Policymakers and groups that have sought to reshape farm policy are again calling on Congress to reconsider tax changes to fund the farm bill while also paying direct payments to producers during these times of soaring commodity prices.
"It has been somewhat disheartening and disappointing seeing where these negotiations are heading," said Rep. Ron Kind, D-Wis., who pushed a failed farm-bill proposal in Congress last year. "It's as if the Congress is operating in a vacuum when it comes to formulating this next farm bill."
Those groups demanding reform in the farm bill such as Kind are taking another shot during farm-bill negotiations at questioning commodity payments. At the same time, crusaders for changing farm policy are crediting the Bush administration for demanding more fiscal responsibility in the farm bill. As negotiations continue, the Bush administration still holds a lot of leverage in talks on the farm bill if the president wants more reform, Kind said.
"I give the president credit," he said. "He has been saying for a long time 'Give us a farm bill that doesn't raise taxes and has meaningful and fair reform with these commodity programs,' and we agree with that position."
Congressional leaders are close to reaching agreement on a farm bill that would add $10 billion in funding over 10 years to a bill already projected to spend $597 billion during that time frame. The agriculture committees are waiting for the Senate Finance Committee and House Ways and Means Committee to provide some tax provision that would pay for that $10 billion. The Bush administration is monitoring the talks while also pushing for more policy changes that would tighten payments in commodity programs.
Most farm groups have defended direct payments as a safety net that would be there if hard times return. Others have noted that the payments, which are not tied to actual production, are compliant with World Trade Organization rules. The American Farm Bureau backs keeping direct payments, and the National Association of Wheat Growers wanted an increase in direct payments because, in many cases, direct payments were the only safety net for wheat producers over the past farm bill.
Still, National Farmers Union President Tom Buis describes direct payments as the "800-pound gorilla in the room nobody wants to deal with." He acknowledges no one can justify getting direct payments with the current market conditions. The trouble, Buis said, is that farmers face significant risk if prices collapse. If money were taken from direct payments, Buis would like to see those funds go to other commodity programs, such as increasing loan rates and target prices to protect farmers.
"We want to permanently fund disaster (programs), and we want to raise the counter-cyclical and the loan rate," Buis said. "If the bubble bursts on prices, that safety net we have now is totally inadequate."
Kind and cohort Rep. Jeff Flake, R-Ariz., have sent a 10-point plan to House Speaker Nancy Pelosi, D-Calif., and other congressmen proposing to rollback any potential changes in target prices or loan rates, as well as reduce direct payments and establish tighter criteria for farmers to receive commodity payments. Given the current commodity markets, the Kind-Flake proposal particularly targets direct payments, which pay $5.2 billion annually to producers and are not tied to market conditions.
"It's just unbelievable that, given the atmosphere that we are in, that we could not have done better here," Flake said.
With the farm bill now relying on the tax-writing committees for money, Kind and Flake are questioning why the farm bill should need more revenue. Kind is a member of the Ways and Means Committee and doesn't think there is a lot of support in the committee to use increased revenue for the farm bill. Flake, meanwhile, is one of Congress' leading fiscal conservatives.
"We hope there is still room for open minds to consider some practical cost savings," Kind said.
Former congressman Cal Dooley, president and CEO of the Grocery Manufacturers Association, particularly questions direct payments and the congressional proposals on means testing for farmers to receive commodity payments. Under a plan proposed earlier this month, a farmer and spouse could collect as much as $1.8 million in income and still receive a direct-payment check annually.
Dooley said lawmakers need to examine the prices commodity producers are now receiving for their crops. DTN reports cash corn prices averaging $5.05 per-bushel nationally and soybeans averaging $13.70 per bushel. Wheat, depending on the exchange and variety, is ranging in price from $12.43 per bushel for hard red winter wheat to $20.25 a bushel for spring wheat.
"It is unconscionable to be asking taxpayers to contribute on an annual basis over $5.2 billion in payments to families and farmers who are doing incredibly well," Dooley said.
Flake, Kind and others who have sought over the past year to reduce commodity-program payments or restructure the farm safety net have been effectively shut out of major farm-bill negotiations. Their reform bill also got more votes in 2002 than last year as well. Flake attributed that to some of the increased spending in areas such as nutrition.
"When you increase the baseline like we have here, you tend to buy people off, and certain groups who would otherwise be opposed to these kinds of subsidies are not so much opposed anymore," Flake said. "That's the unfortunate thing is by putting more money in it, you diminish some of the opposition that would normally come."
Most members of Congress also do not study the farm programs that well, Kind said. They rely upon the agriculture committee chairmen and leadership to focus on those issues. Their votes generally do not count against them with voters as well.
"This is not a voting issue for most Americans back home," Kind said.
While the Bush administration has trumpeted change to commodity programs, the administration has not challenged direct payments. Direct payments, for now, remain compliant with the World Trade Organization and are not considered trade distorting. However, the WTO has ruled that for the U.S. to consider direct payments as non-distorting to trade, the U.S. needs to lift all planting restrictions on that land. Right now, land used to collect direct payments cannot be used to grow fruits and vegetables, for instance, which are not part of the commodity programs. The House and Senate farm bills did not address that restriction.
Flake acknowledged the administration's defense of direct payments, but added that "they may not have the luxury here," Flake said. "It's either that or are the votes there for a tax increase? I don't think so, and so they may not have the luxury of protecting direct payments and going above the baseline here."
Ken Cook, president of Environmental Working Group, said the Bush administration might be willing to consider changes in direct payments now given the market conditions. Shifting money to conservation also doesn't address the questions in the WTO. Cook also gave credit for the administration's role thus far in holding Congress accountable on the farm bill.
"I can't remember a time when the White House, the administration, played such a pivotal role in a farm bill," Cook said. "It's very much to their credit that they weigh in, in such a constructive way, stirring up the questions of reform again and again and fiscal accountability and budget responsibility. Not only have they seen that opportunity, they have seized it."DTNAg
