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Political Change & the Next Farm Bill

Political Change & the Next Farm Bill. Larry D. Sanders OCES Inservice Centra presentation 27 apr 2011. US Budget Surplus/Deficit ($ bil .). ?. Now above 90%. Source: US Bureau of Economic Analysis, 2009 (www.bea.gov). http://zfacts.com/p/318.html. Congressional Shuffle of Power….

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Political Change & the Next Farm Bill

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  1. Political Change & the Next Farm Bill Larry D. Sanders OCES Inservice Centra presentation 27 apr 2011

  2. US Budget Surplus/Deficit ($bil.) ? Now above 90% Source: US Bureau of Economic Analysis, 2009 (www.bea.gov) http://zfacts.com/p/318.html

  3. Congressional Shuffle of Power… 111th Congress 112th Congress • Senate • 57 D • 2 I • 41 R • House • 255 D • 148 R • Senate • 51 D • 2 I • 47 R • House • 193 D • 242 R

  4. Key Leadership Changes in House • Speaker: Boehner (OH) • Agriculture: Lucas (OK) • Approp.: Rogers (KY) + Flake (AZ)* • Energy: Upton (MI) • Finance: Bachus (AL) • Budget: Ryan (WI) • Rules: Dreier (CA) • Oversight/Govt Reform: Issa (CA) • Judiciary: Smith (TX) • Ways/Means: Camp (MI)

  5. 2010 Midterm shuffle means changes for Ag Committees… 2009 – 2010 2011-2012 SenateSenate 12 D / 9 R11 D / 10 R Lincoln (D-AR) Chambliss (R-GA) Stabenow, D-MI Roberts (R-KS House House 28 D / 18 R26 R / 20 D Peterson (D-MN) Lucas (R-OK) Lucas (R-OK) Peterson (D-MN)

  6. So, are you ready for a less rural Congress?

  7. Much of farm country is losing population; Thus, representation. http://ruralcommunitybuilding.fb.org/2010/12/01/rural-population-loss-through-outmigration-ers/

  8. For example… • Senate Agriculture Committee • 11 D, 10 R • 6 farmers*/ranchers • House Agriculture Committee • 26 R, 20 D • 14 farmers*, 2 agribusiness • House Appropriations Agriculture Subcommittee • 7 R, 4 D • 3 farmers/ranchers*, 1 agribusiness * self-identified

  9. C = D = R = Both 2 2 2 Chair C 2/1 1/2 2 3 3 3 2 1/1 2/1 2 C 1/1 C 1/1 2 2 1/2 1/2 112th Congress: House 111th Congress: Senate 2 111th Congress: House Note: ½ = 1 D and 2 R; 2/1 = 2 D and 1 R; Single Number indicates # on Committee from the state. No number indicates 1 R or 1 D 112th Congress” Senate

  10. Budget Issues - States That Get More in Fed Subsidies Than Pay in Federal Taxes http://voices.washingtonpost.com/ezra-klein/2010/04/the_red_state_ripoff.html

  11. Farm Subsidies: 1995-2009 OK: $5.01 bil. (wheat) 3: Lucas $3.37 bil. (wheat) 1: Sullivan $34.7 mil. (wheat) 2: Boren $310 mil. (dis.) 4: Cole $615 mil. (wheat) 5: Fallin/ Lankford $29.5 mil. (wheat) Map:http://www.cccarto.com/congress/ok_congress/index.html Data: EWG/USDA

  12. Farm bill debate begins to take shape Senate Ag Committee House Ag Committee Dems/Repubs want to protect funding, but at odds w/full Senate Chair Stabenow favors specialty crops & food programs Ranking Member Roberts favors commodity programs Chair wants to move “at own pace” 2012? Later? Dems/Repubs want to protect funding, but at odds w/full House Chair Lucas & Ranking Member Peterson favor commodity & risk management programs Chair wants economy & budget to improve first, but hopes for 2012 farm bill

  13. Lucas frames the farm bill issues… • 15 Mar 2011 letter to Ryan • “Promote policies & risk management tools that will keep American agriculture & rural communities strong & our citizens healthy & safe” • Budget reductions of past 7 yrs should count • SRA adjustment $6 b. or greater to baseline • Mandatory spending cuts $7.5 b. • Actual spending declined 28% • SNAP a better target for cuts • Don’t assume high farm prices are here to stay • Timeline: • 2011: regulation oversight; prep for 2012 farm bill (hearings & policy inventory • 2012: writing the bill (assuming economy & budget improved)

