I. CLAIMS REGARDING WORKABILITY
Claim 1. "Purports to provide voluntary, incentive-based solutions to the environmental challenges facing producers yet expressly states that this legislation will be implemented subject to the Clean Water Act. Ironically, such language is introduced at a time when there are numerous lawsuits pending which challenge application of the clean water laws to mainstream agriculture. Does this mean EPA will be on the farm and ranch? The amendment sets up evaluation and monitoring programs without any protection for individual producer information."
Answer: There is no such language in the amendment, or a single reference to the Clean Water Act or EPA. To preclude any misinterpretation, prior draft language clarifying that the amendment does not amend the Clean Water Act has been removed. The amendment does NOT amend the Clean Water Act or any other laws.
The amendment sets up an entirely voluntary monitoring program in which farmers may choose to participate. All existing protections for individual producer information remain unchanged. It is entirely up to the individual producer whether or not to participate in the program.
Claim 2. "Touts the amendment as a means of ensuring United States' compliance with global trade obligations yet this amendment makes guts the provision for income support. - The lessons of the past three years have shown that failure to implement an adequate financial safety net for producers will necessitate further ad hoc disaster payments which are bad fiscal policy and most certainly jeopardize our position with respect to international trade requirements."
Answer: Even with this amendment, commodity program payments in the next Farm Bill will be set at extraordinarily high levels. Over the ten-year lifetime of the bill, the amendment would reduce overall commodity programs from roughly $12.3 billion to $10.4 billion per year. For the next five years (and Senate leaders have announced their goal to restrict the Farm Bill to five years), commodity payments for the basic commodity programs will exceed $12 billion annually, and the offset will reduce these payments by around 13%. This figure is more than twice the average annual payments of $5.5 billion provided in the years 1996 through 1998 under the last Farm Bill before Congress added emergency payments.
Moreover, $10.4-$12 billion annually for commodity crop payments should be fully adequate. The reductions required by the amendment will affect only around 3% of all farmers and will have no impact on the 70% of all farmers, who according to USDA, do not grow crops eligible for these commodity payments. Moreover, of the 30% of farmers it otherwise could affect, the language of the offset precludes any reduction to 90% of these recipients. Over the next five crop years, for which projections are most reliable, the 3% of affected recipients are likely to receive more than $6 billion. Even for these recipients, that is roughly almost double the payments provided under the first three years of the last Farm Bill before Congress began to add emergency payments.
The Bush Administration has said that H.R. 2646 has a 30 percent chance of violating existing trade agreements and will impede negotiation of future trade agreements, hurting all of agriculture. The Administration also stated that the high subsidies of recent years are hurting many farmers by driving up land prices and encouraging crop surpluses. The Administration encourages redirection of funds into conservation programs that do not count against trade agreements. The amendment will somewhat improve trade negotiation prospects by redirecting $1.9 billion per year in this manner.
The fundamental flaw with the Committee argument is that the amendment does NOT reduce assistance to farmers. The amendment simply makes agriculture assistance more equitable. Today, two-thirds of all commodity payments go to just 3% of all farms, whose income levels, according to the Bush Administration, average $136,000. Seventy percent of all farms receive no commodity payments at all because they do not grow commodities. Four-fifths of American agriculture by value of production receives no aid from these commodity programs. The fundamental question is whether virtually all federal aid should be directed at commodity producers, and most at the largest producers, or whether a modest amount should be shifted to help other producers.
Claim 3. Amends existing programs to reflect incompatible social and environmental goals. - The bill directs the Secretary to create an evaluation system for EQIP offers that is weighted in favor of small and socially-disadvantaged producers. Yet, it retains language, which requires the Secretary to select offers which will maximize the environmental benefits per dollar expended. Past history indicates that this language has resulted in large, mainstream operations who can make a low-percent cost share bid receiving the lion's share of the program money. The amendment sets out two diametrically opposing policies that will ensure conflict and result in program inequities.
