D.C. Watch: Farm bill debate continues

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Both houses of Congress are working on the new farm bill. Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich, and ranking member Pat Roberts, R-Kan, are presenting one unified bill to the Senate Agriculture Committee. Committee debate of the plan will take place this week.

Stabenow says she hopes to pass the bill out of committee and doesn’t anticipate major objections. The plan will reduce farm program spending by $23 billion over 10 years and will include different options for different crops. There is expected to be higher target prices for some commodities produced in the South and a shallow-loss program for crops produced in the North. Cotton will have its own insurance program.

The proposed farm bill could come to the floor of the Senate for a vote sometime in May. The House Agriculture Committee is also working on the farm bill this week, trying to meet its Budget Committee requirement to cut about $33 billion from spending over the next decade. But House Agriculture Committee ranking member Collin Peterson, D-Minn., said the work in the House this week is largely symbolic.

“There will be a bunch of speeches and a vote. It doesn’t mean anything anyway”, says Peterson.

That sentiment is echoed by House Agriculture Committee Chairman Frank Lucas, R-Okla., who says, “It is an exercise to demonstrate the ability to achieve savings. It is not the farm bill”.

The House plan to cut spending is expected to focus the cuts in food and nutrition programs. There is little chance that whatever the House comes up with will even be considered in the Senate. A lot of challenges will face Congress as we get closer to the end of the year.

If Congress does not act, the Bush era tax cuts expire at the end of the year. The automatic spending cuts, including $55 billion from the defense budget and $43 billion from domestic programs start Jan. 1 if Congress and the president don’t agree to an alternate plan. The estate tax exemption goes from $5 million to $1 million and the tax rate goes from 35 percent to 55 percent if Congress does not act.

The 2008 Farm Bill expires at the end of September and Sen. Roberts says he doesn’t think an extension can pass in either the House or the Senate. It does not appear that the House and Senate will be able to agree on funding government programs for fiscal 2013. And sometime before the end of the year, there will be another crisis over raising the debt ceiling. With the election looming, few of these issues will be considered ahead of November, setting up a very important lame-duck session late this year.

The U.S.-Colombian Free Trade Agreement (FTA) will go into effect on May 15. The deal has been in the works for years, but implementation is finally near. More than half of all U.S. farm exports to Colombia will become duty free on May 15, with the remaining tariffs eliminated over the next 15 years. Colombia is the second largest South American market for U.S. wheat.

Meanwhile, South Korea is backing away from some of the benefits U.S. agricultural producers thought they would get from the recently enacted U.S.-South Korean FTA. For example, the decision by the Korean government to allow 70,000 metric tons of chilled and frozen pork bellies to be imported tariff-free has been reversed and the demand will be met with domestic production.

If the crop insurance premium subsidy was capped at $40,000 per person, a new General Accounting Office (GAO) report says the government would have saved $1 billion in 2011. GAO says the cap would have only affected about 4 percent of all farmers buying crop insurance, but that this 4 percent accounted for about one-third of all crop insurance premium subsidies shelled out by Uncle Sam. (The government currently pays more than half of the costs of crop insurance policies, costing about $9 billion per year.)



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