Some Straws in the Wind
Posted by: Phillip Fraas
December 12, 2006

Now that the hoopla over the November elections has died down and Congress has wrapped up its work for 2006, more reports and commentary about the upcoming 2007 Farm Bill seem to be surfacing. And, the buzz about the Farm Bill will just increase when Congress returns to Washington in January after the holiday season.

Here are a few samplings of what I have picked up about the Farm Bill in recent days, some straws in the wind if you will.

USDA FARM BILL PROPOSAL: Because USDA proposals typically have a tough time getting traction in a very farm program-friendly Congress, USDA at times has taken a secondary role in the development of the Farm BIll, just laying back and commenting on what Congress develops. Not this time around. Early this month, Secretary of Agriculture Johanns reaffirmed that USDA will submit its own formal Farm BIll proprosal for Congress to consider. However, he said it won't arrive until February or later. A couple of comments here: The later the USDA proposal is, the less impact it will have on congressional deliberations. Also, given that the Bush Administration is trying to jump start Doha Round trade negotiations, which will take some time to bear fruit (if they do), a delay by Johanns on his Farm Bill proposal would dovetail more nicely with what USTR might come up with at the trade negotiating table late this winter--especially since Johanns' proposals likely will seek major changes in current programs that will gain credibililty if they are tied to potential trade gains from a Doha Round accord.

DOHA ROUND HEATS UP: Just today, the Wall Street Journal reported on recent U.S. efforts to pump some life back into the negotiations in the Doha Round trade talks. Some would argue that the only way to have a shot at getting the type of farm program reforms that Secretary Johanns would like to see is to wrap them into a Doha Round agreement. USDA could then argue that such reforms are the price to pay to get increased access for U.S. agricultural products in foreign markets.

FARM BILL SCHEDULE: Both presumptive chairmen of the agriculture committees in the 110th Congress that begins in January, Sen. Tom Harkin of Iowa and Cong. Collin Peterson of Minnesota, have indicated that they want to move with dispatch on developing the 2007 Farm Bill, shooting to complete hearings and drafting work in committee by the end of July and to wrap all floor debate and reconciliation of the differences between the House and Senate by the end of Sepember. Under that schedule, hearings could start in earnest soon after the President submits his budget for FY 2008 in February, even if Secretary Johanns doesn't have his Farm Bill proposal ready by then.

FIVE-YEAR BILL: There is little talk now about a short extension of the current Farm Bill for one or two years to see how the Doha Round trade negotiations go. Rather, it appears the committees are prepared to pass full five-year bill, the same length as the last one. 

RENEWABLE ENERGY: Look for a lot of debate about Farm Bill provisions to facilitate the development of renewable energy production. Ethanol is already a hot topic, and will continue to be so, both on the positive and negative side (i.e., what can we do to boost ethanol production, but how do we prevent ethanol's demand for grain as a feedstock from raising the price of traditional animal feeds like corn).  Cong. Peterson recently issued a call for an alternative ethanol pilot program to grow 5,000,000 acres of switchgrass as a feedstock for ethanol plants.

EXPANDING THE SAFETY NET: For a number of years, the Farm Bill programs have focused on just wheat, feed grains, oilseeds, rice, cotton, dairy, wool, and sugar. Livestock production and specialty crops (such as fruits, vegetables, and pulses) have not been part of the Farm Bill "safety net" programs designed to stabilize prices or protect the income for producers of those commodities. However, in a recent New York Times article, it was reported that furit and vegetable growers are banding together to lobby next year for inclusion in the new Farm BIll. Accommodating this segment of agriculture could add an interesting new dynamic to the Farm Bill process. The legislation would cost more, so where does the money for these new participants come from? If these producers are included, their congressmen and senators will be more likely to push for passage of the Farm Bill even if it costs more; but on the other hand, if these growers are rebuffed, will that create new votes against the Farm Bill on the House or Senate floor?

COMMODITY-SPECIFIC DEVELOPMENTS: Dairy: Sen. Schumer (D-NY), soon to be the number 3 Democrat in the new Democratically-controlled Congress, last week said he would fight hard to get the MILC income support program for dairy farmers continued, and mentioned Senators Harkin and Leahy (D-Vt.) as fellow defenders of the program. Cotton: Mark Keenum, long-time aide to Senator Cochran (R-Miss.), was just confirmed as Under Secretary of Agriculture for Farm and Foreign Agricultural Services. In his work for Cochran, Keenum spent a lot of time working on the cotton program, and thus will have a wealth of expertise in this area to provide USDA during the Farm Bill process.  

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Election 2006 results: What they mean for the Farm Bill process
Posted by: Phillip Fraas
November 13, 2006

The results are in for all but a handful of races in the House of Representatives; and the voters gave control of both the Senate and the House to the Democrats. What does that mean for the farm bill process, which starts in earnest in just a few months?

