U.S. Secretary of Agriculture Tom Vilsack was in Des Moines last week. The former Iowa governor says he's hopeful Congress will pass a new farm bill by the end of 2013. He cites several reasons for bipartisan support, why Republicans and Democrats in the House and Senate should iron-out their differences.
First, consumers will pay substantially higher prices for milk and other dairy products if a farm bill isn't passed and signed into law. USDA will be forced to revert to the enabling farm bill legislation of the 1940s and that would inflate milk prices. Economists estimate milk prices would double.
But the adverse effects of reverting back to the permanent legislation could be even more widespread. The U.S. recently lost a trade dispute over cotton with Brazil and now faces retaliation—unless we get a new farm bill that revises cotton subsidies. Brazil has the right to retaliate against U.S. products that are exported, by up to $850 million. This isn't just limited to ag exports, says Vilsack. It's across the board. All kinds of U.S. products and services could be subject to these penalties.
Vilsack says reforms in a new farm bill—cutting out direct payments and cutting back on some other programs—could provide billions of dollars' worth of savings and help Congress create a new budget, especially if Congress wants to lessen the impact of sequestration—across the board cuts—on military spending. That's another good reason to pass a new farm bill, he says.~~~PAGE_BREAK_HERE~~~
Farm Bill affects how farmers operate, how nutrition programs are delivered and much more
Craig Hill, president of Iowa Farm Bureau, says January 1, 2014 is a key deadline to keep in mind. "Even though we aren't falling off a cliff today in the absence of a farm bill, we will January 1," says Hill. "The permanent legislation passed in 1938 and 1949 provides for parity pricing. The permanent Farm Act is amended each time a new farm bill is written. The permanent legislation will become effective on January 1 if we don't get a new farm bill. The permanent law if allowed to kick-in would have some effects that will not be desirable by anyone including farmers. Congress needs to take action before January 1 and pass a new bill. We hope it's a new 5-year bill, a reformed bill relevant for today and not another extension of the 2008 farm bill."
Bill Northey, Iowa Secretary of Agriculture, notes there is some agreement between the House and Senate versions of the Farm Bill. A joint committee of House and Senate members is now considering each version and is working to come up with a final bill to send to President Obama's desk to be signed into law.
One of the points of agreement is that direct payments to farmers are going to be a thing of the past. How will stopping direct payments to farmers affect the farm economy, which has been one of the more robust parts of Iowa's economy in recent years?
It's agreed that direct payments will be gone; but Congress still has to reach agreement on food stamp spending
"Good prices and good production have allowed Iowa agriculture to really grow," says Northey. "Ten years ago Iowa had a $12 billion ag economy that's grown to $30 billion today. Direct payments from USDA are real, about a billion dollars a year in Iowa. Taking those payments away is small compared to the economic progress Iowa has made over the last 10 years in agriculture. That's why all the ag folks are supporting elimination of direct payments at a time when we have decent prices. Granted, prices are now down 40% from last year's record highs. But it makes sense to cut direct payments even though it'll be a real hit."~~~PAGE_BREAK_HERE~~~
The House version of the farm bill proposes cutting $40 billion from the food stamp program or SNAP (supplemental nutrition assistance program). The Senate only wants to cut $4 billion from SNAP funding. "That's a lot of dollars and is a big difference between the two bills," says Northey. "Actually, the proposal is for the cut to be spread over 10 years, so it's a reduction of $400 million vs. $4 billion per year on a program that amounts to about $80 billion. Spending on SNAP now runs $80 billion a year. Most of us could probably figure out a way to find middle ground on how to cut between $400 million and $4 billion from an $80 billon program."
Farm Bill impacts every American, every day with wide-range of programs that strengthen our nation
John Whitaker, state executive director of USDA's Farm Service Agency in Iowa, and Bill Menner, USDA Rural Development agency state director in Iowa, sent out a press release last week, explaining what's at stake, specifically for Iowa:
"This fall, Congress has an important opportunity to create jobs and grow the economy by passing a long-term, comprehensive Food, Farm and Jobs Bill. The Farm Bill impacts every American, every day by providing a wide range of programs that strengthen our nation.
"The Farm Bill is crucial to maintaining a strong ag sector and an abundant food supply that benefits all Americans. Over the past two years, producers have faced a multitude of disasters—from drought, to flooding, to blizzards. These events demonstrate how important the safety net is to keeping producers going strong. Under the 2008 Farm Bill, the Farm Service Agency was able to provide $403 million in disaster assistance in Iowa using Farm Bill programs.
Reform the safety net, to provide strong crop insurance program, disaster assistance when needed
"A new Food, Farm and Jobs Bill would provide a strong crop insurance program, reauthorize the now-expired disaster assistance programs, and provide retroactive assistance for livestock producers. By reforming the safety net to eliminate the direct payment program—which pays producers whether or not they are in need of assistance—the Food, Farm and Jobs Bill would also save billions of dollars in the next decade.~~~PAGE_BREAK_HERE~~~
"In addition, it would allow USDA to continue export promotion efforts that have led to the best five-year period in agricultural trade in American history, and provide FSA with the tools to extend additional farm credit in Iowa.
"The Farm Bill is also a job creation bill that would empower USDA to partner with rural communities to grow, expand and support new businesses.
New opportunities in bio-based product manufacturing, and renewable energy
"A new Food, Farm and Jobs Bill would help Main Street businesses grow and hire more, strengthen infrastructure in small towns and provide new opportunities in bio-based product manufacturing and renewable energy. For example, in Iowa, USDA has provided more than 1,300 projects since 2009 to help farmers, ranchers and rural businesses save energy through the Rural Energy for America Program. This and many other efforts could continue with a new Farm Bill.
"A new Food, Farm and Jobs Bill would make important investments in nutrition programs that provide critical assistance to vulnerable Americans, including children, seniors, people with disabilities who are unable to work, and returning veterans. It would enable USDA to continue our work with more than 500,000 producers and landowners to conserve the soil and water. It would undertake new strategies to improve agricultural research, and it would ensure a safe food supply.
Need more soil and water conservation, new strategies for ag research, and investing in rural communities
"All of these efforts strengthen our nation. A new Food, Farm and Jobs Bill would continue the job growth we've seen in recent years and help grow the rural economy. That's why President Obama has identified passage of a new Farm Bill as one of his top three legislative priorities this fall.
"This is a prime opportunity to give America's farmers, ranchers and producers the certainty they need about the next five years of U.S. farm policy, while investing in the rural communities that stand at the heart of our values. The Farm Bill has stood as a model of bipartisan consensus for decades and it is high time that both Democrats and Republicans come to a compromise on this new Farm Bill. It is our hope that Senate and House conferees will reach a consensus quickly and move a Farm Bill forward as soon as possible."