Perspectives on the Farm Bill
February 26, 2014
After months and months of negotiations, the new farm bill received final approval earlier this month and was finally signed into law by President Obama. The farm bill, worth close to $1 trillion, contains crucial components for all farmers, and is meant to be a strong safety net focused on crop insurance mixed with investment in a bio-based economy.
Yet the farm bill limbo has been a hard pill to swallow. One of the most severe fall outs of the limbo covered by the national media was the plight of the South Dakota cattlemen and their herds, who were unprotected by expired indemnity programs and suffered a five percent loss of livestock in the sudden blizzards in 2013. Other contentious negotiations took place over food stamp budget reductions and antiquated dairy titles.
What has become clear, though, is that all the farming organizations want to be sure their farmers can continue to operate as risk-free as possible while producing the food we eat and export. We spoke with Sam Willett, Senior Director of Public Policy for National Corn Growers, Christopher Galen, Sr. VP of Communications for National Milk Producers Federation, Dennis Nuxoll, VP, Federal Government Affairs for Western Growers, and Mary Kay Thatcher, Senior Director of Congressional Relations for American Farm Bureau about what the new bill means for their members.
What titles in the farm bill were of most concern to your members?
Thatcher/Farm Bureau: There was a clear indication among our membership for the last three years that a) everyone was going to have to give up something for deficit reduction and b) crop insurance was the biggest priority. The message we heard was preserve what you can in the commodity title, but really try and protect crop insurance. I don’t believe the Congressional Budget Office scores are out yet, but suspect that of the twelve titles of the farm bill, only two have more spending in the upcoming five years – one is crop insurance and the other is specialty crops. In ten years when we look back at the 2014 farm bill and ponder on what was the most significant change, I think it will be that we took a definite step away from commodity programs as a primary risk management tool and now focus more on crop insurance.
The bill also requires is a link between crop insurance and conservation compliance. You will lose eligibility for crop insurance premium subsidies if you don’t comply. You could still buy crop insurance if you are out of compliance, but it will cost significantly more because a farmer won’t be eligible for Federal premium support.
Nuxoll/Western Growers: The farm bill will provide funding for industry Research and Development in prestigious schools such as University of Florida, UC Davis and CalPoly. These universities among others are researching things like drought-resistant seeds as well as developing programs on how to train and teach growers the latest and greatest practices. For our growers, these efforts, usually done as private-public partnerships, help our industry continually improve its efficiency. As our resources are constrained – whether water or land – and as input prices climb, our industry must become ever more efficient and grow the fruits and vegetables our customers – the American people – want. That’s why the farm bill’s significant federal investment to help leverage private efforts is so useful. There will also be money to help educate producers on how to become compliant with food safety rules under the Food Safety Modernization Act.
Galen/Milk Producers: If you are a dairy farmer, you live or die on whether you can sell your products profitably. The Margin Insurance Program that allows us to cover the margin between the cost of feed and milk prices for dairy farmers is a safety net for the dairy farmers. For dairy, profits are determined by the gap between the price of milk and how much it is costing you to feed your cows. The price of dairy cow feed has gotten a lot higher in the last five or six years. It is no longer enough for the dairy farmer to get a certain price for milk if their cost of feed is too high. They are not making enough money.
We are establishing an economic insurance program covering the margin between the price of milk farmers get and the price they have to pay for feed for their cows. If milk prices are good but feed prices are high, and you are enrolled in the new insurance program (it is voluntary), you will have protection. The farmers do have to pay a premium for this insurance, so they have skin in the game. The cost share is with the USDA and taxpayers.
Willett/Corn Growers: Our growers look to the commodity title as a supplemental protection that the Crop Insurance Program is not designed to address. Addressing long-term slides in prices for us is more important to address than annual declines in prices. However, if we have an extended drought for a period of years that could impact production, the commodity title program offers more protection as a revenue-based program addressing some of the long term risks.
We are looking to a revenue-based program that is designed in a way that would not distort planting decisions and have growers planting for the market and not the government program. Assistance when they truly need it. Farmers are responding to the market signals. They pay attention to the futures market and the cash market is nearby (the local grain elevator); and they look to see what the ethanol market is paying for their grain. So much depends upon the signals that are delivered on the Chicago Mercantile exchange. Growers see an uptick or a down tick and that helps them decide what to plant in the spring.
