Congress’ failure to enact a new farm bill last year “isn’t all bad,” says Daniel Ulmer, legislative assistant to Sen. Thad Cochran, R-Miss., because the extension of the 2008 legislation continues direct and countercyclical payments and milk supports.
“The USDA recently announced that signups for the programs will begin Feb. 19,” he said via a video link to the Mississippi Farm Bureau Federation’s annual commodity conference.
“While direct payments are not guaranteed this year, I think this extension makes it very likely. We’re very pleased with this; we feel that our producers, lenders, and others in agriculture industry can relax a little bit.”
While there are some budget matters to be addressed in the next several weeks that could potentially affect direct payments, Ulmer says, “I think the USDA will fulfill its obligations.”
Congress is facing several budget/financial-related issues, he says.
“Sequestration, or automatic across-the-bard spending reductions, will take place March 1 if Congress doesn’t (1) come up with its own spending reductions or (2) kick the can down the road, which unfortunately it has been done on previous occasions.
“Our goal is to prevent these across-the-board cuts that would affect all programs implemented by the USDA. It’s the position of Sen. Cochran and all agricultural state policy leaders that the House and Senate agriculture committees should develop meaningful farm policy reform and improvements rather than just blindly taking an ax to ag funding.”
Another potential issue in the near future is the debt ceiling debate, Ulmer says. “This basically the federal government’s credit limit. Often, when the government reaches that limit, they have to raise the cap or default on the nation’s financial obligations.
“While spending cuts aren’t directly tied to raising the debt limit, this often is a political strategy by whichever party is pushing it. More recently, it has been the Obama administration seeking to increase the limit.”
Congress also has to pass several appropriations bills in the coming months, he says.
“We’re going to be closely monitoring all these budget matters to see if any proposals materialize that reduce ag funding. Right now, there’s nothing specific, but it’s possible something could be introduced.
“The outcome of the budget debate will directly affect the next farm bill. The nation’s financial condition necessitates reform and reductions in government spending, and the funding amounts we’ve had for ag programs in previous years won’t be there. So, we can expect that some programs will be eliminated or altered to achieve savings.”
Sen. Cochran’s recently being named ranking member of the Senate Agriculture Committee “is positive,” Ulmer says, and “will give him a much stronger voice in representing southern agriculture interests as he works with Chairwoman Debbie Stabenow, D-Mich., in crafting the new farm bill.”
Probably “the most important, and most complicated issue is what the farm safety net will look like in the future,” he says. “Our country’s serious financial condition, mixed with the current political environment, suggests there will be changes to programs in the 2008 farm bill.”
Direct payments in crosshairs
Direct payments, in particular, “have been put in the crosshairs by members of Congress and the president,” Ulmer says.
“We understand how important these payments are to Mississippi producers, and Sen. Cochran’s goal is to seek the best possible way to develop a strong, robust safety net proposal that can receive enough votes to pass in the Senate and House.”
While he says Cochran “hasn’t gone into detail yet about what he wants to change in the farm bill passed by the Senate last year, I think we can expect he will continue to oppose its regional inequities and its one-size-fits-all approach in the commodity title.
“It would eliminate everything in Title 1 except a new program called ARC, Average Revenue Coverage. Based on economic projections, this coverage model looks very good for certain crops and not so good for others. The senator has great concern about its potential impact on Mississippi producers who grow a lot of different crops.
“It’s his goal to come out with the strongest possible farm bill that will be equitable for all crops in all regions of the country.”
The bill developed by the House Agriculture Committee last year received more support by southern members of the Senate, Ulmer says.
“That bill included producer choice, which we think is very important to those who grow a variety of crops that face all kind of different risks. You should be able to choose what form of protection you would like for the risks you face. In general, we were pleased that the House bill provided that producer choice in the form of price protection, as well as revenue protection, on top of a robust crop insurance title.”
Ulmer says Cochran “is very excited to work with Chairman Stabenow. She’s a very hard worker and has shown an ability to lead, and we think we will see some positive results in the next farm bill.”
The timetable for the legislation “is a bit hazy, because it depends on how the budget issues shake out over the next two months or so. But we think any movement on the farm bill before springtime is unlikely.”
Under the current extension, Ulmer says, “I think we’re rather safe in expecting that direct payments will go out this year. I’m hopeful that Congress can resolve the budget issues so ag programs won’t take unnecessary funding cuts in funding, and that we can move forward with crafting a new farm bill — one that will provide a strong, robust safety net for Mississippi producers and our state’s agriculture industry.”
In response to a question about means testing, caps, and limits, Ulmer said “I think it’s going to be something very strong conservatives will push. I think it’s important that we look at all the facts about how large the farms are. How can we justify telling a large farmer he can’t be protected just because he’s achieved economies of scale? Large farmers take large risks, and they also need protection. I think this will be addressed in the next farm bill, and probably will be a heated topic for debate.”