FARM BILL UPDATE: The Complete Farm Bill Enacted Into Law
Posted by: Phillip Fraas
June 21, 2008
Topic: REPORTS ON 2008 FARM BILL STATUS--January 2008 To Enactment

A little less than a month ago, on May 22, Congress overrode President Bush's veto and enacted into law a version of the farm bill that, due to clerical errors, did not include title III, which covers international agricultural programs and policies. That version had the bill number H.R. 2419, and was enacted as Public Law 110-234.

Congress vowed at the time to take action to correct this oversight; and it has. First, the House of Representatives in May, and then the Senate, on June 5, passed a new version that included title III (bill number H.R. 6124). Following that, after careful proof-reading, H.R. 6124 was sent to the President last Monday, June 16. He vetoed it, and on Wednesday, June 18, that bill--the full farm bill, including title III--was enacted into law when both the House and Senate overrode the President's veto. I have not been able to obtain the Public Law number on this bill yet. As to the effect of the second enactment, it will not have any, save for its title III provisions. Everything else in the new version will have already been the law of the land since May 22.

Legislative action on the 2008 farm bill is complete. Now, the focus shifts to USDA, which has the important task of writing regulations and taking other actions to implement the provisions of the farm bill.

 NOTES:

 --This blog now has a new topic area: REPORTS ON WHAT IS IN THE NEW FARM BILL. Over the next several months, postings will be made in this topic area describing what is in the fifteen titles of the farm bill. There is one entry already, on the loan and payment provisions of title I (commodity-specific price and income support). And, in a couple of days, I'll post another entry on the other provisions of title I.

 --I am starting a new blog: farm paymentlimitationslaw.com, which will focus on the complicated but important changes that the new farm bill makes in the rules limiting the amounts farmers can receive under the commodity payment programs and on the new adjusted gross income (AGI) limit. The new AGI limit excludes persons from (1) receiving any program payments if their non-farm AGI exceeds $500,000 or (2) receiving direct payments if their farm income exceeds $750,000. Look for that blog site to be up and running next week.

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Title I--Price Support Loan And Payment Provisions
Posted by: Phillip Fraas
June 11, 2008
Topic: REPORTS ON WHAT IS IN THE NEW FARM BILL

OVERVIEW: This posting will review the commodity program price support loan and payment provisions in title I (commodities) of the new farm bill. Please excuse the length of the posting; it is due to the need to list loan and payment rates for a number of commodities. The next blog posting will discuss the other key elements of title I.

The commodity title is the heart of any farm bill. Even though the size of the farm bill has grown tremendously since I started following the process in 1977 (the 1977 farm bill was 133 pages long, while the new 2008 farm bill is 673 pages in length) and the variety of topics covered by the farm bill has similarly mushroomed, what hasn't changed is the beginning point of the exercise--the need to update the commodity price and income support programs for farmers.

The necessity for a new farm bill this year was obvious--the prior farm bill only covered the 2002 through 2007 crops. The new legislation will be effective for the 2008 through 2112 crops.

The nature of farm price and income support also has evolved over the years. Again harkening back to 1977, there were marketing and production control programs in operation in conjunction with the loan and payments programs. Those control programs, save for sugar marketing allotments, all are now gone.

Under the new farm bill, for the 2008 through 2012 crops, the loan and payment programs will be available for : wheat, corn, grain sorghum, barley, oats, soybeans, other oil seeds (including sunflower seed, rapeseed, canola, and sesame seed), rice, cotton, peanuts,dry peas, lentils, chickpeas, wool, mohair, and honey. Sugar and milk have different programs, which will be described in the next blog posting.

LOANS: Prices are supported through loans to farmers on harvested crops. The loans are made available at the specified price per unit of production and are nonrecourse--meaning that the farmer need not pay back the loans if the prices fall below the loan price, he or she can just forfeit the collateral. However, these loans are offered as marketing loans, that is, loans that give the producer the option of paying back the loan at the market price if that is lower than the loan rate (this option encourages farmers to pay back loans and put the crop onto the market at times of low prices rather than having the government take ownership and store the commodity.) Further, farmers have the option of receiving price support without going through the loan process at all, by opting for loan deficiency payments that reflect the difference between the loan rate and the market price, if lower.