Also, we wanted to provide producers some risk management program options. It’s important for us that those programs in the commodity title are focused on addressing the risk management gaps that are currently in the federal crop insurance program. Other priorities have been to make sure we have a viable federal crop insurance program because it addresses different types of risk but ones producers can customize to their own farm operation. And there would continue to be a sharing of costs with the federal government.
What was most challenging for your members during the long wait to pass a new bill?
Galen/Milk Producers: The last farm bill expired at the end of 2012, and they passed an extension at the end of 2012. The Bill expired again end of last year. Since then, we have been in a lapsed period of limbo but no real consequences right now because the price for milk is still high enough – for now.
Thatcher/Farm Bureau: Generally the unknown about public policy and still having to make decisions on what to plant and what to plan on for risk management tools. Last year there were farmers in Texas already planting in January without a farm bill. The group that was hurt the most was the livestock industry. There were the bad snowstorms where all those animals were killed. The Livestock Indemnity Program to help farmers pay for those livestock expired over two years ago. They were feeling that in their pocketbooks.
Willett/Corn Growers: It’s been a painful process to watch this all unfold while at the same time we know that the committees have worked very hard in a tough economic and political environment. One of the driving forces in how this bill unfolded was the very tight budget that Congress had to deal with. As expected, some regional differences came up in these farm bill debates. The negotiators and their staffs have worked very hard to bridge those differences. This is a big diverse country. In the conversations with Western Growers, with the Dairy Federation, you have regional differences. Associations such as ours work with other organizations on our priorities. We are talking about folks’ livelihoods. Being in limbo has been tough since the bill expired in 2012 despite an extension that gave some certainty. Farmers and ranchers need long-term certainty as do the folks that support them, and the lending community.
How does your organization feel about the nutrition portion of the bill?
Nuxoll/Western Growers: We are absolutely interested in the nutrition title as those programs help feed both 40+ million Americans on assistance as well as help educate and provide products to our nation’s children via the school feeding programs. It’s this second aspect that is very interesting since there are programs in the farm bill that provide fresh fruits and vegetables to largely the underprivileged schools in communities across the country. Once exposed to healthy products, those children want more and more fruits and vegetables and we hope that programs like that help to educate and create good eating habits in the next generation.
Galen/Milk Producers: Nutrition is really being decided outside the farm bill. The Dietary Guidelines Advisory Committee met here in Washington mid-January to establish new nutritional guidelines. The nutrition programs in the farm bill are where all the money is. Eighty percent of money authorized in the farm bill goes to consumer feeding programs like SNAP. While we have big stakes in the WIC program, lunch programs and SNAP, we did not take a position on the level of cuts for that.
Willett/Corn Growers: NCGA has taken the position that the nutrition title belongs in the farm bill, and we know there are members who we respect that disagree with that position. The farm bill is best advanced by bringing both the nutrition community and the producers that bring food to the marketplace together. It’s very important that we preserve that type of bill. We made it very clear that this ought to be a balanced bill in how resources are spent. We are coming out of a very difficult recession and a good deal of unemployment, so whether it be farm or nutrition programs, we need ways to make them both more effective and efficient.
How important is conservation in this new bill?
Nuxoll/Western Growers: The conservation title provides money to implement conservation practices on the landscape while maintaining or even improving a farm’s productivity. Programs there can be used to cost-share more efficient irrigation systems, which result in lower water usage – a must as we face water pressure in the state. Programs also can be used to put systems in place that reduce the nitrates from the fertilizer entering the watersheds which reduces regulatory pressure on farmers in the state facing nitrate issues. Conservation dollars can also help producers to comply with wildlife or other environmental regulations by helping to fund things like restorations of wetlands or money for a wildlife habitat.
Would more consumer awareness of the bill be beneficial in the future?
Thatcher/Farm Bureau: I actually think a pretty high number of people know about the farm bill. People are much more aware because we’ve had a lot of press. It’s very broad. A large majority of Americans are affected in some way whether it be with food stamps and school lunch programs, rural communities, water and waste facility grants, the hunters and the wetlands reserve program, and so on. There is a two edged sword in showing the consumers that farming is a business and the farmers and ranchers are technologically and politically savvy. While studies show that most consumers are supportive of family farmers, when they find out they are a business, they assume it is like a corporation and that has less appeal.