The 2012 Farm Bill, Part 2

While the drought of 2012 rages on across the country, a drought of another sort has hit the halls of Congress regarding the proposed 2012 Farm Bill. Soon, Congress will head back to their home districts to avoid D.C.’s sweltering late summer weather. Shown on the Congressional calendar as “Constituent Work Weeks,” in an election year, campaigning is the main activity, and it will not cease until after the elections on November 6.

With the likely Congressional failure to pass a new version, the 2008 bill (scheduled to end on September 30) may be extended for another year. While it awaits legislative-limbo, it does give us some more time to parse through the changes the House of Representatives Agricultural Committee has implemented.

In the area of crop insurance complements, the House’s version scales back the Agriculture Risk Coverage (ARC) formula designed by the Senate (for an analysis of that formula, see our first post on the Farm Bill, from July 16). Although it remains an option for farmers, the House’s main complement for risk management is the Price Loss Coverage (PLC).

In order for the PLC to trigger, a commodity’s effective price has to be less than the Congressional reference price, which are set prices contained in the bill (for example, corn is set at $3.70/bu and soybeans are set at $8.40/bu.). The effective price is the higher of either the midseason price or the national average loan rate for a marketing assistance loan for the covered commodity in effect from 2013-2017. Supposing that the midseason price is the higher number for our example, and supposing that the midseason price is $5.26 for corn and $11.35 for soybeans, then no PLC payment is made to the producer. The PLC risk management is supposed to take into account deep, multiple-year price declines that simple crop insurance does not factor in.

The net savings of repealing the direct payments, countercyclical payments, and ACRE and replacing them with the ARC and PLC payments are projected to be around $23 billion, according to the Congressional Budget Office. Another big area of cuts comes in the Nutrition section of the bill, which is where Supplemental Nutrition Assistance Program (SNAP), mostly known as food stamps, is located. By reforms in eligibility and allowances, the House is projected to cut around $16 billion in the program. The Senate’s proposal, on the other hand, sought to cut only around $4 billion in the program. Interestingly, the vast majority of the spending of each Farm Bill is through the food stamp program. In our rough estimates, the total projected spending for the bill over 10 years is somewhere around the $955 billion range, with about $756 billion of that going to food stamps.

As for conservation, our readers might be interested to know that the House’s proposal regarding the CRP program is to make a small and gradual reduction of enrollment to a maximum of 25 million acres, compared to the 32 million acres set as max now. The Environmental Quality Incentives Program, which helps farmers comply with conservation regulations by doing things like wildlife management, controlling soil erosion, and maintaining or improving water quality, will not see any changes in its funding or practices.

If you have any particular concerns about the Farm Bill you would like us to look into, just leave a message to this blog post or send us an email at lawlerandswanson@iabar.org.

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Two other related farm issues our readers might be interested in are worth noting here. One concerns the unpopular proposed regulation from the Labor Department that would extend federal child labor rules to farm activities. Concerns that farm kids would be prohibited either in law or in practice from helping their relatives and neighbors with farm chores led to strong condemnations of the proposal. This proposal was so unpopular that the Labor Department soon after retracted it. Although it won’t be implemented now, Tom Latham, R-Iowa, has since introduced H.R. 4157, which would prohibit the Labor Department from being able to implement such a regulation if they ever decided to bring it up again. Two days ago, Representatives Leonard Boswell, D-Iowa and Steve King, R-Iowa, urged passage of the bill, over protests from one Democratic congresswoman who felt the bill was beating a dead horse. We will keep you updated on H.R. 4157’s status.

Secondly, the non-profit organization Farm Rescue, based in North Dakota and started in 2005, has extended its organizational reach to Iowa. If you’re a farmer and have had a major illness or injury in your family in the past year, or if you have experienced a severe natural disaster in the past year, you may be assisted by the volunteer farmers with Farm Rescue. For more information or to apply, go to http://www.farmrescue.org or call 701-252-2017.

Thanks for reading, and stay hydrated out there.

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