House Agriculture Committee Chairman Frank Lucas, R-Okla., says he plans to mark up a new farm bill on May 15, and the bill will reduce spending by $38 billion over 10 years versus the baseline. The cuts will be made up of $20 billion in less funding for food and nutrition programs and $18 billion less for the other titles.
Lucas says the commodity title will be very similar to the one passed by the committee last year – eliminating direct payments and creating a “shallow loss” program to pay for losses not covered by crop insurance and a “target price-countercyclical-type” program.
Payments would be based on 85 percent of planted acreage – up to the total base acres of the farm.
The Senate Ag Committee is also expected to develop a farm bill but with far less ambitious savings than the House plan: just $23 billion over 10 years. So even if these two bills get approved by the respective full House and full Senate, it will be very difficult for a joint House-Senate conference committee to develop a compromise bill that can win final approval in both.
Agriculture Committee members in both houses of Congress are determined to protect the crop insurance program. In fact, the bills they produce will probably even expand coverage. However, other members of Congress are gearing up to try to reduce the costs of the program.
Iowa State University Professor Bruce Babcock claims crop insurance is too highly subsidized and that taxpayers pay more than two-thirds of the costs of the program.
The Congressional Budget Office says that subsidies could be reduced to save as much as $40 billion over 10 years without restricting farmers’ choices over the type of insurance or eliminating subsidies entirely. But taxpayers would pay less of the tab, farmers more.
Currently most crop insurance products are subsidized with taxpayers paying more than half the cost of the premium.
Other issues being addressed include
- The Renewable Fuels Standard (RFS): Hearings will be held by the Energy and Commerce Committee to examine the RFS that mandates the amount of biofuel that must be used. Under the current RFS, 16.55 billion gallons of biofuels are to be used in 2013, with 13.8 billion gallons coming from starch-based ethanol. The Committee is currently issuing white papers on the subject and is soliciting input from interested stakeholders. Some issues to be discussed include the “blend wall”; the looming problem of the RFS mandate far exceeding the amount of ethanol that can be used with only a 10% blend rate in gasoline! Other issues to be addressed include greenhouse gas emissions, energy policy considerations and RIN fraud. Changes to the RFS are becoming more likely due to lingering effects of last year’s drought and the lack of progress selling e-15 as a solution to the “blend wall” problem.
- Immigration: The Senate is working on a single comprehensive immigration bill that will deal with a broad range of issues and provisions. In contrast, the House has begun a process of dealing with the different aspects of immigration reform with a series of different bills. The first proposal deals with agricultural workers. The new plan would replace the old H-2A program with a program that would allow agricultural workers to stay in the country for 36 months – followed by a three-month return to the immigrant’s home country. The program also limits the use of certain tax credits and welfare programs. For example, the immigrant workers will not be allowed to bring spouses and minor children with them.
- Pesticide approval: Long running settlement talks between EPA and various environmental groups over the approval of hundreds of pesticides is over – at least for now. More than two years ago environmental groups filed suit against EPA, charging the agency had not considered the possible impact on endangered species when approving the use of about 300 pesticides. The fear among farm groups and pesticide makers alike was that most or all of the pesticides could be removed from the market while EPA did extensive evaluation. The groups have been in settlement talks since May 2011. But late last week the U.S. District Court of California dismissed the lawsuit. The ruling can be appealed within 60 days. The lawsuit could have affected about 30,000 ag-chemical applications affecting all 50 states.