Background

First, it is important to keep in mind that the Senate and House agriculture committees traditionally have been as non-partisan as any committee on Capitol Hill. Their membership is dominated by farm state legislators who are not inclined to undercut any farm bill programs perceived to be of benefit to farmers, regardless who is in control.

While one will see agriculture committee members divide along party line or philosophy of government (conservative v. liberal/moderate) in areas such as the nutrition programs, forest management, or pesticide regulation, when it comes to the farm programs, the divisions tend to be regional, not party-based. 

It is true that, when the Republicans swept to victory in 1994, the next farm bill, in 1996, included farm programs with less government involvement in planting decisions than in previous farm legislation. However, the new programs had been supported by farmers themselves; and when farming came under economic pressure prior to the drafting of the next farm bill in 2002 and farmers wanted a change, the Republican House joined the then-Democratic Senate in making those changes.    

That said, one generally sees more Republicans than Democrats come down on the side of agribusiness and the food industry on issues such as dairy and sugar price support program. So, we might see a little shift of the balance in these areas.

 Expected Fall-out from the Election Results

While the Democratic wave this year was big, it wasn't a tsunami, many of the new Democrats are moderates from rural areas, and farm policy was not a campaign issue. Thus, the switch in control of Congress can't be read as a mandate for major change in farm program policy. To the extent there was any message from voters on policy changes, it appears to relate only to the conduct of the war in Iraq.

Thus, I believe that the dynamics going into the farm bill process are pretty much the same as before the election, with just one caveat: For those seeking major reform of the farm programs in ways farmers aren't exactly clamoring for (including the Secretary of Agriculture, Mike Johanns, and food industry groups such as the sugar users), their jobs, which were an uphill struggle to begin with, just got more difficult.

Looking to who the new players will be, it shouldn't be anticipated that there will be major shake-ups at either the Senate or House Agriculture Committee.

On the Senate side, prior to the election, the Agriculture Committee consisted of 11 Republicans and 9 Demcrats. I wouldn't be surprised to see the ratio in the new Congress that starts in January to be 10 Democrats and 9 Republicans, given that the Democrats will hold only a two-vote margin (51-49). Two of the 11 Republicans lost their elections (Jim Talent of Missouri and Rick Santorum of Pennsylvania); so the Republicans don't need to do anything to trim their membership. Of the 9 current Democrats, only one will be gone, Mark Dayton of Minnesota (by retirement). One could easily see the Democratic side move up to 10 with the addition of newly-elected Amy Klobuchar of Minnesota and Claire McCaskill of Missouri--and without even any change in state representation.

On the House side, the Agriculture Commitee before the election had 25 Republicans and 21 Democrats. And, while the election will bring in more Democrats, the relative size of the majority and minority will be roughly the same as before; the party ratios just flipped-flop from 233 Republicans and 202 Democrats to 230 Democrats and 195 Republicans (in the 10 races not finally decided, the Republicans lead in 7 of them). Thus, it could be that the committee ratio would stay the same: 25 Democrats and 21 Republicans.

For the Republicans to slim down from 25 to 21, it is already done: 4 of their members lost last week. On the Democratic side, there was one retirement and one race not called yet (John Barrow of Georgia, who leads by 900 votes with all votes counted, but who might have to endure a recount). It would not be surprising to see the Democrats who beat  3 committee Republicans seek membership on the Committee, which would fill up 3 of the 5 slots right there. Those Democrats are Jerry McNerney of California, who beat Richard Pombo; Jim Walz of Minnesota, who beat Gil Gutnecht; and Baron Hill of Indiana, who beat Mike Sodrel.

Of course, the chairman of the committee can have great influence in what goes into the farm bill just by controlling the process of drafting it. Thus, on the Senate side, it is worth noting that the chairmanship of the committee will pass from Saxby Chamblis of Georgia, known for his interest in the cotton program, to Tom Harkin of Iowa, similar known for his interest in the corn program. On the House side, Bob Goodlatte of Virginia, not tied to any one commodity and not known as a fervant advocate of the traditional farm programs, will be replaced by Collin Peterson of Minnesota, a strong supporter of both the dairy and sugar programs.

 One final note on committee membership: It is not untypical for members of the agriculture committees to move on to more powerful tax-writing/trade and appropriations committees when there are openings. Arguably, they can as effectively serve their farm constituents in those posts as on the agriculture committees. And, at this point, it looks as if there will be a number of open Democratic slots on these money and trade committees to be filled when the Democrats caucus in the near future. So, look for the make-up of the agriculture committees possibly to be influenced by resignations of some of their current members.   

