Just before 1:00 PM Eastern Time on Wednesday, the Senate passed
its version of the Farm Bill. The proposal, authored primarily by
Agriculture Committee Chairman Senator Tom Harkin (D-IA). It passed on a
58-40 vote, with some votes crossing party lines due primarily to dairy
issues and inclusion of a payment limitations amendment.
The Senate process has been a frustrating one at times. Even on the
last day of debate, Senator John McCain (R-AZ) was criticizing the
last-minute introduction of a 394-page managers amendment to the bill
which made some significant financial changes. The bill still contains
water provisions that were never subject to committee hearings or debate,
and now includes a payment limitations amendment that is opposed by nearly
every agricultural organization in Washington. The Senate process stands
in stark contrast to the organized and bipartisan process that produced
the House bill.
The payment limitation amendment, introduced by Senator Charles
Grassley (R-IA) and Senator Byron Dorgan (D-ND), drew most of the
attention in the closing days of debate. The amendment established the
following limits:
A combined limit on direct (fixed) and countercyclical payments of
$85,000 per entity. Marketing Loan Gains and Loan Deficiency Payments
are capped at $125,000 per entity. The three-entity rule is repealed.
Spouses in a husband-wife operation qualify for an additional limit of
only $50,000, not a full entity status. A means test is established for
participation – any entity who shows in excess of $2.5 million in adjusted
gross income (average over the last 3 years) is not eligible to receive a
payment. The calculation includes income from all sources, such as
off-farm employment. Payments for all participants in an entity may be
reduced of some participants exceed the threshold.
NAWG adopted policy at its 2002 convention, supporting payment limits
as crafted in the House bill. The association supports reasonable limits
on payments to farm operations, but believes the Senate provisions go way
too far. Repeal of the three-entity rule will result in a full-employment
act for attorneys and enormous workload strains on local Farm Service
Agency offices as people reconstitute their operations to comply with the
new law. The means test is based on gross income, meaning that producers
who raise some high-value (and high-cost) row crops may trip the income
trigger and lose their eligibility for support on program crops, even
though their net income may still be negative. We also believe that farm
programs serve a broad array of societal goals, and that means testing is
an inappropriate tool in reaching or monitoring those goals. The goals
include production of safe, affordable, and abundant food for the lowest
share of consumer income in the world; strong and vibrant rural
communities; provision of basic products for processing and trade, which
benefits the entire economy; environmental conservation, including carbon
sequestration; wildlife habitat; and national food security. NAWG also
believes that spouses should be equal partners in the farm operation, and
qualify for equal status in the eyes of the government.
The actual text of the Grassley-Dorgan amendment is available for
download from the NAWG web site (www.wheatworld.org), as is the
final-passed version of the House bill. Once a final Senate version
becomes available, we will post it as well.
All eyes now turn toward the upcoming conference committee process,
which will iron out the differences between the House and Senate bills.
One of the first issues to be resolved is the determination of which House
of Congress will host the conference. According to Chairman Combest, the
Senate has chaired the last three farm bills, and seeks to chair this bill
as well. That issue will be one of the first to be resolved.
While the House and Senate begin the organization process, NAWG’s
priorities continue to move forward. The provisions that provide a fair
level of support for wheat growers will be promoted in lobbying efforts in
Washington. However, just as importantly, that message must be delivered
loud and clear in State Senate and House Districts as Members return for a
week-long recess through February 22. The effort requires full effort to
“get in their face and get on their case.” The importance of maintaining
the House commitment to the commodity programs is great. An analysis of
the two bills reveals that over a five year bill, the Senate offers 27% of
its budget to commodities while the House bill offers 30%. Over the ten
year bill, the Commodity title of the Senate bill results in 42% support
for commodities and the House a 62% level of support.
Members of the conference committee will not be formally named until
the Senate bill is printed in its final version and delivered to the
House, but staff-level meetings may begin at any time. Congressmen and
Senators will be out of town the week of February 18, but we anticipate
that staff will begin informal discussions by next week.
NAWG’s original farm policy proposal, introduced in March 2001, very
nearly resembles the bill passed by the House of Representatives.
Obviously, our goal is to conclude the conference process with a bill that
closely resembles the House bill. The Food and Agricultural Policy
Research Institute (FAPRI) has published some comparisons of gross income
for major program crops, and their data show that by 2006, every commodity
except soybeans will have higher gross returns under the House bill than
the Senate bill. The House bill allows base updating but freezes yields,
while the Senate bill would allow updating both (but not necessarily
independently); NAWG argued from the beginning that both should be
preserved, so that we maintain the decoupled nature of the program and not
punish producers who took advantage of the flexibility offered under the
1996 law. USDA and the White House have raised concerns about both bills,
but appear to favor the House alternative.
NAWG’s Board of Directors will meet in Washington in March, and will be
in town during a critical time in the conference process.
