Ag leaders don’t want reconciliation bill

ANAHEIM, Calif. — Farm leaders are unlikely to propose cuts to farm programs during House Agriculture Chairman Collin Peterson’s upcoming hearings on the next farm bill unless there is a real threat of reconciliation, key lobbyists said during the recent Commodity Classic, a meeting of corn, soybean, wheat and sorghum producers in California.

“The vast majority of farm groups will say we like this farm bill. Don’t change it,” Mary Kay Thatcher, director of agricultural policy at the American Farm Bureau Federation, said during a panel discussion. But Thatcher also said that if there is a real threat of a 10 percent cut, as Peterson has suggested, “there may be ideas.” But she added, “We are hoping we don’t get a reconciliation bill.”

If Congress decides to try to cut the deficit, it will pass a lower-cost budget resolution and then ask each committee in Congress to cut spending to fit the budget.

Nutrition funding

Thatcher and Chandler Goule, a former Peterson aide who is now vice president for government relations at the National Farmers Union, both said that even though Peterson has declared everything that comes under the House Agriculture Committee’s jurisdiction to be “on the table” in reconciliation, it will be difficult to cut food stamps, other nutrition programs or conservation programs because they have political support outside the agriculture community.

Goule noted that it will be difficult to get a majority of House members to vote for a new farm bill if cuts in nutrition are proposed. With nutrition now taking up almost 70 percent of the USDA budget, a 10 percent cut would have to come out of only 30 percent of the bill, Thatcher said. She also noted that President Obama had proposed cuts to farm programs in his fiscal year 2011 budget, but that his budget would increase USDA spending overall because it includes a $1 billion-per-year increase in child nutrition programs.

Crop insurance

Both Thatcher and Goule said crop insurance is likely to be the focus of farm policy debate. Crop insurance now costs about $8 billion per year in premium subsidies and payments to companies and insurance agents for delivering the programs while other subsidies for the same crops total $7 billion. In the ongoing negotiations between USDA’s Risk Management Agency and the insurance industry over the cost of delivering the programs, Thatcher said she thinks the Obama administration may force a $5 billion cut over 10 years. Noting that the Obama administration already has proposed a cap on insurance agent commissions, she said that farmers have observed the crop insurance agent often “has the biggest house in town.”

Goule said that if the Doha Round of trade talks are ever completed, crop insurance is likely to be an even more important part of the farm safety net because the Doha Round agreement likely would require a reduction in U.S. target prices that trigger payments when prices are low. Thatcher also noted that the dairy program takes up a lot of allowed U.S. trade-distorting subsidies and said a new agreement with a lower allowed subsidy level could pit dairy against other commodities. She also noted that the dairy industry is the only segment of agriculture so far that is working on a new program to propose in the 2012 farm bill.

American Soybean Association CEO Steve Censky said that Peterson’s view that budget reconciliation is “probably telling it like it is, but we have to make sure agriculture does not take more than its share of cuts.” Censky said agriculture will oppose any cuts “until we see everyone is being asked to give.”

Outgoing National Association of Wheat Growers President Karl Scronce, an Oregon farmer, said it is possible that reconciliation may not be “a choice,” but that his group is not ready to propose any changes in the farm bill.