1 / 42

Farm Bill Update

Farm Bill Update. Dr. Jody Campiche Assistant Professor & Extension Economist Agricultural Policy Oklahoma State University November 4, 2011. Larry D. Sanders Jim Novak.

pandora
Download Presentation

Farm Bill Update

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Farm Bill Update Dr. Jody Campiche Assistant Professor & Extension Economist Agricultural Policy Oklahoma State University November 4, 2011 Larry D. Sanders Jim Novak

  2. “Ag policy has a very, very, long history. Current ag policy is driven by budget and politics. Reality and economic facts matter, but only in as far as it affects those who have political influence and can gain from reality and/or economics.” J.L. Novak, Auburn University

  3. Outline • Background • Realities • Budget Developments • Budget Control Act of 2011 • Farm Bill Negotiations • Conclusions

  4. Background

  5. LeadershipCommittee on Agriculture Collin Peterson (D-MN) Ranking Member Frank Lucas (R-OK) Chairman

  6. House Agriculture CommitteeJurisdiction • Does not include: • school lunch and other child nutrition (Senate Agriculture Committee has jurisdiction) • taxes (including ethanol-related tax credits) • trade law • climate change (or other environmental programs)

  7. Realities

  8. New Membership House Committee On Agriculture 112th Congress Northern Mariana Islands Source: Congressional Research Service

  9. Committee Education Agriculture Program Audit Hearings: June – Sept 2011 • Crop Insurance • Specialty Crops • Conservation • Foreign Ag and Food Aid • Farm Loans • Energy and Forestry • Nutrition • Commodity Programs and SURE • USDA Research Programs • USDA Dairy Programs • USDA Rural Development Programs

  10. Budget Gross Federal Debt 1940-2016E In Millions of Dollars Source: OMB

  11. Budget Agriculture & Nutrition Outlays 1962-2010

  12. Agriculture’s Share of the U.S. Budget Agriculture’s Share (Non-Nutrition)

  13. Budget Developments

  14. Deficit Reduction Proposals Budget… • Debt Commission • House Budget • Biden Group • Gang of Six • McConnell Proposal

  15. Deficit Reduction Proposals • Simpson-Bowles President’s Deficit Commission (12/1/10) • Reduces deficits by $3.9 trillion over 9 years • $15 billion in cuts to mandatory ag programs with $10 billion to deficit reduction and $5 billion directed to extend the ag disaster relief fund • President Obama’s framework deficit reduction (4/13/11) • Framework for $4 trillion in deficit reduction over 12 years • Mentions cuts in mandatory program ag subsidies, but not specific programs or amounts • President’s 2012 Budget (CBO score released on 4/15/11) • Increases deficits by $2.8 trillion over 10 years • Cuts $2.5 billion in payments to “wealthy farmers”

  16. Deficit Reduction Proposals • House (Ryan Budget) passed budget (4/15/11) • Reduces deficits by $1.6 trillion over 10 years • $48 billion in cuts to mandatory ag programs, with $12 billion from commodity programs, $18 billion from crop insurance, and $18 billion from conservation programs • RSC Budget Proposal (4/20/11) • Reduces mandatory spending by $1.9 trillion over 10 years • Eliminates direct payments, reduces premium subsidy for crop insurance, no new enrollment in CSP and CRP, eliminate MAP, and Wool and Mohair program

  17. Deficit Reduction Proposals • House Democrat budget (5/25/11) • Reduces the deficit by $1.2 trillion more than the President’s budget • $20 billion in cuts to mandatory ag programs • Biden Group (6/2011) • Farm subsidies mentioned frequently as target for cuts ranging from $34 to $45 billion • Direct Payments and Crop Insurance will absorb most of the cuts • “Gang of Six” (7/2011) • Reduce deficits up to $4 trillion over 10 years • $11 billion in cuts to mandatory agriculture programs • No additional dollars directed to extend SURE • Ag committees to determine $11 billion in cuts • Protects SNAP

  18. Deficit Reduction Proposals • Senator Conrad’s budget (7/20/11) • Reduces deficits by $4 trillion over 10 years. • $11 billion in cuts to mandatory agriculture programs. Agriculture committees to determine $11 billion in cuts during Farm Bill. • Reid Plan (7/2011) • Reduces deficits by $2.7 trillion over 10 years. • $11 billion in cuts to mandatory agriculture programs by reducing the payment rate from 85% of base acres to 59% of base acres.