Following are the old (2007) price support loan rates and the loan rates under the new farm bill (increased or decreased loan rates are in boldface type).

                           2007      2008      2009      2010-2012

Wheat (bu)          $2.75     $2.75      $2.75        $2.94

Corn (bu)             $1.95     $1.95      $1.95        $1.95

Sorghum (bu)       $1.95     $1.95      $1.95        $1.95

Barley (bu)           $1.85    $1.85       $1.85        $1.95

Oats(bu)              $1.33    $1.33       $1.33        $1.39

Upland cotton (lb) $0.52    $0.52       $0.52        $0.52

ELS cotton (lb)     $0.7977 $0.7977   $0.7977    $0.7977

Rice (cwt)            $6.50     $6.50      $6.50        $6.50

Soybeans (bu)     $5.00      $5.00      $5.00        $5.00

Other oils'ds (cwt)$9.30      $9.30      $9.30        $10.09

Peanuts (ton)      $355.00   $355.00  $355.00     $355.00

Dry peas (cwt)    $6.22       $6.22     $5.40         $5.40

Lentils (cwt)        $11.72     $11.72   $11.28       $11.28

Sm ch'peas (cwt)$7.43       $7.43     $7.43        $7.43

Lg ch'peas (cwt)    --             --         $11.28      $11.28

Graded wool (lb) $1.00        $1.00     $1.00        $1.15

Non-gr. wool (lb) $0.40        $0.40     $0.40        $0.40

Mohair (lb)          $4.20       $4.20     $4.20        $4.20

Honey (lb)          $0.60       $0.60     $0.60        $0.69

PAYMENTS: There are two types of outright payments, direct and counter-cyclical, and both are continued for the 2008 through 2112 crops.

Direct payments are made to producers of a commodity, regardless of what the market price for the commodity is. The payments are tied to historical farm acreages and yields. Payments are calculated by multiplying up to 85 percent of a farm's base acreage for the commodity by the farm's payment yield by the payment rate.

For 2008 and 2012, the base acreage perecentage is set at 85. For the 2009 to 2011 crops, it is reduced to 83.3 percent. This change has the effect of making reductions in farm program costs that were needed to comply with congressional budget restrictions.

Direct payments are made on just some of the loan commodities. The direct payment rates under the new farm bill will be unchanged from 2007 rates, except for oats. The direct payment rates are as follows: Wheat (bu), $0.52; corn (bu), $0.28; grain sorghum (bu), $0.35; barley (bu), $0.24; oats (bu), $0.024 [was $0.02 in 2007]; upland cotton (lb), $0.0667; rice (cwt), $2.35; soybeans (bu), $0.44; other oilseeds (cwt), $0.80; and peanuts (ton), $36.00.

Counter-cyclical payments are triggered when the prices for specified commodities fall below the target price for the commodity. Again, the payments are tied to historical farm acreages and yields. Payments are calculated by multiplying 85 percent of a farm's base acreage for the commodity by the farm's payment yield by the counter-cyclical payment rate, which is the difference between the target price and effective price for the commodity. The effective price is (1) the higher of the national average market price and the national average loan rate for the commodity plus (2) the payment rate for direct payments for the commodity.

 Counter-cyclical payments are not available for extra long staple cotton, wool, mohair, or honey.

Following are the old (2007) and new (2008-2012) target prices for purposes of counter-cyclical payment program (increased or decreased target prices are in boldface type).

Wheat (bu)        $3.92     $3.92       $3.92         $4.17

Corn (bu)           $2.63     $2.63       $2.63         $2.63

Sorghum (bu)     $2.57     $2.57       $2.57         $2.63

Barley (bu)        $2.24      $2.24       $2.24         $2.63

Oats(bu)           $1.44      $1.44       $1.44         $1.79

Upl. cotton (lb)  $0.724    $0.7125    $0.7125      $0.7125

Rice (cwt)         $10.50    $10.50      $10.50        $10.50

Soybeans (bu)   $5.80     $5.80         $5.80         $6.00

Oth. oils'ds (cwt)$10.10   $10.10        $10.10       $12.68

Peanuts (ton)     $495.00 $495.00      $495.00      $495.00

Dry peas (cwt)     --           --              $8.32         $8.32

Lentils (cwt)        --           --              $12.81        $12.81

Sm.ch'peas (cwt) --          --               $10.36        $10.36

Lg. ch'peas (cwt) --          --               $12.81         $12.81

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FARM BILL UPDATE: After A Procedural Glitch, Most Of The Farm Bill Enacted Into Law
Posted by: Phillip Fraas
May 26, 2008
Topic: REPORTS ON 2008 FARM BILL STATUS--January 2008 To Enactment

