Secretary of Agriculture Ed Schafer is optimistic congressional negotiators will reach a deal within days on new spending for the bill, but that agreement may not come in time to complete a farm bill by March 15.
The likely scenario is that a spending agreement will be reached in the coming days that would allow negotiations on other policy questions to begin being addressed. The question then becomes whether negotiators and congressional staff could put together a bill, pass it in both chambers of Congress and get it to President Bush within three weeks.
"There are a million details that need to be covered by the conference committee and things. I think it's probably likely that you would see an extension in April," Schafer said in a phone interview Wednesday with DTN.
Currently, the farm bill is operating on that March 15 deadline because that is when the latest extension of the 2002 law is set to end. There have been threats in Congress of letting agricultural policy revert back to the permanent law of 1949 if no bill is completed by then. Schafer said it's more likely that if an agreement is reached, that there would be another, shorter extension so negotiators and congressional staff can complete the bill.
"We need to see a resolution between the House and Senate here in days, and at the most, weeks, if we are going to get a farm bill this year,"
Schafer, who was confirmed as agriculture secretary last month, noted that it is not unusual for the president to sign a farm bill in mid-spring, such as April. President Bush did not sign the 2002 farm bill until May 13 of that year.
Right now, House and Senate negotiators are sending various counteroffers to each other regarding the amount of money needed above the projected 10-year baseline cost of the bill, which is $597 billion. Figures in the past week have ranged from a $6 billion proposal by the House to a $12.3 billion counteroffer by the Senate. Sen. Charles Grassley, R-Iowa, one of the Senate conferees, said Tuesday he thought negotiations would end up settling on about $9 billion in extra spending.
As those congressional talks continue, USDA is "kind of watching the action," Schafer said. The administration has stated under which circumstances President Bush would support a farm bill. The administration backed the House proposal because of its low spending number and potential changes to commodity programs that would lower farm-program payments to the largest producers.
"I am optimistic we are going to come to an agreement on a farm bill that everybody can be supportive of," Schafer said. "The issue here is one of spending."
The "big issue" in spending differences being challenged in the Senate's version of the farm bill is its insistence on a permanent disaster program, which was actually created by the Senate Finance Committee as part of a package to help fund other aspects of the farm bill. The program would set aside just over $1 billion a year for five years. Schafer said some state disasters, including one he faced as governor of North Dakota, took up more than $1 billion in aid alone. A permanent disaster program for agriculture may not cover all the needs in a given year and other lawmakers would then be even more resistant to funding further ad-hoc assistance.
"How can you predict a disaster and how much money you put into it?" Schafer said. "To me, everybody wants to have a safety net for farmers, and we need to put the appropriate money into programs that will help them in their everyday operations, and to do that, there will be some attention paid to a pot of money that would be socked away for potential disasters."
While the Senate bill as communicated is being portrayed as being $12.5 billion over baseline, USDA and the administration maintain the bill is closer to $25 billion to $27 billion over baseline. Regardless, the administration continues questioning why Congress is looking to increase spending on the farm bill now.
"We can talk about funding sources and all of that, but the point is, in this time of the best agriculture economic arena in history, how much more are we going to spend on a farm bill than we have in the past?" Schafer said.
Schafer said he is also concerned that some farm organizations are "lackluster in their intent on getting a farm bill done this year." The attitude is that a new farm bill is not that important to some agricultural groups and an extension until the next administration might be preferable. Schafer said he thinks it is "very important" that the bill is completed.
Beyond the farm bill, Schafer has been getting a lot of pressure from all sides since taking office on the issue of allowing landowners out of their Conservation Reserve Program contracts without paying penalties. The record price of commodities, particularly wheat right now, is causing bakers, millers and landowners to want out of contracts while conservationists and wildlife groups are telling USDA to keep the contract requirements in place.
"There is a lot of debate going on on both sides of the fence here," Schafer said.
Given the rules needed to allow early out of CRP, it's too late to change the 2008 crop year. Schafer said USDA will have to make a decision, before next fall, "say somewhere between July and September" on what to do for 2009.
"We need to look at that timeline, and I haven't really looked at it fully about when to make those decisions, but we are mindful that we need to make a decision before the '09 crop year," Schafer said.
Despite the high commodity prices, the low value of the dollar worldwide means U.S. sellers keep selling grain overseas. There are now questions about whether the administration would consider putting a cap on commodity exports. Schafer had a simple answer to that question: "No."DTNAg
