Updates from DC: Could the Deficit Reduction Committee Decide Farm Policy?

21 October 2011

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By Kate Fitzgerald, guest writer

On Monday, Congress’s four agriculture policy leaders sent a bipartisan, bicameral letter (http://stabenow.senate.gov/?p=press_release&id=502) the deficit-cutting “super committee” offering to make $23 billion in spending cuts to programs under their jurisdiction. The twelve member Select Committee on Deficit Reduction has been tasked with coming up with a proposal to cut government spending by at least $1.2 trillion over ten years. The ag leaders’ hope is that by agreeing on a significant dollar value of cuts and offering consensus on which programs would be cut they could forestall worse. According to reports (http://farmpolicy.com/2011/10/18/5840/#more-5840), Senate Agriculture Committee Chair Debbie Stabenow (D-MI), Ranking Member Pat Roberts (R-KS) and House Ag Committee Chair Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) agreed on a framework in which more than half of the cuts will come from commodity support programs for crops like corn and soybeans; conservation will be cut by about $6 billion; and $4 or $5 billion will come from nutrition spending over the next ten years. The group will send a detailed plan to the super committee on November 1. The super committee has until November 23rd to present a comprehensive deficit reduction plan to Congress, which must approve it by December 23rd or automatic across-the-board cuts will take effect in January 2013, a process known as sequestration.

COMMODITIES

Commodity support programs have been the backbone of American agriculture policy for almost a century and the decision to cut them reflects a significant shift in the approach to farm policy caused by political realities. Direct payments to farmers regardless of what they grow or the market price have been the target of fiscal conservatives and progressive advocates for years and with crop prices at all-time highs production agriculture groups decided that they were no longer politically defensible. A combination of government-subsidized crop insurance and disaster programs will provide the risk protection for farmers that government policy is intended to do. Agricultural producers argue that unpredictable weather and international policy decisions over which they have no control make farming more vulnerable, volatile, and prone to dramatic price (and revenue) changes than other sectors of the economy so it is appropriate for government to intercede to provide food price stability and keep rural communities economically viable.
The proposal offered by the Congressional agriculture leadership does not necessarily remedy the bias towards consolidation in farm operations that critics believe the existing commodity programs promote. The National Sustainable Agriculture Coalition (NSAC) has a good list of criteria by which to assess whether the proposal to be sent to the super committee is a real reform proposal here. (http://sustainableagriculture.net/blog/agriculture-spending/)

CONSERVATION

One of the little-known advantages of existing commodity programs is that farmers must show that they are using sustainable production practices to participate. Since there is no analogous requirement for crop insurance, the transition away from commodity programs at a time when high prices encourage farmers to maximize their production could have significant negative effects on natural resources. Conservation funding increased significantly under the last farm bill, but deficit cutting in the past two years has already taken a significant cut out of new spending. The farm bill includes a variety of programs designed to protect soil and water quality and they tend to fall into two categories – those that pay farmers to take fragile land out of production (like the Conservation Reserve Program) and what are called “working lands” programs that pay farmers to institute and continue sustainable practices on land that they have in production (like the Conservation Stewardship Program). Both types will almost certainly be cut.

NUTRITION

Although farm policy discussions seldom include talk about feeding programs, the Nutrition Title, which includes SNAP (formerly food stamps) and other feeding programs, accounts for about 75 percent of farm bill spending. In July, 43.5 million Americans received SNAP food benefits (http://frac.org/reports-and-resources/snapfood-stamp-monthly-participation-data/) and the program will cost about $70 billion in 2011 (http://www.obpa.usda.gov/budsum/FY11budsum.pdf). The continuing recession has increased SNAP participation by more than 60 percent since 2007 and its large budget makes it a tempting target for some lawmakers. A proposal offered by Representative Paul Ryan last spring suggested changing SNAP to a block grant program, leading to cuts of $127 billion over ten years (http://www.cbpp.org/cms/index.cfm?fa=view&id=3463). In September the Administration released its deficit-cutting plan cutting agriculture by $33 billion with none of the cuts coming from nutrition programs (http://farmpolicy.com/2011/09/20/farm-bill-trade-ag-economy-and-regulations/). It is not yet clear how the ag leaders’ proposal would come up with $4 – $5 billion in nutrition cuts.

LOCAL AND REGIONAL FOOD

USDA programs that support the development of local and regional food systems comprise a tiny portion of the farm bill budget, which could protect them since cutting them would not provide much savings or could make them easy targets since the constituency groups they serve are smaller and new to farm politics.
The Congressional agriculture leadership has taken the gamble that the super committee process has a high-enough likelihood of being successful that it is worth their while to offer substantive policy proposals and hope they are accepted. Authorization for existing farm programs will expire next September and it would be very politically difficult to write a farm bill with big cuts in an election year, especially with Congress as divided as it is now. The result would probably be temporary extensions of existing programs that would leave producers uncertain, international commodity prices unstable, and the real threat of even greater cuts to all programs. Whatever the outcome of the deficit negotiations process this fall, there will certainly be continuing discussion and tweaking of ag policy and implementation in 2012 and onward.

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