The discovery of $3 billion to $3.5 billion in savings from a slightly altered version of the revenue counter-cyclical program that's been making the Washington rounds has helped put the Senate's 2007 farm bill back on track.
Senate Agriculture Committee Chairman Tom Harkin announced during a telephone news conference Oct. 17 he had reached a basic agreement on the new farm bill with key members of the committee.
He said he expected to report the bill to the Senate floor during a mark-up session scheduled for Oct. 24.
The savings — and funding from a Senate Finance Committee tax package — would provide $4.2 billion in extra money for food stamps, $1 billion to expand the Fresh Fruit and Vegetable Program in the nation's schools, $1.3 billion for biomass energy research and $3.7 billion more for Harkin's treasured conservation programs.
“The proposal is a forward-looking bill with critical investments for the future in energy, conservation, nutrition, rural development and promoting better diets and health for all Americans,” Harkin told reporters.
“America's farmers will have important new opportunities and reforms to create a better safety net as well as support for programs that will help beginning farmers and those who wish to transition into organic farming.
“And we will manage all this under very tight budget circumstances, under pay-as-you-go rules.”
Harkin identified the “key committee members” as Sens. Saxby Chambliss, the committee's ranking member and a Georgia Republican, and Kent Conrad, a senior Democrat on the agriculture committee.
“Between us, we've had many conversations with our colleagues,” he said. “We have forged compromises and worked within a tight budget toward agreement on what will be in my chairman's mark next week.
“We believe the range of geographical and philosophical views and interests on our committee are addressed in a balanced way.”
The proposed commodity title would give producers the option, beginning in the 2010 crop year, to choose between a state level revenue protection program or remain in the traditional farm program. The new approach, called Average Crop Revenue, is similar to the Durbin-Brown proposal and that of the Iowa and National Corn Growers.
Durbin-Brown, named for its authors, Sens. Dick Durbin, D-Ill., and Sherrod Brown, D-Ohio, would authorize USDA to make counter-cyclical payments in times of low prices or low crop yields vs. the target-price-based CCPs in the 2002 farm bill.
Harkin said the savings of $3 billion to $3.5 billion in the Congressional Budget Office's scoring of the Average Crop Revenue program means the committee will not have to reduce direct payments, an option Harkin considered in the early stages of writing the new farm bill.
“I was surprised myself when I saw the savings of $3 billion to $3.5 billion from the ACR option,” said Harkin. “I asked my staff to have them run it again because I didn't want to get sucked in on this thing.”
He said the majority of the savings appear to come from CBO's assumption that farmers would choose the average crop revenue option over the target price program.
In doing so, they would not receive Commodity Credit Corp. loans or direct payments.
“If the farmers pick the ACR, that's about $15 an acre they won't be receiving from USDA,” Harkin noted. “Farmers are saying they don't need the farm program if the prices are high but need payments when prices fall or crop yields are reduced.”
Conrad, who is chairman of the Senate Budget Committee, said extension of commodity programs would include a “rebalancing” so target prices and loan rates will increase for soybeans, wheat, barley and oilseeds.
Conrad said an additional $100 million for rebalancing was included the night before the agreement was announced.
For farmers who sign up for the crop revenue program, the prohibition on planting fruits, vegetables and other specialty crops on subsidized land would be eliminated while they are in that program.
The proposal would increase loan rates for certain commodities by up to 6 percent and provide higher target prices for wheat, barley, oats, soybeans and minor oilseeds. It would also establish a new target price program for pulse crops.
Harkin's staff said the senator had not worked out the full details of new payment limit rules in the proposal, but Conrad said the proposed farm bill would eliminate the three-entity rule and require direct attribution for farm program payments.
He said the bill would also lower the income cap for non-farmers receiving payments to $750,000 from the current $2.5 million adjusted growth income limit. The House-passed farm bill reduces the AGI limit to $1 million.
The nutrition title, which will receive the largest amount of new funding — $4.2 billion over five years — will strengthen the commitment to fight hunger and promote sound health and nutrition.
“We update archaic nutrition program rules, increase benefit levels and stop the erosion of benefits that has compounded since 1996,” Harkin said. “It also provides $1 billion to expand the Fresh Fruit and Vegetable Program nationwide to reach nearly 4.5 million low-income children across the country.”
The conservation title has an estimated $4 billion in new budget authority, not including funding moved back from the out years.
“This will allow CSP — now renamed the Conservation Stewardship Program — to grow vigorously at over 13 million acres a year,” said Harkin.
The senator said he expects USDA to increase enrollment in the Conservation Stewardship Program by 13 million acres a year to a total of 80 million acres at the end of five years.
This funding will also continue to allow enrollment in the Wetland Reserve Program and the Grassland Reserve Program and would devote $165 million to fund cleanup of the Chesapeake Bay.
The farm bill proposal will also provide $1.3 billion in investments into farm-based energy by supporting programs to help farmers begin to establish biomass crops and offering resources for grants and loan guarantees for cellulosic bio-refineries.
The proposal expands markets for bio-based products and looks to the future of energy production by offering investments in research and development of farm-based energy and funding to help farmers, ranchers and rural small businesses make energy efficiency and renewable energy investments.
“In rural development, we have provided nearly half a billion dollars that will go toward a variety of initiatives that will promote economic growth and jobs in rural areas,” said Harkin.
“The rural development title will bring quality, affordable day care and access to broadband to these areas as well as provide loans to rural hospitals so that they can have the best equipment possible.”