Earlier this year, it was hard to be optimistic about any progress in Congress on the farm bill. Fiscal cliff legislation on New Year’s Day extended the current farm bill through September, buying time for more delays. And, there was so much on the legislative agenda—from budget sequestration to appropriations and more. But after watching sequestration take hold in March, Congress addressed appropriations for the remainder of fiscal year (FY) 2013 and moved on separate budget resolutions for FY2014.
Still, when both the Senate and House agricultural committees announced plans for farm bill markup, no one could have expected the speed of deliberations in committee and the quick movement to floor consideration. On May 14, the Senate Agriculture Committee marked up the farm bill legislation in little more than three hours. The following day, the House Agriculture Committee took about nine hours to get the job done.
Both bills passed committee with large majorities, but the debate and the final votes were indicative of the challenges yet to come in floor consideration and presumably, conference committee compromise. In the Senate, much of the time in Committee was spent debating target prices and nutrition spending. In the House, the Committee debate included substantial time on nutrition spending and the issue of interstate commerce. There are clearly still major hurdles to passage of any final compromise legislation that makes it all the way to new law.
The re-emergence of target prices in the Senate mark-up bill was clearly an overture to new ranking member Sen. Thad Cochran (R-Mississippi) and the rice and peanut growers, who have fought to keep and enhance the price-based safety net. The House version has included a price-based safety net all along, so in spite of the opposition from some quarters to a legislated price guarantee, it is difficult to imagine a final bill not including some price safety net. One amendment in the Senate would shift the target price from a fixed to an average price calculation for all but rice and peanuts. This still leaves a price-based plan that protects from large drops in market prices, but the moving average would reduce the potential long-run distortionary effects of a price signal to producers.
Another safety net debate focused on dairy programs and a supply control measure included in current proposals. Reportedly, the supply control feature was a primary sticking point last year in moving a farm bill forward in the House. It remains to be seen whether this issue can be resolved as the bills move forward.
Crop insurance is also a primary target for changes, but the biggest challenges are likely to come during floor debate. The Senate bill contains conservation compliance provisions for crop insurance, something that now appears acceptable to a broad farm-conservation coalition. The bigger debate for the floor is likely the level of premium assistance or subsidy. Crop insurance has become the biggest part of the safety net for producers and the biggest budget item in federal farm spending after direct payments, which are proposed to end. As such, it is also the biggest bank account for any and all proposals that would require additional funding.
The fight over additional funding is likely nowhere more focused than on nutrition spending. Nutrition assistance, which accounts for nearly 80% of total farm bill spending, is targeted for $4 billion in cuts in the Senate bill and $16 billion in the House bill. The House Agriculture Committee proposed to cut spending accruing from “categorical eligibility”, the rules that allow automatic qualification for food assistance for individuals and families if they are eligible for other federal assistance. The House proposal has been described as eliminating a loophole and not removing eligible people from assistance, but the debate was clearly on the total $16 billion that would not be delivered in food assistance. In the Senate, the cuts focused on administration and waste, but even then, the argument was against any reduction in program spending. With $4 billion in cuts too much for the left wing and $16 billion in cuts not enough for the right wing, finding any compromise on the level of cuts seems to be the biggest hurdle to completing this farm bill.
It may be the ultimate test of the decades-old rural-urban coalition to determine whether nutrition spending cuts are sustained or whether crop insurance takes more cuts to fill the gap. If farm programs must take all of the cuts, then the coalition surely seems one-sided. But without a coalition, it is unclear what of the farm program portfolio would even be considered. Maybe the remaining deliberations this year will help answer that fundamental question.