  14. House Ag Committee Dems Rap House GOP 2012 Budget • 15 Apr 2011 House votes in favor of Ryan budget • $177.86 b. in ag program cuts over 10 yrs • $127 b. cut in food stamp/nutrition programs • $30 b. cut in commodity programs • $20 b. cut in other ag programs • Senate unlikely to support; but could become rule for House budget actions • 23% cut for ag; 14% cut for other programs • “2012 House Budget Resolution is a non-starter” • “nearly impossible to write 2012 farm bill”

  15. House Ag Cmte spending over 10 yrs (& % of all Fed spending) … Total: $924 b. (2.15%) Nutrition: $624 b. (1.62%) Crop ins: $83 b. (0.19%) Conservation: $65 b. (0.15%) Commodity: $64 b. (0.15%) Other: $17 b. (0.04%) Note: Craig Jagger, Chief Economist, House Ag Committee

  16. Stabenow frames issues on Senate side… “proceed on its own schedule…”; “the toughest fb to write since the first one…”; more experience than House Hearings already in process Re-examine direct payments Expand crop insurance to cover more crops Continue sugar program Continue specialty crops program (research, marketing, state block grants) Support bio-fuels but may be changed Supports coop extension Congress should consider cuts/reductions made over past several yrs

  17. Land-grant funding Cotton Case World Food Prices “Farm “ Bill, or “Food” Bill International Food Aid gone? Environment for production Derivative support Renewable Energy Agency Budget Cuts Farm Bill Issues (2012-38-9-6) ? Commodity vs. Other ($9 b.?) Immigrant labor Protection? Livestock Relief EPA Challenged SURE gone? DP gone? Federal Budget Deficit & Debt Disaster Assistance? 18

  18. FARM PROGRAMS AND THE BUDGET:“small” as compared to …

  19. FARM PROGRAMS AND THE BUDGET:“big” as compared to … * * Commodity, Crop Insurance & Conservation

  20. The next farm bill… 2012? 2013? There will be cuts to programs There will be reform of programs DP, ACRE, CRP, RD at risk Contentious: SNAP, specialty crops, disaster aid

  21. 2008 ERS Report Nutrition now closer to 74% because of ARRA

  22. Net Farm Income & Direct Government Payments (1991-2011f) FCEA 2008 FSRIA 2002 $ Billion $94.7 b. $84.1 b. $10.6 b. 23

  23. US Crop Subsidies 2003-2005

  24. http://www.businessinsider.com/chart-of-the-day-un-food-price-index-2010-12http://www.businessinsider.com/chart-of-the-day-un-food-price-index-2010-12

  25. Options for the next Farm Bill (odds vary) Status Quo: (not likely) Phase out (not likely) Enhance all/most programs (not likely) No reform: Reduce existing programs w/some enhanced; net change less $ (possible) Reform: shift $ to alt. focus; net change less $ (possible) Risk Management

  26. THE ACRE/DCP DEBATE • Why was sign-up for ACRE so low in 2009-11? • Too complicated? Didn’t “breakeven”? • Landowners? Other? • What is the purpose of farm programs? • Income distribution? • Risk management? • Oklahoma payments: • ACRE: $95 mil. • SURE: $4.97 mil. • DP: $128 to $131 mil. • CCP: $$13.76 mil.

  27. OTHER THOUGHTS ABOUT THE ACRE/DCP DEBATE • The “lumpy payments” problem • If ACRE is a risk management tool, do payment limits defeat its effectiveness for risk management? • The budget cost/risk protection tradeoff • Lower level trigger means higher budget cost • The “luxury of choice” problem • Was ACRE too much to explain to landlords?

  28. Is a farm safety net necessary & affordable? Do externalities exist? How do we consider moral hazard? How are priorities for public spending determined? Do we manage to protect number of farms, production capacity, farm income, rural economic health, or natural resource protection?

  29. Thanks for your attention! Larry D. Sanders larry.sanders@okstate.edu 405-744-9834 Now, finally a computer error message I can understand

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