Answer: The goals of maximizing environmental benefits per dollar and assuring participation by smaller and disadvantaged farmers are not incompatible. The simple solution is to maintain a strong ranking index while providing added points for smaller and economically disadvantaged farmers. The Committee bill eliminates all requirements to maximize benefits per dollar, not just for smaller participants, but for even the most large-scale farms - giving even massive operations a boon. Perhaps under the theory of benefiting smaller operations, the Committee bill eliminates any overall goal to make the EQIP program maximize benefits. The proper mechanism is to maintain both goals.
Claim 4. "Claims to inject a substantial sum of new money it conservation programs to benefit everyone, but the legislation awards funding to special geographical areas. - For example, in a new watershed quality incentives program the Kind Amendment spends over $1 billion for a nutrient reduction pilot program to be used in ONLY five impaired watersheds. Incentives payments for nutrient reduction will be made based on an individual's contribution, which could result in fraud and abuse in a program of this size. Similarly, of the money made available for the Environmental Quality Incentives Program ("EQIP") at least 10 percent must be spent on EACH of the following practices: managed grazing, "innovative" manure management, surface and groundwater conservation, and pesticide and herbicide reduction. In other words, 40 percent of the program funding is taken up by specific project areas for 10 years preventing the Secretary from having any discretion over this money in the future."
Answer: Under the amendment, an additional $1.9 billion will be put into conservation programs, and environmental ranking systems for directing these funds are preserved or strengthened. In addition, programs like a Grassland Preservation and Enhancement Program are added to benefit previously under-served regions such as the West, Florida, and the Northeast, and provisions are included to guaranty regional equity. By contrast, the new funds under H.R. 2646 are likely to be directed primarily at a small number of large feedlot operations. H.R. 2646 also eliminates or weakens environmental ranking systems and criteria for CRP, EQIP, and WRP and exacerbates regional equity problems in a variety of ways. For example, H.R. 2646 creates a new grassland program as well, but it limits funds to an average of $83 per acre total over ten years. At best, this would permit enrollments in only the most remote rangelands in the country and makes the program useless in California, Florida, the Northeast, and the Great Lakes states.
Another difference between the Committee bill and the amendment is that H.R. 2646 would eliminate the use of priority areas for the Great Lakes, Chesapeake Bay, and other areas, while the amendment would retain them. Farm groups have long argued that environmental programs directed at farms should not only be incentive-based, but also should be focused at the greatest challenges to help reduce demands for additional regulation. The amendment would also allow the Secretary to approve state-submitted plans to tailor federal conservation programs to state-identified high priority needs (while ensuring that all states have the opportunity to participate). There is no question that one of the major differences between H.R. 2646 and the amendment is the importance the amendment places on tailoring programs to local needs and proving that incentives can truly solve critical environmental challenges without regulation.
A key provision in the amendment is a pilot program for five watersheds that would use $100 million per year (out of a total conservation title budget of $5.4 billion per year) to test a more flexible approach to addressing excess nitrogen and phosphorus. (Excess use of these fertilizers poses one of the country's most serious water quality problems for both bays and drinking water supplies.) Unlike most USDA programs that pay farmers to implement a specific government-approved plan, this program would pay farmers based on actual measurable reductions in nutrients. Farmers therefore would retain the flexibility to implement and tinker with any plan of their choosing. This is precisely the kind of market-based program recommended by the Bush Administration, and far from allowing fraud and abuse, it is precisely the kind of program least likely to result in fraud and abuse because it is based on measurable results. It is important to test this program in five watersheds initially both to get it right and to demonstrate, through monitoring, that it is achieving actual environmental results for the taxpayers' investment.