As expected, on Wednesday May 21, President Bush vetoed the farm bill. The bill went back to Congress the same day, where the House voted, by a margin of 316 to 108, to override the veto (two-thirds of the legislature, or 291 votes in the House and 67 in the Senate, must approve an override for it to be effective). The next day, the Senate followed suit and voted to override by a margin of 82 to 13. At that point, the bill became law.

Wednesday, however, a procedural glitch was discovered that sowed a lot of confusion about the effect of the veto and override votes. It was discovered that title III of the bill that the two houses had debated and voted on had accidentally been left out of the "engrossed" bill (the bill prepared by the clerks after the members of Congress complete their actions on it) signed by the Speaker of the House and Majority Leader of the Senate and sent to the President earlier in the week. Title III of the bill deals with international trade in agricultural commodities and foreign food aid.

By Thursday afternoon, just before Congress adjourned for a one-week recess, the Senate and House clerks had reviewed the precedents and concluded that the other fourteen titles of the bill included in the text sent to the President had become law when the President's veto of that document was overridden. Title III, however, is still not law. Congress will have to take additional action when it returns to session next week to re-enact title III.

Now, USDA will have to begin the daunting task of writing regulations and updating policies to put the new farm bill in effect. Because many of its provisions affect on-going programs or 2008 crops, the pressure will be on to move through the implementation process quickly.

In the meantime, I will start of new topic area for this blog to review the key provisions of the new farm bill. With fourteen titles, there is a lot in there to cover. I'll start out in a couple days with a summary of the the commodities price and income support title--the heart of any farm bill. 

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UPDATE: Senate Follows House And Passes Farm Bill By A Big Margin
Posted by: Phillip Fraas
May 15, 2008
Topic: REPORTS ON 2008 FARM BILL STATUS--January 2008 To Enactment

Today, the Senate voted on the farm bill conference report, and approved it by a vote of 81 to 15, some 14 votes more than the 67 needed to override a veto by the President.

It has been reported that the President likely will get the bill next Tuesday, and is expected to veto it right away. That would give Congress more than adequate time to debate and vote on a veto override by the end of next week.

It would not be surprising to see one more short extenson of the current farm bill enacted in the next day or so, to allow the veto/override process a chance to play out. 

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FARM BILL UPDATE: Farm Bill Conference Report Passes House By Big Margin
Posted by: Phillip Fraas
May 14, 2008
Topic: REPORTS ON 2008 FARM BILL STATUS--January 2008 To Enactment

This afternoon, the House voted overwhelmingly (318 to 106) to approve the conference report on the new farm bill. The "conference report" is the final version of the farm bill reflecting all the compromises and revisions to the legislation that Congress has made over the course of the past few months. It is the version of the farm bill that wii go to the President for his signature or veto.

What happens now is that the Senate will get the conference report from the House later today, debate it, and vote on it probably tomorrow. Should it pass the Senate--and most expect it will--within a few days, the conference report will be converted by the congressional clerks into an enrolled bill and sent to the President for action by him.

The President has stated several times (most recently yesterday) that he will veto the bill. If that happens, he will send a veto message back to Congress and both houses will have to cast votes on the legislation a second time. But, to override the veto and ensure that the bill becomes law, the required majority will be 2/3 the second time around ( a 2/3 vote in the House is 291 votes and in the Senate it is 67 votes). 

If both houses vote to override, the bill becomes law without the President's signature. If either body fails to override, the bill is dead in its current form; Congress would have to come up with an extension of current law or some other proposal acceptable to the President.

It is more likely than not that the bill won't get to the President for a veto and back to Congress for override votes before the end of this week. That means there is a chance that another one- or two-week extension of the current farm bill will be enacted later this week to give the veto/override vote scenario time to play out. 

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