The stakeholders who watch the farm bill conference process
believe that the debate has gone on far too long, House and Senate
conferee staffers who have borne the brunt of the schedule couldn’t agree
more. As one staffer pointed out today, he had one day off since the
process began, and that was Easter Sunday.
The difficult schedule has meant that information about the status of
the negotiations is not easy to obtain. However, despite long hours and
contentious debate, for the most part, staffers have often been open and
willing to talk about the process.
One of the most difficult issues to be resolved has been the issue of
base and yield updating. The Senate’s bill offers either the option of
using the yield specified in the existing contract or updating through an
average yield from 1998 through 2001. The House’s position is that the
payment yield is that yield in effect for 2002 under an existing
Production Flexibility Contract.
However, the Senate and the House are not the only players in these
negotiations. The administration is reported to have made it clear that it
“can’t stomach yield updating on fixed payments.” Since the Senate
conferees are not willing to give up on yield updating, compromises have
been proposed, as one staffer said, “in the spirit of getting things
done.” A number of scenarios reported include updating farm program
payment yields by percentage. Reports range from using 60% to 70% of
updated yield with the remaining figure using existing yield. This
updating proposal would not include fixed payments and is limited to
counter-cyclical payments.
There is a cost to updating yields and this cost is taken out of the
target price levels. For wheat, a 60% yield update on counter-cyclical
payments alone, according to a senior staffer, would bring wheat to an
approximate target price of $3.96.
Under both the Senate and the House bills, the base acres for each crop
are either the acres specified in existing contracts, or the average of
acres of eligible crops from 1998 through 2001. There is, of course, an
option for double cropping.
The lack of agreement in the establishment of loan rates is a huge
roadblock to progress. According to one of NAWG’s sources, the
Administration hates high loan rates, and seeks higher target prices
primarily because of WTO implications. That position is closer to that of
the House bill as well as NAWG’s position.
As information is at times in short supply, rumor and hearsay abound.
NAWG’s response is to maintain a presence on Capitol Hill, providing
information whenever possible.
One of the issues that has raised the greatest concern is that of
payment limitations. The House proposal of $125,000 for Direct and
Countercyclical and $150,00 for Market Loan Gains and Loan deficiency
payments with the incorporation of the 3-entity rule and a total limit of
$550,000, is in contrast to the Senate’s $75,000 Direct and
Counter-cyclical and $150, Market Loan Gain and Loan Deficiency payment
and a $50,000 spousal allowance. Most have agreed that the Senate’s
proposal needed to be softened, but a Senate staffer charged that any
offers of compromise had been rejected by the House. He went on to say
that the public perception of farm payments would demand that the issue be
raised again, if not through the farm bill, through additional
legislation.
While staff has put long hours in an effort to negotiate the over 500
differences between the two bills, the more difficult issues such as loan
rates, dairy programs and packer ownership will require another level of
authority. According to one source, part of the problem is that the House
staff has been given more freedom to negotiate than has been allowed their
Senate counterparts.
NAWG’s latest information is that the staff directors of the House and
Senate Agriculture Committees will be meeting over the weekend and that
issues that remain unresolved will be determined at that time.
Whatever does not get resolved over the weekend will surely be on the
agenda when the Farm Bill conference committee meets on Tuesday, April 9
at 3:00 p.m. at the Longworth House Office Building. The conference
committee has not met since March 19th when general agreement was made on
the allocation of the $73.5 billion among the farm bill titles.
The question on everyone’s minds is whether a bill will be passed and
signed in time to impact the 2002 crop. There is no sure answer to that
question, although even the most optimistic would agree that reaching
agreement and completing the implementation process soon enough for this
to happen would be a mammoth undertaking.
While getting a farm bill through committee and then approved by
Congress is a challenge, a bill must also meet with the approval of the
administration. The belief has been that the President would not veto a
farm bill, but the warning from a senior staffer was clear. The threat of
a veto is serious and the Administration takes seriously WTO implications.
Farm policy that includes amber box payment mechanisms such as high loan
rates or yield updating will not pass muster, he said.