In EQIP, out of a total budget of $1.7 billion per year, the amendment establishes priorities for $400 million (less than 25%) for some of the most critical goals. These priorities include manure management technologies that, unlike present technologies, address odor and air pollution problems and can turn methane (a contributor to global warming) into electricity for the farm. They include efforts to address water shortage problems - a top problem identified by USDA and the Bush Administration in their recent report - to ensure that this key problem is addressed both nationally and in states like California and Florida. Other priorities include helping farmers reduce pesticide use, which can reduce farm costs and help protect large numbers of farm workers, and increasing use of grazing operations because farm programs have traditionally ignored opportunities for enhanced grazing. Ensuring serious attention to these priorities benefits not only the farmers who participate, but also other farmers by helping to prove the efficacy of innovative technologies. The Secretary retains enormous discretion not only in how to focus on these priorities, but also because the statute does no more than set targets that the Secretary need not meet if she determines that applications are of insufficient number or quality.
The real distinction between EQIP under H.R. 2646 and under this amendment is that H.R. 2646 would likely direct nearly all funds at the largest feedlots to implement old-fashioned manure storage technologies while the amendment is designed to ensure that all the country's major problems are addressed in a regionally balanced way and to help farms explore promising, innovative solutions to vexing challenges.
Claim 5. "Claims to be designed to assist producers in complying with environmental regulations yet limits the amount of money available to individual farmers to unrealistic amounts. -- Under the EQIP amendment, there is an illusion that large producers may access the program in light of the amount allowed per project; however, program operations of the bill will test that possibility. The amendment retains the current prohibition on the use of EQIP funds to assist operations larger than 1,000 animal units. In any event, these amounts are far less than is needed to comply with environmental laws. The program does make an exception for the purchase of digester systems. However, this is a viable pollution control system only for large animal operations such as dairies, many of which are excluded from the program altogether."
Answer: There is no question that one fundamental difference between the amendment and H.R. 2646 is the emphasis each places on directing funds toward the largest farms not only in the EQIP program, but through commodity payments generally as well. H.R. 2646 would continue the commodity programs historic bias in completely ignoring 70% of all farms that do not produce favored commodities. And of the 30% of farms that do participate in commodity programs, it would direct two-thirds of payments at the largest 10%. Consistent with this philosophy, H.R. 2646 would change the law of the EQIP program and direct the majority of funds to the largest commercial feedlots, which can include up to 100,000 animals. Nationally, 3% of pork producers and 2% of beef producers control half their respective markets, and H.R. 2646 is designed to favor these massive operations at the expensive of smaller, family-sized operations that need help most in addressing polluted runoff.
The amendment not only provides more than $400 million more for EQIP than provided by the Committee bill, but also ensures that far more farmers are able to obtain a fair share of these funds. Every dollar the Committee bill targets at the largest farms (and that is now probably the great majority of EQIP funds) is one dollar less available for the vast majority of livestock operations. The effect of the Committee bill in New York, for example, would be channel funds now focused on 96% of all dairy farms toward the 4% of largest farms that now face some restrictions on funding available through EQIP. Nationally, the vast majority of all livestock operations in each sector would benefit from the greater focus on small and medium-sized farms provided by current law and maintained by the amendment.
However, the final amendment takes a middle ground approach and does not preclude any farms from participating in the EQIP program. It maintains existing law that not only allows the Secretary to define which "large" farms face some restrictions, but allows even the largest feedlots to receive both technical assistance and up to 100% of the costs of land management practices such as soil testing, improved application equipment, and buffer zones. The amendment also raises the existing EQIP annual payment limit from $10,000 per year to $30,000. For a large animal operation, technical and land management assistance could easily reach even this raised cap. In Florida, for example, improved land management is a significant part of the challenge for large operations.
Ironically, despite the Committee's
Claim to wish to help large farms, H.R. 2646 would have the effect of barring the participation of most large commodity farms in the Wetland Reserve Program. Existing law only restricts farms to receiving more than $50,000 from the Wetland Reserve Program alone each year. Commodity payment limits are under separate caps. Under H.R. 2646, any farmer that already receives commodity payments could only receive WRP payments up to a combined $50,000 - a far tighter limit than on commodity payments alone. Those farmers who already receive $50,000 in commodity payments would not be able to participate in WRP at all.
