With Congress in recess until September, and only a few work days scheduled in that month, time will be critical for getting a farm bill in final form and to the president for signing before the current extension expires at the end of September.
And timing is particularly critical for cotton, says Craig Brown, vice president of producer affairs for the National Cotton Council.
“We definitely need for Congress to pass a farm bill before the current extension runs out so it can be implemented in 2014,” he said at the annual joint meeting of the Delta Council Ginning and Cotton Quality Improvement Committee and the Southern Cotton Ginners Association. “If any one commodity is concerned about the timing of a farm bill, it’s cotton.”
One reason, he says, is that the STAX (Stacked Income Protection Plan for Upland Cotton) provisions backed by the council will require time for prep work in order to be implemented for the 2014 season.
And a resolution of the World Trade Organization’s Brazil case also hinges on passage of a farm bill with provisions acceptable to Brazil.
The evolution of the 2013 farm bill has been “one of the most extraordinary processes I’ve seen in my tenure of dealing with farm policy,” Brown says.
“Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, has passed two bills out of her committee and two on the Senate floor. House Agriculture Committee Chairman Frank Lucas, R-Okla., has offered two different versions of the farm bill that were passed out of his committee on a bipartisan basis — one that was defeated on the floor and one that was passed. As far as we know, this is the first time ever that a farm bill has been defeated on the House floor.”
The House passed a bill only after the nutrition title was split out, leaving just the commodity titles. It passed with not a single Democrat vote.
“If you want to pinpoint one issue that has been the holdup of the normal progression of farm policy, it has been the nutrition side of this bill, which represents 75 percent to 80 percent of the spending authority,” Brown says.
“Did we like the split bill? Not really, but when Mr. Lucas said it was the only way to get the bill off the House floor, we followed the lead of the chairman.”
So, where does that leave things with the farm bill?
“Mr. Lucas has said it’s his intention to pass the nutrition title out of his committee and bring it to the House floor,” Brown says, “but he’s having a very difficult time finding a consensus on what the nutrition title should look like. Chairwoman Stabenow has said she prefers a farm bill with a nutrition title. This is going to further complicate the process.
“If the House does pass a separate nutrition title, the intent would be to combine it with the House farm bill titles, go to conference with the Senate, and then bring a conference report to both houses.”
Reductions in nutrition spending
The Lucas bill had a $20 billion 10-year reduction in nutrition spending, compared to a $4 billion reduction over 10 years in the Senate version. Democrats opposed it the House version, saying the reductions were too steep, while ultra-conservative Republicans opposed the bill, contending that $20 billion wasn’t enough of a cut.
It’s unclear whether a compromise nutrition title would pass House muster, Brown says.
“The best outcome would be to get a nutrition title off the House floor, conference it, bring it back to both houses, pass the conference version, and the president sign it by early fall. If that doesn’t happen, we need to be ready for contingencies.”
And he says, “There’s still the possibility of an extension of the current legislation, which would be the least desirable option.
“We have an American Cotton Producers meeting coming up in Scottsdale, Ariz., and our council task force will meet ahead of that to talk about what we’ll do if we have to have an extension — what our options will be.”
In the meantime, Brown says, “We’ve been working closely with the Risk Management Agency, and have had very good cooperation on how we would implement a STAX program and other risk management programs if they are authorized. There’s a lot of prep work — a lot of actuarial and handbook work — that has to be done before a new crop insurance product can be implemented, and timing is very critical.
“The sales closing date for any crop insurance product is mid-February, and everything has to be backed up from that. We’ve been working very closely with RMA on how we can facilitate the implementation of STAX for 2014, if possible — if not, then for 2015.
“When we do get a farm bill, and when we get the STAX provisions implemented, we’re going to have to do an extensive amount of education. If we get it for 2014, it will come at a very busy time of the year.
“One of the nice features about STAX, as compared to other risk management programs, is that it is required to be available in every cotton producing county in the U.S. — it can’t be implemented incrementally. How it’s implemented in each county is a critical factor.”
A final resolution of the WTO Brazil case, which has been ongoing for a decade or more, also hinges on a timely passage of the farm bill, Brown says.
“We believe the provisions in the Senate and House bills for STAX and changes in the marketing loan will satisfy the case. We’ve have been encouraged by the Brazilian cotton industry’s indication that the cotton provisions in both bills would satisfy the issue of competitiveness of U.S. cotton in world markets.
“A key consideration is Brazil has agreed to hold off on imposing countervailing duties on U.S. products going into Brazil. Part of that agreement is contingent on the U.S. paying $147 million a year for the cotton portion of the agreement. When the 2008 legislation was extended last year, the $147 million was authorized to be paid. After Sept. 30 this year, it’s not authorized, nor is it in the president’s budget; so, the money stops.
Should resolve Brazil case
“If we get a farm bill, the issue with Brazil should be resolved, but if we get an extension of the current legislation without authorization of the $147 million payment, that’s a problem.
“If we don’t get a farm bill passed until November or Christmas, STAX wouldn’t be available for 2014, nor would any of the crop insurance provisions in the farm bill. We’d need a bridge program to carry us from 2014 until STAX could be implemented in 2015. Mr. Lucas’ bill includes transition payments for that scenario, but whether we’d actually see those transition payments depends on Congress. The important fact is that those transition payments would provide spending authority for a bridge program to get us over the hump until STAX is in place.
“It’s less likely that Brazil will be satisfied with another extension of the 2008 farm bill, particularly if there’s no money to pay the yearly $147 million. So, there’s added pressure to get something done on a timely basis so we can have STAX in 2014 and finally settle the Brazil case. The pressure is really mounting from a time standpoint.”
When Congress returns Sept. 9, there will be only 9 legislative days before the end of the current fiscal year and current spending law runs out, posing the possibility of a government shutdown Oct. 1. And by early November, the government’s statutory borrowing limit has to be increased or risk a default on federal debt.
There has been, Brown notes, some misconception about the farm bill and the permanent law contained in the 1939 and 1948 farm legislation. That law, he says, is “totally unworkable,” but has been used “as leverage to keep Congress from amending the farm bill.”
The Republican leadership insisted, he says, that the new farm bill contain a provision making the 2013 legislation permanent law.
“It’s actually a more workable piece of legislation for permanent law,” Brown says, because it would include titles for sugar, soybeans, and other commodities that were not in the old permanent law. “This will have to be resolved in conference, because the old permanent law is still a part of the Senate bill.”
There have also been misunderstandings about the nutrition title, he says.
“Some think that if we don’t have a nutrition title in the farm bill, there won’t be any nutrition spending. But, that’s not accurate. Nutrition programs are permanent legislation — the way they’ve been amended or modified has been through the farm bill.
“But even if there’s no farm bill, there is still permanent nutrition legislation. The same is true for crop insurance, which is permanent legislation that doesn’t have to be reauthorized, but can be amended. If we don’t have a farm bill, we still have crop insurance.”
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Sen. Thad Cochran, R-Miss., ranking member of the Senate Agriculture Committee, has played a key role in the ag legislation process, Brown says.
“When he assumed this role, things got a lot more positive, particularly for southern commodities. He and Chairwoman Stabenow have worked very closely together, putting through a bipartisan bill in the Senate Agriculture Committee that then passed on a bipartisan vote on the Senate floor. This made a lot of improvements in the southern commodity provisions of the farm bill.”
While the Senate has been waiting for the House to move on the farm bill, Brown says House Agriculture Committee Chairman Lucas and Collin Peterson, ranking member, “have done everything they knew, worked every angle, to get a bill off the House floor. “