Senate ag committee passes farm bill

by Jay Sjerven
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WASHINGTON — The Senate Committee on Agriculture, Nutrition and Forestry overwhelmingly passed its version of the 2007 farm bill, The Food and Energy Security Act, last Thursday after a markup that lasted less than two days.

"After months of negotiations, we were able to work within a very strict budget allocation to complete our work and pass a farm bill that is good for agriculture, good for rural areas and good for the health of Americans," said Senator Tom Harkin of Iowa, chairman of the agriculture committee. Senator Saxby Chambliss of Georgia, ranking republic member of the panel, added, "This is a good bill and it deserves the support of the entire Senate. The package we put together is notable in that it does not raise taxes to pay for new programs or deny our farmers and ranchers a strong safety net."

The farm bill next will be considered by the full Senate, which also will be asked to consider an alternative bill sponsored by Senator Richard Lugar of Indiana and Senator Frank Lautenberg of New Jersey (see related story on Page 63).

Like the farm bill passed by the House of Representatives in July, the Senate bill could invite a veto threat from President George Bush for falling short on reform and turning to tax measures to provide funding for farm disaster assistance and increases in funding for domestic nutrition programs.

Acting Secretary of Agriculture Charles Conner in a press conference shortly after the agriculture panel voted to approve its farm bill said only the White House could determine whether to issue a threat to veto. He observed the Senate committee addressed some of the administration’s concerns, such as the need for a revenue-based income support program as an alternative to the current commodity support programs. But he decried the panel’s refusal to put a hard cap on payments to producers and to end subsidies to producers among the nation’s top 2% with regard to overall wealth. And he criticized the bill’s raising loan rates and target prices of certain crops as "bad farm policy."

Mr. Conner said the administration was analyzing the tax measures proposed by the Senate Finance Committee to fund increases in certain programs in the farm bill but indicated the administration thought it bad policy and precedent for one committee to have to turn to another to find means of supporting certain programs. Mr. Conner said he expected a lively debate in the full Senate.

With regard to the critical commodities title, the Senate bill would give producers the choice of participating in current commodity price support programs or enrolling in an alternative new revenue-based income support program.

The current commodity support program based on base acres, marketing loans and target prices would be extended with little change. As in the House bill, direct payment rates on program crops would be unchanged from the 2002 farm act. Marketing loan rates would be "rebalanced," with loan rates on wheat, barley, oats, "other oilseeds" and honey raised, while rates on most other commodities, including corn, soybeans and rice would be unchanged. Target prices for determining countercyclical payments would be raised for wheat, sorghum, barley, oats, soybeans and "other oilseeds," and left unchanged for corn and rice.

Planting restrictions with regard to fruits and vegetables on base acres would remain.

The chairman’s markup considered by the committee adopted a proposal similar to that of former Secretary of Agriculture Mike Johanns to require the date for determining the amount of the loan deficiency payment a producer receives be made as soon as practicable after the date the producer loses "beneficial interest" in the grain or other commodity, i.e. when he sells it. Under the current program, producers may claim a L.D.P. when they perceive the market price to be at its low, usually around harvest, but defer the actual sales of the crop until later in the season, when prices may be higher.

But an amendment offered by Senator John Thune of South Dakota and passed by the committee turned back that attempted reform, at least with regard to LDPs that might be paid for the 2009 through 2012 crop years. The amendment reasoned: "LDPs are a critical part of the ‘three-legged stool’ that supports farm income. LDPs are marketing tools that allow producers to receiving financing early in the harvest season, avoid forfeitures to the government and market commodities in response to market signals. Requiring payment based on loss of beneficial interest lessens the value of LDPs to the producer as a marketing tool and will cause severe problems for those producers lacking adequate storage, which is already an issue with record crop forecasts."

The alternative to the current commodity support program approved by the agriculture panel was a state-level acreage revenue program, in which farmers would receive a payment when actual state revenue for a covered commodity or peanuts is less than the average crop revenue guarantee for that commodity. The Senate and the House seemed to agree that a revenue-based income support program could be a useful alternative to the current program.

The bill’s provisions on the sugar program were bound to raise the ire of those seeking reform. The bill would raise the loan rate on cane sugar in quarter-cent increments beginning with 18c per lb in 2008 and rising to 19c per lb in 2012. Loan rates for sugar beets would be equal to 128.5% of the loan rate for raw cane sugar.

The bill would require the Secretary of Agriculture to establish annual sugar allotments "at a level sufficient to avoid sugar forfeitures, with a minimum overall allotment quantity equal to at least 85% of estimated domestic human consumption." A provision also would eliminate the "trigger" in the current farm law that suspends allotments when imports are estimated to exceed a certain level.

Like the House bill, the Senate legislation would provide $4.2 billion in new funding over five years for the nation’s nutrition programs. It would update the nutrition program rules, increase benefit levels and stop the erosion of benefits, Senator Harkin said.

Unlike the House bill, the Senate bill would provide $5 billion for weather-related agricultural disaster assistance. Mr. Harkin was not a proponent of that approach to providing assistance to producers under those circumstances, but Senator Max Baucus of Montana, member of the agriculture panel and chairman of the Senate Committee on Finance, "found" $16 billion for funding the expansion of nutrition and other programs as long as $5 billion was set aside for agricultural disaster assistance.

House Democrats turning to tax measures to fund expansion of spending in the House version of the farm bill turned away erstwhile Republican supporters of the legislation, which resulted in a vote in the House that indicated a presidential veto would not be overturned.

This article can also be found in the digital edition of Food Business News, October 30, 2007, starting on Page 1. Click here to search that archive.

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