II. Alleged Confusion
Claim 1: "Earmarks 7 million acres of the Conservation Reserve Program for the Continuous CRP (CCRP). With 1.6 million acres enrolled in the CCRP during the last five years, the Kind amendment devotes most of the CRP acres to what is essentially a program that has not lived up to its original billing. The Kind amendment expands the CRP to 45 million acres, and then makes it essentially unavailable."
Answer: Nearly all experts agree that the most environmentally valuable enrollments are buffer zones on working farms. NRCS estimates that more than ten million acres of such buffers are necessary. To meet this demand and the demand for other exceptionally high value enrollments, the amendment reserves 7 million acres only through 1997 for a variety of continuous enrollment practices, including buffers, but also state Conservation Reserve Enhancement Programs. There are now fifteen states with CREP's, and several more CREP's on the way, with more than 1.5 million acres committed. These acres also qualify under the 7 million acre reservation. If all states develop and implement CREP's, it is likely that five million acres will be required to service just them. The amendment also makes buffers more attractive by requiring that they be allowed at wider widths to benefit wildlife and by requiring special incentives for in-field "contour" buffer strips that are also exceptionally beneficial for water quality. For all these reasons, 7 million acres is a reasonable target. Critically, however, if demand does not materialize, the statute authorizes USDA to use these acres for other CRP purposes after 2007.
By contrast, H.R. 2646 does not reserve a single acre for buffers, CREP's, or other high value enrollments. Given its limited expansion of CRP, if USDA has another single open enrollment, few or no acres would be left to enroll more buffers or even to fulfill existing CREP agreements. All states with CREP's or new CREP's could suffer, including: Wisconsin, New York, Maryland, Florida, California, Kentucky, Minnesota, Illinois, New Jersey, Virginia, Ohio, Michigan, Iowa, and North Carolina, among others.
Claim 2. "Earmarks an additional 3 million CRP acres for permanent easements. After several years of trying to get easements on Conservation Reserve Enhancement Program (CREP), it has been pretty much confirmed that landowners do not want their lands restricted permanently.
Answer: The amendment authorizes 3 million acres of the 45 million acre CRP to be enrolled using permanent easements. If the demand does not materialize, these acres can be enrolled in traditional short-term contracts.
However, experience has shown that the demand is almost certainly there. The only meaningful test of using CRP for easements comes from two of the three original states that pioneered Conservation Reserve Enhancement Programs, Minnesota and Illinois, which placed an emphasis on permanent easements. Through these programs, the states provided the funds to turn 15-year normal CRP contracts into permanent easements for up to the entire 100,000 acres of the programs. (Maryland, the remaining original state, had only a minor role for permanent easements). Illinois has now nearly met its 100,000 target, overwhelmingly enrolling land in permanent easements. Minnesota has reached 60,000 of its 100,000 acres, virtually all in permanent easements, and the obstacle to reaching 100,000 acres has not been demand but sufficient state funding (recently provided). Because farmers in Illinois can participate in CREP either through normal 15-year agreements or 30-year or permanent easements, the fact that the overwhelming majority have chosen permanent easements shows that landowners like permanent easements.
Other programs also show that farmers are happy to participate in permanent easement programs. The Wetland Reserve Program has enrolled 1 million acres almost entirely in permanent easements and has a backlog of 560,000 acres. There are massive backlogs for the Farmland Protection Program. Farmers can often gain favorable state tax treatment for land under permanent easement and can supplement farm income through hunting leases and related efforts.
The failure to enroll lands in permanent easements means that federal taxpayers can over fifteen years pay nearly the full amount for a permanent easement and then have nothing to show for it after the fifteen year contract expires. That makes no sense for the most valuable enrollments, such as buffer zones and wetlands. Of the 3 million acres, the amendment also hopes to enroll 1 million acres of isolated wetlands, which are in serious threat of loss.
Claim 3. "Establishes a nutrient reduction pilot program within a new Watershed Quality Incentives Program that would require producers to reduce nutrient applications to at least 15 percent below agronomic rates. The agronomic rate of application is that rate which provides the plant with the most efficient and usable nutrients for proper growth and production. Anything less than that and the farmer is throwing money down a rat hole. What or how much of an incentive would be necessary to get real farmers into this kind of program?"
