Budget Impacts U.S. Farm Bill

House and Senate Agriculture Committee leaders and staffs of both parties are furiously rewriting the U.S. Farm Bill in the remaining legislative weeks of this year. But the Farm Bill reauthorization is not due for another year. What’s up?

Writing a Farm Bill in a matter of weeks is an extremely ambitious goal. Since the first Farm Bill in 1965, nothing like what’s going on now has been attempted. Typically, scores of congressional hearings are followed by protracted committee mark-up sessions conducted in both the House and Senate agriculture committees. Then, the committees’ bills are considered on the floor of their respective chambers before a month or more of conference committee deliberations between the House and Senate complete a process that takes far more than a year. So, while hearings have occurred, why is the Farm Bill being rewritten from start to finish in a few weeks? The Budget.

In crude terms, the Farm Bill process is a matter of the agriculture committees finding out how much money they have for the next five years and then writing legislation that distributes that money in the manner that will best meet the food and agriculture interests of the country. Of course, the House and Senate approach that task in ways that reflect differences in how the chambers are constituted.

The Budget Control Act of 2011, which resolved the debt ceiling “crisis” this past summer, set terms for deficit reductions for the next couple of years (until after the 2012 election). It specified that spending cuts would automatically go into effect in FY 2013, unless a Joint Select Committee on Deficit Reduction develops and Congress approves this year a measure that reduces the budget by at least $1.2 trillion over 10 years. If the Joint Committee produces a legislative package, it seems clear that it would cut agriculture spending much more than automatic spending reductions. To avoid that result, leaders of the agriculture committees have promised the Joint Committee that they will reduce Farm Bill spending by $23 billion. Now, to avoid further reductions in agriculture budgets, leaders of the committees are scrambling to write a new Farm Bill that will achieve those savings and rush it to enactment in the coming weeks.

Predicting Farm Bill outcomes is a rash exercise. But here are a few observations regarding the outlook for a high-speed 2011 Farm Bill:

• Currently, about 80% of Farm Bill spending is in nutrition programs, primarily SNAP (formerly known as Food Stamps). Very little or none of the deficit reduction would come from cutting SNAP benefits, though administrative funding is sure to be squeezed.

• Most of the remaining Farm Bill spending is in Commodity, Conservation, and Crop Insurance Programs. Commodity spending would likely take the lion’s share of the cuts. Direct payments to grain farmers appear sure to be eliminated and counter cyclical payments (payments when prices are low) are suspect. With a greater market focus, farm programs would likely be more strongly focused on helping farmers manage risk, presumably through greater access to crop insurance tools. In particular, federal crop insurance will likely be extended to specialty crops.

• The market distortive sugar program likely will not be fundamentally changed because it achieves its effect without substantial federal budget impact. No federal budget savings to be had, so there’s little incentive to take on the pain associated with major reform.

• Milk producers have proposed major changes in the dairy program, but recently backed away from making their proposal mandatory for all dairy farmers. Even among producers, the proposed mandatory supply management program was controversial. With steadfast opposition from dairy processors and serious questions about the efficacy of a voluntary supply management program, dairy policy once again promises to be the most contested part of the Farm Bill.

• Additional deficit reduction pressure would likely be felt by USDA conservation programs, though those programs have a relatively broad base of support.

• Despite the attempts to keep a fast Farm Bill focused on budget- related matters, amendments to the meat & poultry inspection acts are possible, including proposals for mandatory recall authority and mandatory testing.

With congressional leaders guessing that the chances of a high-speed Farm Bill this fall remain a bit below 50%, what is the alternative? That too is unclear. The existing Farm Bill expires September 30, 2012, so Congress must do its work. Old hands will note that Congress has never written a Farm Bill in a presidential election year. To do so now with each party controlling one chamber of Congress seems especially unlikely. Nothing is certain, but there will be great pressure to slide past immediate budget demands to push the Farm Bill into 2013, the year after the presidential election.

John W. Bode, a Member of IFT, and a Washington, D.C. attorney specializing in food law ([email protected]).