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The Washington Post factor
Posted by: Phillip Fraas
October 16, 2006

As Congress readies itself for drafting the 2007 Farm Bill, one of the newspapers known for actively covering farm issues, The Washington Post, has itself been busy, churning out a series of six reports so far examining the operations of the farm and price support programs of the current Farm Bill. And, the reports have not been complimentary--to the contrary, they paint the picture of very wasteful programs throwing away billions of taxpayer dollars. Whether that is the real story about those program or not, those stories have introduced a "Washington Post factor" into the farm bill debate.

The Washington Post reports: July 2, 2006: paying people who don't farm; July 3, 2006: loan deficiency payments provide benefits even in good years; July 18, 2006: no drought required for drought aid; July 19, 2006: donated milk powder diverted for big profits; October 15, 2006: disaster aid double-dipping; and October 16, 2006: government loses but crop insurers make big profits.

Even ardent supporters of the farm and price support programs (and there are many and for good reason) would have to admit the Post reporters appear to be very knowledgeable about the programs; and their reports look to be well-researched and investigated. Further, the reports raise serious questions about the value of the programs in light of their apparent inefficency and waste. Finally, the Post is read by just about everyone in Washington who works on government policy issues; so it is safe to say the articles haven't gone unnoticed.

So, will the reports have an effect on the shaping of the Farm Bill next spring? Here are some thoughts on that.

• First of all, months will pass before the 2007 Farm Bill comes up for debate. By then, the Post series of reports might be but a dim memory. However, if that doesn't happen and the series is still fresh on people's minds next spring, they might have an influence on the legislative process. Newspapers can influence government action on farm programs. Example: The series of articles in several newspapers in the 1990s about the plight of Black and other minority farmers facing discrimination in the administration of USDA programs effectively set the stage for remedial legislation Congress passed in 1998 and the settlement of a lawsuit against USDA in 1999 providing substantial damage awards to thousands of Black farmers hurt by discrimination.
• Second, perhaps those who support the farm programs can effectively rebut the Post reports. As I hinted at in the preceding paragraph, there are good reasons for having the farm and income support programs, and there are many success stories in USDA the Post didn't report. If program supporters can get these messages out, the damage to the reputations of USDA's programs done by the Post reports could be minimized.
• However, rural district congressmen and farm-state senators can't pass farm bills on their own. They need to win the support of urban members of Congress. And, while even urban members understand the Nation's need to sustain its agricultural production capacity, farm bills don't help their constituents. So, this series of articles, unless rebutted, can only make the rural congressman's job selling the Farm Bill to his or her urban counterpart that much more difficult.
• This especially will be the case if, as many expect, there will be increasing pressurenext year to reduce Federal budget deficits. While strong tax revenues have served to reduce the deficit this year, it is still in the neighborhood of a quarter of a trillion dollars, and the overall Federal debt is well into the trillions.
• The upshot, in my mind, is that the "Washington Post factor" could complicate the jobs of congressional leaders and the chairmen of the House and Senate agriculture committees in rounding up votes for the 2007 Farm Bill. And, they might spur efforts to modify the programs to rein in out-of-control spending and impose more accountability.

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September 18, 2006, report: The Washington guessing game.
Posted by: Phillip Fraas
September 18, 2006

We are halfway through Congress's September session. In two weeks, members of Congress will adjourn for Fall campaigning, and not return until mid-November. The House Committee on Agriculture has been using this short late-Summer session for several hearings to receive testimony on the 2007 Farm Bill. Other than that, there is little action to report on the development of the 2007 Farm Bill.

The guessing game in Washington remains the same as it has been for the past few months: Is Congress likely to use the 2007 Farm Bill process just to pass just an extension of the current farm programs (which expire at the end of the 2007 crop years), or will it strike out in new directions. And, the answer remains elusive.

On the one hand, some in Congress, reflecting the views of many of their farmers who participate in the farm bill programs, have already expressed a preference for a simple extension of current programs. On the other hand, there are those (including, notably, Secretary of Agriculture Johanns) who think the farm programs need to be reshaped, either to deal with trade concerns or to "modernize" the farm programs.

The trade concerns are two: First, if the Doha Round of multilateral trade negotiations get back on track, it is likely the U.S. negotiators will agree to a substantial reduction in farm bill programs in order to get other countries to commit to open their markets to U.S. agricultural products. Second, even if the Doha Round remains in suspension for the next couple of years, there are those who are worried that other countries might even now be gearing up to attack the WTO-consistency of our current programs, following the lead of the Brazilians who successfully challenged aspects of our cotton program before the WTO. They argue we should use the farm bill process to make the programs WTO-consistent.

The guessing game won't be resolved soon, and likely solid clues to the eventual outcome won't surface until after the November elections. Stay tuned!

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