Answer: The nutrient reduction pilot program actually authorizes funds to farmers who reduce nutrient application by at least 15 percent below the average for comparable farms. A highly distinguished scientific and economic panel established to examine cost-effective remedies for the dead zone off the Gulf of Mexico, recommended reducing nitrogen applications in the entire Mississippi River watershed, which includes most of the country's commodity farmland, by 20%. It found that such reductions were cost-effective and would not reduce yields.
Claim 4. "Provides EQIP assistance to purchase anaerobic digesters. The Kind amendment purports to focus on assisting small farmers and ranchers, yet a digester system costs about $300,000 -- the kind of system only available to and usable by large operations."
Answer: Many digesters are used by medium-sized farms, and digester technology can be somewhat scaled up or down. Additionally, digesters can be shared by two or more farms in a local area. The amendment provides up to $150,000 to cost-share such a system.
Claim 5. Reimburses NRCS for the actual costs of providing technical assistance since 1996. NRCS has no idea how much it costs the agency to provide technical assistance, and a recent General Accounting Office report backs them up. The NRCS financial system accounts for activities as they are "budgeted", not as they are actually worked. Mr. Kind does not appear to know the cost of this provision since he provides no funding level for this reimbursement. It is, however, interesting to order the Secretary to pay her own government employees for work performed five years ago.
Answer: The amendment does not reimburse NRCS for prior costs. It simply provides that in the future, the program costs will include the costs of implementing the programs, payable either to NRCS or to third parties. Present law already provides this, and established formulas are in place for each program except that an artificial cap was put on these reimbursements in the 1996 Farm Bill. The result has been both a massive backlog in program delivery and a shift in funds now used for basic technical assistance to program delivery. H.R. 2646 does not eliminate or relax this cap, even while promising massive new technical assistance to very large feedlots. The result will be an even worse crunch and backlog for average farmers. The amendment fixes this problem, and the funding for this reimbursement is fully calculated into the estimated cost of the amendment.
Claim 6. " Provides lucrative subsidies for organic growers. Organic growers have established successful niche markets in many areas of the country, but, although they are growing slowly, they are fragile. The Kind amendment likely will destroy the organic produce industry by flooding the markets with new producers who have government assistance not available to existing organic farmers."
Answer: The amendment provides the same level of financial assistance for existing farmers to help expand their organic markets as for new farmers to become organic. The organic market is growing by 20 percent per year. H.R. 2646 not only provides no help to farmers to take advantage of this market, but it also effectively penalizes them from doing so by limiting funds to inorganic forms of production. Organic farmers have endorsed the amendment.
Claim 7. By cutting back on the fixed and counter-cyclical payments to producers of the major field crops, the amendment severely restricts program payments to full-time farmers. - If these farmers can't pay their bills and care for their families by growing the major field crops, they are likely to start growing fruits and other vegetables. What will that do to the fresh and processed markets for these commodities? The best farmland protection program is a sound agricultural policy.
Answer: As discussed above, the amendment leaves commodity payments far higher than historic levels and even the levels of the last decade including staggeringly high emergency payments. It is highly unlikely that growers of major field grows will significantly shift to fruits and vegetables even if subsidy levels were cut, particularly by the modest amounts in the amendment. According to the Bush Administration, today's excessive subsidy levels are harming most major field producers by driving up land values, increasing crop surpluses, exacerbating low prices, and impeding international trade agreements.
Claim 8. "Allocates conservation payments under the amendment by each state's share of total agricultural market value of production. How does this funding mechanism relate to dealing with environmental problems? The various earmarks in the Kind amendment become that much more important, and certainly will cause more inequities than those the Kind amendment professes to want to address."
