With weighty budget constraints and fractious election year politics, writing a new farm bill in 2012 was never going to be easy. Congressional agriculture committees have already begun a series of hearings on the farm bill – with the Senate committee vowing to have a bill prepared sometime this spring -- and commodity and farm organizations have offered up farm program proposals in anticipation of the legislation.
On Tuesday afternoon, Bob Stallman, America Farm Bureau Federation (AFBF) president held a press conference prior to testifying at the Senate Agriculture Committee’s Thursday hearing on risk management. Stallman pushed the AFBF’s “deep loss” policy proposal that was passed in January at the federation’s annual meeting.
However, it turns out three state Farm Bureaus -- all in Mid-South – have dissented, or begun the formal dissenting process, related to the deep loss proposal. The main reasons are not novel to the region: agriculture leaders in the tri-state region of Arkansas, Louisiana and Mississippi say that crops grown such as rice and cotton – along with an abundance of irrigated acreage – present a special set of needs and circumstances not pertinent to the rest of the country.
“We’ve been working … on a proposal called the ‘deep loss’ program,” said Stallman. “In essence, it’s a way of flipping the government’s role in terms of the safety net for agriculture. The government would take zero to 75 percent of the risk from producers based on area-wide losses that could occur. In other words, it is a revenue risk-management program using five-year average across an area (either a county or crop-reporting district).
“The revenue from that – if there is a payment -- would be used to offset any premium or indemnity payment under an existing crop insurance policy. (That would) automatically compensate the insurance companies for the fact that the risk is being taken by the government and any payment they put out would be offset by what would be provided by the ‘deep loss’ program.
“It probably sounds more complicated than it really is. It really isn’t that complex is one reason it has applicability across all program crops, all fruits and vegetables – frankly, for any crop for which there’s a crop insurance policy.”
A new environment
The drive for continuing to support the policy “is we’re really working in a new environment,” said Stallman. “And this proposal is somewhat revolutionary compared to the more evolutionary changes that normally occur in farm policy.”
Stallman also pointed to public perceptions of direct payments in light of high commodity prices. There is, he said, “changing public sentiment about the role of government in the farm safety net. The public generally is rejecting annual income payments like the direct payments to producers. It’s much easier for policy-makers and the public to understand a ‘revenue risk management’ approach – it’s insurance and they understand the purpose of insurance. It’s there when coverage is needed.”
The AFBF “really believes that will fit better, particularly in the context of a budget reduction requirement that may be in excess of the $23 billion already contemplated by the (agriculture) committees last fall and the starting point this spring about the new farm bill’s design.”
One problem with deep-loss is a lack of a Congressional Budget Office (CBO) score, which is needed prior to legislation being written. “We’re expecting that, hopefully, within a couple of weeks. We can’t force it.”
The lack of a CBO score has led to reports that the AFBF would abandon the deep-loss policy proposal. Stallman said such reports are “absolutely false. We want that as our primary program we’re promoting but we are pragmatic. If the timeline runs against us and we can’t get a CBO score, we’ll be willing to engage and get the best possible (farm) bill under the circumstances…
“Agriculture is not together, obviously, in where we’re going with the farm bill. Each of the commodity groups has their own proposals and general farm organizations have their own proposals. So, agriculture is less united than we normally are at this stage in a farm bill process. I expect that to change over time as debate unfolds and proposals are put on the table.”
One thing the AFBF board is clear on, said Stallman, is that Congress shouldn’t make any cuts to agriculture research.
The agriculture committees are “using the framework put together last fall with $23 billion in cuts. Fifteen billion dollars of that was from (commodity programs), $4 billion was proposed to come from conservation programs, no cuts were to the crop insurance subsidy component, and $4 billion from nutrition programs as a combination of reducing administrative costs and waste, fraud and abuse…
“They’re still operating under that same framework, as far as I know. I will tell you that as soon as the (House) Budget Committee goes through their process and determine what the budget allocations will be for the ag committee, those numbers will change – maybe significantly.”
How deep might additional cuts go?
“From our standpoint, given the Ryan (and Obama) budgets put forth last year, both contemplate significantly higher to come out of the farm bill than $23 billion.
“I think, given the makeup of the House – who were elected on the basis of cutting the budget – there will be an opportunity for them to weigh in with thoughts about cutting the farm bill safety net even further. It’s hard to predict at this time. We’ll know a whole lot more at the end of April or into May.”
Stallman is unsure how beneficial it would be for the agriculture committees to write a farm bill this spring. “The goal, it appears from the Senate Agriculture Committee, is to say ‘okay, with $23 billion in cuts, here’s the kind of program we can come up with.’ At the end of the day, I don’t know if that strongly influences the budget committee because there are so many other actors in so many other areas that the budget will be tough. The fiscal condition of this country is not in good shape. There will be many higher-level decisions made that will affect the budget outcome that aren’t directly related to whatever policy (comes) from the farming community.
As for dissents of the Mid-South states, Stallman said the trio has made use of “a specific, formal, so-called dissent process that states can engage in if they disagree with a policy passed by our delegates. It’s a sort of safety valve that’s served our organization well over the years.”
None of the three states, claimed Stallman “has an indication of what they’re willing to support. At this point, they just don’t like the policy passed by our delegates. The other 47 states and Puerto Rico have not dissented from our policy. Therefore, I think we have pretty good organizational support for where we are.”
Jeffrey Hall, who deals with national affairs for the Arkansas Farm Bureau, says state Farm Bureau offices “are independent, although we’re members of the American Farm Bureau Federation. After the (January) AFBF convention in Hawaii, there was a formal process to go through (to dissent). All three states did follow that process – or, are in the middle of that process – of explaining the reasoning behind not following the (adopted) policy.”
Having sent in a letter of dissent, Arkansas is in the middle of that process as is Louisiana. Mississippi, says Hall, has concluded the process. The final step will be when Stallman addresses the Farm Bureau board of directors in each state. The Arkansas meeting is set for April 25.
The main reason for the dissent?
“The problem that the three states have in common is we’re heavy in rice and cotton,” says Hall. “Also, we all have a lot of irrigated acreage. We have different issues with irrigated corn than the Midwest, which doesn’t irrigate (like the Mid-South does).
“The common thread for the three states was the ‘catastrophic deep loss’ proposal that AFBF has been talking about, the two policies passed at the convention (concerning that proposed) safety net program. We’ve run the numbers with University of Arkansas economists and it won’t provide the kind of safety net that our farmers feel they need to stay in business.
“It’s tough to write a farm bill during a time of high prices. We write them for the difficult times. But we must create a program that protects farmers during those difficult times. We don’t feel that the ‘catastrophic deep loss’ program adequately does that.”
While he doesn’t speak for sister organizations in Louisiana and Mississippi, Hall believes all are “together about the current marketing loan program. Arkansas would like to see that with increased loan rates to market values. That’s one thing I think (all three states) agree with. Also, that’s in the AFBF policy that we agree with – we didn’t dissent from that. That’s something we can all work towards.”
While the Mid-South states dissented from the catastrophic deep loss program, “we also question a one-size-fits-all commodity safety net program,” says Hall. “We don’t think a one-size-fits-all approach works.
“There are regional differences in the way (the Mid-South) grows crops compared to other regions in the country. And there are commodity differences, as well. Take rice, for instance, where Arkansas is Number One in production. We feel these safety net programs must take into consideration regional and commodity differences.”