bill

News
May 17, 2013

—SNAP cuts, dairy lead debate.

The battle over dairy policy took center stage in the House Agriculture Committee’s early debate on the farm bill Wednesday, May 15 as committee reforms to commodity and conservation programs were approved relatively unscathed.

Unlike the Senate Agriculture Committee—which cleared its entire bill in three and a half hours—the House Agriculture Committee’s markup on Wednesday was setting up to be a much longer affair, even though the lion’s share of the legislation is the same as last year.

Lawmakers took an extended break at mid-afternoon due to party caucus meetings and then floor votes later in the afternoon. House committee members were planning to return early Wednesday evening to finish marking up their version of the farm bill. Several provisions of the legislation, including the crop insurance title, remain to be discussed.

Debate in the House put dairy policy front and center. The farm bill includes language from the Dairy Security Act, crafted by ranking member Collin Peterson, D- MN, following the collapse of dairy prices in 2009. Peterson and others worked to successfully get the dairy act into both the House and Senate versions of the bill. The Dairy Security Act creates a margin protection between national milk prices and the average cost of feed. Producers get basic coverage and can buy higher coverage if they want. At the same time, the provision has more controversial language that creates a market stabilization program meant to manage the size of the national dairy herd.

The market stabilization program kicks in when dairy prices are low and profit margins collapse. Producers whose herd size exceeds a base amount would lose payments unless they culled down the size of their milking herd.

The Dairy Security Act has the strong backing of the National Milk Producers Federation while being equally opposed by the International Dairy Foods Association (ID- FA). Caught in the middle are a broad array of producer and processor cooperatives and businesses.

Reps. Bob Goodlatte, R- VA, and David Scott, D-GA, sought to replace the Dairy Security Act in the bill with their own language that would avoid any attempts to limit supply. Their plan, supported by IDFA, would create a comparable margin insurance policy for dairy producers but eliminate any policy meant to manage dairy supplies. The Goodlatte-Scott amendment sparked the first major round of debate on the committee Wednesday.

Goodlatte called the market stabilization program “complex market intervention” that would put the entire farm bill at risk of being stalled again.

“This highly controversial piece would attempt to manage the dairy market supply,” Goodlatte said.

Goodlatte also argued that his amendment with Scott would not translate into limiting overall milk production.

“Our amendment accounts for and allows for growth in dairy farmers,” Goodlatte said.

Scott also argued the Goodlatte-Scott proposal would save $15 million over 10 years compared to the Dairy Security Act. It also would limit how much the cost of milk would increase if milk supplies are managed by a federal program. “If the price of milk goes up, so does the nutrition program,” Scott said. “A supply management program causes higher milk prices.”

Peterson came back with arguments that the Goodlatte-Scott proposal was pushed by IDFA. He also noted that retail dairy prices tend not to come down even though milk prices for farmers are lower. Peterson said the goal of the Dairy Security Act is to limit volatility that has caused chaos for farmers. That’s not necessarily in the interests of large processors. “They want volatility because volatility is in their best interest. Volatility is not in the interest of the dairy farmers,” he said.

Peterson added that economics in the dairy industry are sensitive. A 2 percent oversupply will collapse the market. Peterson said the point of the entire program is to deal with that oversupply issue. “If we get into that situation again, we’re going to lose 25 percent of the farmers in the country because there is no margin to fall back on,” he said.

After extensive debate, Goodlatte and Scott failed to sway the committee. Their amendment failed 20-26, but Goodlatte and Scott likely will attempt to bring up their amendment later on the floor.

Commodities

The House Agriculture Committee made no changes to the main commodity programs crafted for the bill.

The legislation eliminates direct payments, but creates a shallow-loss program, called the Revenue Loss Coverage (RLC) program, and target price program option for producers. The committee’s proposed target-price program is called Price Loss Coverage (PLC).

The bill shows $18.6 billion in net savings from commodity programs over 10 years.

The way it is structured, a farmer could enroll some crops or whole farms in the PLC and enroll other crops in the RLC. That’s different from the Senate bill, which requires a one-time decision for the whole farm.

For cotton producers, the House and Senate also both have the Stacked Income Protection Plan, or STAX. To appease Brazil in regard to cotton subsidies, the bill does remove a reference price floor for STAX. That is considered a major concession to Brazil. Currently, the U.S. is paying Brazil roughly $140 million annually after losing a World Trade Organization case over U.S. cotton subsidies.

While cotton farmers get STAX, they also would collect two years of transition payments under the bill as they shift from direct payments and USDA implements the STAX program. Under the provisions, cotton producers would collect a payment equal to 70 percent of their current direct payments for 2014. In 2015, that would cut back to 60 percent. Already, some lobbyists have joked about double dipping for cotton producers.

Nutrition

The major fight early Wednesday was over plans to cut $20.5 billion from the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamps program). Twelve of the 21 Democrats on the committee introduced an amendment to void the cuts, leading to more than an hour of debate. The amendment eventually failed.

Arguments ranged from questioning the lack of analysis and hearings over SNAP cuts to whether the Christian faith should tolerate plans that would remove as many as 1.8 million people from SNAP over time.

“This is a program to provide food to people,” said Rep. Jim McGovern, D-MA, one of the major supporters of nutrition programs in the House. “This is not a get-richquick scheme.”

If the SNAP cuts stand, “this bill will make hunger worse in America, not better,” McGovern said.

Republicans disagreed with the Democrat take, arguing the cuts are small considering the SNAP program is projected to cost $760 billion over 10 years.

“We’re not talking about eliminating SNAP,” said Rep. Michael Conaway, R-TX. “We’re talking about fitting it into a budget of limited resources.”

Arguing SNAP was being singled out as a program to cut, McGovern then offered an amendment suggesting that SNAP cuts could not take effect until the error rate—waste, fraud and abuse—for crop insurance came down to the same level as SNAP. He pointed to comments from Peterson that implied the fraud rate for crop insurance is significantly higher than for SNAP, prompting Peterson to clarify his position.

“I should just clarify. I was talking to some reporters and I got carried away,” Peterson said.

Peterson later added that the SNAP cuts largely eliminate provisions states use to expand the program, which eliminates a uniform standard. “We’re not actually cutting any benefits,” Peterson said. “What we’re doing here is changing how you qualify for SNAP.” — Chris Clayton, DTN

{rating_box}