Answer: Because membership on the Agriculture Committee has been regionally skewed, programs have been developed that are also regionally skewed. As a result, total payments to farmers in North Dakota have recently averaged 27 cents for every dollar of agricultural production, while payments to farmers in Florida and California have averaged 1 and 2 cents respectively. Conservation programs historically, while far more equitable than commodity payments, are also still regionally skewed. The amendment therefore provides a partial guarantee against this historic inequity. It requires that the Secretary administer the programs to the maximum extent practical to guarantee each state that it will receive its fair proportionate share of at least $2 billion of the total $5.4 billion of conservation funds. In fact, every state has important environmental needs, and this guarantee enures at least minimal equity.
It would not be necessary to include this provision if it were not for the historic discrimination against many states. H.R. 2646 is likely to exacerbate historic inequities. It creates a new grassland program, but limits funding amounts to $83 in total per acre over ten years, making it useless in most states, including any state where land values are influenced by development value. It eliminates priority areas for the Great Lakes and Chesapeake Bay that have helped them participate in conservation programs despite other ranking and compensation formulas that discriminate against them. It fails to reserve any acres for CREP and continuous enrollment, which are the principal kinds of CRP participation desired and feasible in the northeast, Great Lakes, Florida, California and other West Coast states. And it not only increases technical assistance, but shifts available funds to large feedlots. Shortages of technical assistance are already a particular problem in states that seek to enroll buffer strips and wetlands in CRP strips and WRP, rather than massive whole farms, because the same paperwork is required to enroll a 10 acre strip as 500 acres.
III. Alleged Added Bureaucracy and Overhead
Claim 1. "Establishes 8 centers to train and certify third parties that will provide conservation technical assistance. These are named facilities to be located in Fresno, CA.; Platteville, WI.; Lincoln, NE.; Ithaca, NY.; Pullman, WA.; Orono, ME.; Gainesville, FL.; and College Park, MD. NRCS already operates 7 technical institutes and has 6 regional offices around the country where such training could take place."
The amendment provides additional basic levels of technical assistance and provides for engaging local governments and outside entities in helping to deliver programs and technical assistance. NRCS has no existing training facilities. The locations identified are all land grant universities with large agriculture departments that are far more appropriate places to engage in training than existing NRCS offices.
Claim 2. "Provides $100 million to make grants for program performance and evaluation. These grants will go to land grants and research institutions, helping to feed the research bureaucracy. As mentioned above, NRCS has technical institutes around the country that specialize in various conservation pursuits and that are perfectly outfitted for program evaluation and other research activities."
H.R. 2646 would provide $35 billion for what it considers to be conservation programs without providing one single dollar to evaluate whether the programs are delivering promised environmental benefits. The $10 million per year provided by the amendment is already a modest sum for research to evaluate the environmental results produced by these significant expenditures. It is appropriate for these evaluations to be done by outside researchers both because they have highly trained scientists for what is in many cases highly technical research and because proper evaluation is better done by outsiders.
Claim 3. "Increases technical assistance by an additional $200 million per year. Kind already allows reductions in program dollars to pay for technical assistance for the programs. In addition, the Secretary is directed to further reimburse the Natural Resources Conservation Service for program delivery. Beyond all that, Congress already provides nearly $800 million annually for technical assistance. Apparently, the authors of the Kind amendment could not find a better use for $2 billion than to use it to expand the NRCS."
Answer: Anyone who visits federal or state field offices for conservation programs is aware of an enormous backlog in program delivery because of insufficient staff. Nationally, 50% of farmers just seeking technical assistance and no other funds to improve environmental performance are turned away. H.R. 2646 not only provides no new dollars to deal with this problem but would divert available dollars to provide technical assistance to the largest feedlots.
According to CBO, the amendment will provide in total around $300 million for program delivery and technical assistance. These are absolutely needed not only to deliver existing programs and meet technical assistance demand but to assure proper delivery of expanded conservation programs. The failure of H.R. 2646 to provide proper funds for program implementation and technical assistance is particularly problematic for states that are now underserved because extra technical resources are needed to enroll many small and average sized farmers in conservation programs than to enroll only a few large farms.