Posted by: Phillip Fraas
July 11, 2007
Topic: REPORTS ON FARM BILL STATUS--Second Half of 2007

Congress faces a jam-packed four weeks before it adjourns for its traditional August recess. Members of the House and Senate agriculture committees will be especially busy. Besides participating in the debates on appropriation bills, the Iraq war, the energy bill, and other important national issues, they will be digging into the farm bill in earnest.

The House Committee on Agriculture has scheduled mark-ups of the farm bill for July 17, 18, and 19; and it is reported that the House Democratic leadership has allotted time on July 26 for floor debate on the legislation. On the Senate side, there have been no announcements yet as to the farm bill schedule, but it is rumored that the Chairman, Sen. Tom Harkin (D-Ia.), is close to releasing his chairman's mark (the document used as the base document for committee mark-up) and that mark-up in his committee could come as early as next week.

THE HUNT FOR FARM BILL FUNDS: While not formally part of the legislative process, one thing that will keep both agriculture committee chairmen extremely busy this month is the search for additional money to fund new additions to the farm bill, such as bioenergy development projects and a permanent disaster assistance program, and increase funding for popular program areas, such as soil and water conservation, nutrition, and fruit and vegetable/specialty crop production.

So far, the House approach has been to put the farm bill items needing new money on a separate track from the reauthorization of existing programs that the budget baseline has already accomodated, until the new money becomes available. And, apparently, the hope there is that the House leadership will find a way to make that money available, perhaps by offsetting the farm bill increases with cut-backs in other programs or by earmarking increases in tax revenues to the farm bill. And, reportedly, the agriculture committee also is looking at reducing one area of farm bill spending--crop insurance subsidies--to raise some of the needed new money. However, at this point, no reports have surfaced of breakthroughs in the House on the search for new farm bill funding.

On the Senate side, the agriculture committee is said to be looking at passing a farm bill that will last six or seven years to take advantage of increases in the baseline budget that only show up in the sixth and seventh years (congressional budget planning this year is based on five-year budget estimates). Again, nothing definite yet on whether the committee has found the new money for the farm bill spending it wants to make, either through this approach or in other ways.

THE PAYMENT LIMITATION BATTLE: Perhaps the most intense farm bill battle going on now is behind the scenes over what is called the "payment limitation." Since the 1970 farm bill, Congress has restricted the amount of price and income support payments farmers can receive, in order to prevent the biggest (and thus probably the least vulnerable) farm operators from getting literally millions of dollars of taxpayer funds. The payment caps have varied over the years, but the current effective overall payment limit, accoridng to USDA, is $360,000 per year.

Earlier this year, USDA advanced several proposals to tighten payment eligibility rules while maintaining the current dollar limit. Its proposals include limiting participation to farmers whose adjusted gross income (AGI) is $200,000 a year or less. The current AGI limit is $$2.5 million annually. Some members of Congress are pushing for similar payment limitation reforms. On the other side, members of Congress from Southern states are resolutely opposed to any tightening of payment limitations, as many of the operations producing commodities grown primarily in the South--cotton and rice--are large enough to bump up against the current limitations. Because pay limit rules affect those farmers' bottom line, you can be assured that the battle on this issue is and will continue to be hard-fought.

So far, it appears that the battle is a draw. The proponents of the current system have prevented the adoption in the House mark-up of the USDA or any other proposal that would substantially cut into current payment caps. However, the chairmen of both the House and the Senate agriculture committees have made it clear that some new restrictions on payments are inevitable. By the end of the House floor debate later this month, we likely will have a better idea of which side ultimately will prevail in this fight. So, stay tuned.

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FARM BILL UPDATE: Congress To Have A Busy July Working On The Farm Bill

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