Finding farm bill sweet spot

Finding farm bill sweet spot

MANY looked at Thanksgiving as a crucial calendar marker in whether Congress could successfully move forward on a farm bill compromise. That "deadline" was missed (gasp, no surprise), but some new ideas are surfacing to help move along the debate.

Three big issues continue to bog down legislators: the commodity title, the dairy program and how to tackle nutrition spending.

The top four principals spoke via conference call last Monday evening but reported no new progress. A spokesman confirmed only that the "process is ongoing."

Frustrated by inaction, the National Corn Growers Assn., American Soybean Assn. and U.S. Canola Assn. wrote in a joint letter Nov. 26 that they hope conferees can find common ground that producers of all crops in all regions can support.

The previous week, the three groups offered a compromise that would use a rolling average of recent-year plantings to determine base acres under both revenue- and price-based programs. Their biggest concern is tying current-year planted acres to payments, which, in the 1980s, led to major planting distortions and caused market prices to plummet.

"If such a resolution is not possible, we would support a two-year extension of the 2008 farm bill, including, if necessary, a reduction in direct payments to achieve savings equivalent to the bills passed by both the Senate and the House," they said. "While difficult, this approach would leave sufficient funding in the commodities title to write a new farm program at such time as consensus can be achieved."

An extension won't be easy, what with opposition from Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) and majority leader Sen. Harry Reid (D., Nev.). It will be even more difficult to convince them not to totally do away with direct payments and allow just a reduction in order to use in later years.

The dairy camps remain deeply divided over whether to use the Senate's Dairy Security Act, which offers an insurance program but also a stabilization program that kicks in when milk supplies increase, or the House's version, which eliminates the stabilization component.

The House farm bill's dairy title is projected to cost $418 million above the baseline, according to a Congressional Research Service report released in October, while the Senate dairy program would cost $302 million more over the next 10 years.

Those two might not be the only options on the table, though. Ohio State University dairy economist Cameron Thraen and doctoral student John Newton have formulated a proposal for a new dairy policy alternative after hearing from farmers that they may not want to depart from the current milk program.

After publishing some of the suggested concepts, Thraen said congressional staff reached out to him and developed legislative language on how it might work.

"Offering farmers a choice among an expanded Milk Income Loss Contract (MILC) program and a limited Income Over Feed Cost margin insurance program would double the support of existing programs yet, based on our independent analysis, could cost 40-60% less than the current stand-alone margin insurance program," Thraen said.

The Congressional Budget Office also favorably scored the compromise option.

"Combining the insurance and MILC will meet the needs of most U.S. dairy farms and would provide a much more effective safety net at not much of an increase in projected cost," Thraen said.

He "politically guessed" that some kind of agreement can be reached the week following Thanksgiving. "I think there's enough moderation in the middle that they can come to a compromise," he said. "I think they don't want to do an extension."

Volume:85 Issue:49

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