The fate of U.S. farming rides as much on the public statements and legislative acts of federal lawmakers as it does on the ebbs and flows of global markets.
No one knows that better than Jim Novak, an Alabama Cooperative Extension System agricultural economist, who has spent his career monitoring and interpreting all of these trends and who is now busily engaged divining the shape of the next farm bill.
For now, the two factors that will shape — or, as the case may be, impede — passage of the next farm bill are the yawning federal deficit and the looming 2012 elections, says Novak. Largely for these reasons, he says passage is far more likely in 2013.
One thing is virtually certain, he says, is a farm bill that is less generous than the current one.
The Budget Control Act passed last year stipulates that any increase in the debt limit has to be accompanied by corresponding budgetary cuts. While farm programs occupy a comparatively small share of overall federal appropriations, Novak says they are no less likely to escape the budgetary ax.
One program most susceptible to axing or, at minimum, downsizing: direct payments, which, according to some farm policy observers, may be cut by as much as 60 percent or eliminated entirely.
“It’s highly possible that direct payments will be ended, but that’s not 100 percent certain,” says Novak, who speculated about the upcoming farm bill at the 2012 Wiregrass Cotton Expo, held in Dothan, Ala.
Likewise, counter-cyclical payments and the Average Crop Revenue Election program, commonly known by its acronym ACRE, may eliminated as well, although Novak says it’s more likely that some form of counter-cyclical payments will be retained along with the inclusion of a revenue program.
Crop insurance's role
“They’ve got a lot of names for these (proposed) programs, but they tend to be variations on a theme that would include some level of revenue coverage,” Novak says, adding that crop insurance will likely comprise an integral part of this new approach.
“There’s some discussion right now about changing premium structures,” he says. “Companies made money last year, but that’s not going to be so true this year, especially in the La Niña situation.”
The Wetlands and Grasslands Reserve programs, along with other conservation programs, may also fall under the ax. Other programs will also be under scrutiny.
Some biofuels initiatives, which figured so prominently in the 2008 farm bill, may possibly fall on hard times in the upcoming farm bill, Novak says, adding that 37 programs do not have a budget baseline and money must be found to continue them.
Broadly speaking, Novak says farmers should expect a bill that in addition to being less generous will be considerably more revenue-based.
While the shape of the next farm bill is currently open to wide speculation, Novak remains certain of one thing: The U.S. farming industry would do itself a big favor by learning to act like a dinosaur rather than a team of strong-willed, unruly horses — an analogy inspired years ago by a child’s spontaneous remark during a Sunday morning’s children’s moment at his local church.
As the minister carefully laid out a case for why horses pulling a coach should work together as a team, the minister’s young son weighed in with his own unique solution: replace the horses with a single dinosaur.
The lad’s suggestion stuck with Novak, who has used it time and again to illustrate one of the underlying challenges of farming: ensuring that farm interest groups work as one hulking dinosaur rather than as a team of defiant horses.
“The problem, as it relates to agricultural policy, is that we don’t have any dinosaurs,” Novak observes. “We’re all horses, and that’s been the problem — all these farm interests have been pulling in different directions.”
As Novak sees it, this is a luxury farm groups no longer can afford in these austere times.