  19. Budget Control Act of 2011

  20. Highlights • Passed House on August 1, 2011 and became Public Law 112-25 on August 2, 2011 • Authorized increases in the debt limit of at least $2.1 trillion dollars • Established caps on the amount of money that could be spent through the annual appropriations process for the next 10 years • CBO estimates will reduce federal spending by $917 billion

  21. Highlights • Created a Joint Select Committee on Deficit Reduction (i.e. the ‘Super Committee’) • Develop a bill to reduce the federal deficit by at least another $1.5 trillion over the 10 year period ending in FY2021 • If the super committee proposal is not enacted by January 15, 2012, the BCA established an automatic spending reduction process that includes sequestration • Across-the-board spending cuts are applied to government programs in order to meet a budgetary goal • About 200 programs are exempt from sequestration • House and Senate must vote on a balanced budget amendment

  22. Super Committee

  23. Super Committee

  24. Legislative Timeline • 1 Nov • Self-imposed, late deadline for farm bill cut details from SAC & HAC • 21 Nov • Deadline for CBO to provide SC with scoring for all proposals • 23 Nov • Deadline for SC to provide Congress with package for cuts • 23 Dec • Deadline for Congress to vote on SC package • 2 Jan • Deadline for congress to vote on SC package

  25. Farm Bill Negotiations

  26. Farm Bill Process • Traditional process: • DC hearings, field hearings, move legislation in 2012 • Not currently happening • Current Reality: • Expedited process under the context of the Budget Control Act of 2011 • Changed the traditional approach to the farm bill • No time for problem framing, debate, or public input

  27. Many Proposals . . . • Obama • proposes $33 billion in cuts to farm programs • Sen. Conrad (D-NE) • Reform DCP, ACRE & disaster aid • National Corn Growers • ADAP to replace ACRE, CCP, and Direct Payments • Brown-Thune-Lugar-Durbin • ARRM to replace ACRE, DCP, and SURE

  28. Many Proposals. . . • National Cotton Growers • STAX • NFU • Farmer Owned Reserve • Peterson-Simpson • Bipartisan Dairy bill • Lugar • Farming Flexibility Act

  29. Many proposals… • National Sustainable Ag Coalition • preserve conservation and hunger programs, proportional cuts in farm programs, ending direct payments • Organic producers • increase mandatory spending for organics, including research & data collection • Rural development proponents • preserve/strengthen rural programs • American Farmland Trust • Strategic conservation initiatives, consolidate conservation programs, subsidies only for a loss

  30. Farm Bill Process – Main Ideas • Direct Payments repeatedly offered up for reductions • Most WTO compliant and have a differential impact by crop, region, and generation • Integrated with other program components • simply eliminating Direct Payments has significant drawbacks, but they are likely gone…

  31. Farm Bill Process – Main Ideas • With extreme drought and flooding, crop insurance is as important as ever • ACRE is too complicated • The Supplemental Revenue Assistance Payments (SURE) Program, along with 36 other programs, does not have baseline going forward • SURE likely gone

  32. Farm Bill Process – Main Ideas • Shallow Loss Revenue Program • Recognize diversity in operations across the state • Different buy up levels of crop insurance • Different risk profiles for different crops • Issues with the loss threshold • Corn and soybeans have more shallow losses • This can trigger payments often on many acres • Eats up the baseline • Can’t design one program to benefit everyone

  33. Farm Bill Process – Main Ideas • AGI limits are a major issue • Cotton payment program is also a major issue • Hesitant to have a separate program for cotton, but it is being considered… • STAX is still on the table • May not solve WTO issues • Payments from this program are mostly from RMA • Get around payment limits and AGI threshold • Programs for other crops are subject to this

  34. Farm Bill Process – Main Ideas • Crop Insurance seems to be safe for now • Other disaster programs (LFP, LIP, etc…) will probably be continued to the drought issue • Conservation will see reductions • Fighting to protect EQIP • Reductions in CSP • Reductions in CRP (lower acreage cap) • Nutrition will be cut but will not really take as much of a hit as commodity programs…

  35. Main Goal of Chairman Lucas for the 2012 Farm Bill • Wants producers to have a choice to best address their risk needs • Currently working on a package but many details need to be worked out…

  36. 2012 Farm Bill – Latest Developments Options 1) Revenue Guarantee Program (modification of ACRE) 2) Counter-Cyclical Program coupled with a shallow loss program • Increase current target prices near the cost of production • Option to purchase additional area based deductible coverage (similar to GRIP) 3) Possibly a cotton program Producers would be able to enroll by crop (instead of by farm)

  37. ACRE Refresher • Started with 2009 crop year • Based on state and farm revenue shortfall using national average marketing year price • If both are not triggered the producer will not get paid • Producers enrolling in ACRE receive: • No CCP payments • Direct payments reduced by 20% • Marketing loans reduced by 30%

  38. ACRE Refresher • Payment made on planted acres (up the # of base acres) • Producer may not get a payment even if state eligible • State ACRE payment guarantee can’t increase/decrease by more than 10% from previous year

  39. Conclusions

  40. Conclusions • 2012 Farm bill is coming together • Risk management is a key priority • Still have many details to work out…

  41. Questions? Jody Campiche Assistant Professor & Extension Economist Ag Policy 528 Ag Hall Stillwater, OK jody.campiche@okstate.edu 405-744-9811

  42. National Cotton Council Stacked Income Protection PlanSTAX • Expecting a significant reduction in direct payments and possibly CCP payments • New revenue based insurance program to replace payment-based farm bill provisions • Area-wide revenue product delivered through crop insurance • Protect against shallow losses • Ride on top of existing crop insurance • Modified marketing loan to satisfy Brazil WTO case

More Related