Posted by: Phillip Fraas
January 16, 2007

Now that the new 110th Congress has begun work, we can expect to see key members of the congressional agriculture committees begin describing what the new farm bill might look like. In addition, early to mid January is the busiest time of the year for the annual meetings of the big national farm organizations at which congressional leaders are invited to speak. This confluence of events has led to a couple early declarations of intentions regarding the farm bill that are worth passing on.

THE HOUSE AGRICULTURE CHAIRMAN SPEAKS OUT: The new chairman of the House Committee on Agriculture, Collin Peterson (Dem.-MN), spoke at the annual convention of the American Farm Bureau Federation earlier this month. He told the Farm Bureau members that his committee would not wait to see if the Doha Round trade negotiations might restart in earnest before it begins drafting the farm bill. Further, he indicated he is opposed to eliminating a provision in the current farm bill (that prohibits fruit and vegetable growers from receiving direct payments) in order to avoid a World Trade Organization (WTO) challenge to the U.S. subsidy programs. More on the Doha Round and the possible WTO challenge in the paragraph following the next.

He also said that his committee's farm bill proposal will look very similar to the current 2002 farm bill programs. Also, he would like to set up a permanent disaster assistance program to farmers, and hopes there is money available for the development of renewable energy/ethanol programs. However, he pointed out that the agriculture committee will have to wait until the congressional budget estimates come out in March to get a better sense of whether there will be money available for such ambitious new programs.

[A note on Doha and the WTO: President Bush and EU Commission President Jose Barroso, at their bilateral summit on January 8, committed to have their staff negotiators begin work to come to a solution to resolve the US-EU differences on agricultural trade in the Doha Round trade negotiations. So, while many believe (and are reasonable in doing so) that Doha is dead for this year, there remains a small possibility that a breakthrough might be reached within the next few weeks that would impel Congress to extend the President's "fast track" negotiating authority, which expires at midyear. Doing so would allow Doha negotiations go forward to fruition as early as this year and might force the congressional agriculture committees to consider Doha proposals in crafting a new farm bill. As to the WTO challenge to the U.S. farm bill programs, last year Brazil won a WTO challenge to the U.S. cotton program that is still having ramifications for the farm bill even after the U.S. agreed to fix the export subsidy program that was the main impetus for Brazil's WTO challenge. The wording of  the WTO decision in favor of Brazil has drawn into question the compatibility with United States WTO obligations of a minor, but key, element of U.S. price support policies--the prohibition against fruit and vegetable growers from receiving direct farm bill payments. Some want to fix this WTO problem in the new farm bill, while others, such as Chairman Peterson, are wary that doing so could undermine support for the farm bill among fruit and vegetable growers--who fear that, without the prohibition, grain, oilseed, and cotton growers might be encouraged to start growing their commodities in competition with them. On a different front, Canada recently announced it would pursue WTO remedies for the trade distortions--and adverse impact on its corn growers--allegedly caused by this U.S. program feature and others, but encouraged the U.S. to use the farm bill process to address its concerns. While the Canadian challenge is unlikely to have much direct affect on the farm bill debate, it highlights how WTO considerations could yet be a major part of the farm bill calculus. ]  

THE FARM BUREAU WANTS TO CONTINUE CURRENT FARM BILL POLICIIES: At its convention, the membership of the Farm Bureau (which is probably the most influential general-membership farm organization) approved a policy that calls for a new full-term farm bill that simply extends 2002 farm bill programs. In doing so, it puts the Farm Bureau on the side of many in Congress, including the Democratic farm leadership, who favor an extension of current programs against Secretary of Agriculture Johanns who has recommended substantial changes in the programs. The new Farm Bureau policy switchs gears considerably from last year, when the organization called for just a one-year extension of the 2002 farm bill to allow time for Doha negotiations to be completed.

P.S. The Washington Post, in an editorial published on January 8, called for a complete overhaul of the federal farm subsidy system, expressing its belief that the current programs distort the markets to push smaller farmers out of business. The Post cited the series of articles it had run in 2006 (and described in this blog) in explaining its position.

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