Farm Bill draft passes Senate committeeSenate Farm Bill continues Brazil cotton payments

Measure would save $23 billion over next 10 years

The Senate's Committee on Agriculture, Nutrition and Forestry approved a bi-partisan farm, food and jobs bill last week and sent it on to the full Senate for consideration, drawing praise from many farm groups and concerns from other groups and lawmakers.

For some, the idea that we might still see a farm bill in 2012 - an election year - was prospect enough to praise the committee's action.

The measure, if enacted, would save the government an estimated $23 billion over the next 10 years.

The committee, led by Chairwoman Debbie Stabenow, (D-MI) and Ranking Member Pat Roberts, (R-KS) passed the bill on a 16-5 vote, raising hope in the agricultural community that farm policy could be passed this year.

Karen Gefvert, Wisconsin Farm Bureau's director of governmental relations, said passage of the draft "rejuvenates the prospect of a farm bill being completed this year. Passing a Farm Bill in 2012 will provide certainty for farmers for the upcoming years."

Bob Stallman, president of the American Farm Bureau, said the bill isn't perfect, but it is a "suitable policy vehicle with a solid framework on which to make further improvements."

Having a bill in place this year is in the best interest of all farmers, he added.

"Chairwoman Stabenow and Ranking Member Roberts deserve praise for structuring this legislation with crucial risk management tools for farmers and doing so in a fiscally responsible manner during one of the toughest budget climates our nation has ever faced," Stallman added.

Farm Bureau would continue to seek improvements in several areas as this bill moves forward, he said, particularly in how to provide more equity among commodities, and ways to better address deep, catastrophic losses.

DISASTER PROGRAM CONCERNS

National Farmers Union President Roger Johnson said he is still concerned that the legislation doesn't do enough to protect farmers and ranchers against long-term price collapses. A program such as the Market-Driven Inventory System (MDIS) would help protect against such collapses and should be implemented in the final bill, he added.

Johnson said his organization was pleased that the bill included an amendment offered by Senators Kent Conrad, (D-ND), and Richard Lugar, (R-IN) to restore $800 million in mandatory funding for energy programs.

Farmers Union has long been a backer of renewable energy production, which Johnson said is "at the core of recent rural economic development progress."

The Conservation Reserve Program (CRP) also received increased funding, ensuring that farmers and ranchers will continue to have the tools necessary to preserve natural resources, he added.

The bill that passed out of committee included adjustments to the new Agriculture Risk Coverage (ARC) program, intended to allow farmers to choose a coverage plan that allows them to best manage their risk.

It also includes a temporary extension of the Supplemental Revenue Assistance (SURE) program to cover disaster-level losses suffered during the 2012 crop year. The Milk Income Loss Contract Program (MILC) was also extended to provide protection to dairy farmers during the transition period as the next farm bill is implemented.

The bill also includes provisions establishing a military veterans agricultural liaison at the U.S. Department of Agriculture (USDA) - as mentioned by U.S. Agriculture Secretary Tom Vilsack during a visit in Platteville last week.

It would provide assistance to veterans who want to begin farming or ranching.

The committee also approved stronger enforcement authority for the USDA to detect abuse of the National Organic Program as well as the language that ensures Supplemental Nutrition Assistance Program - food stamps - benefits can be used with Community-Supported Agriculture (CSA) programs.



DIRECT PAYMENTS GONE

The committee's bill also includes historic reforms to commodity subsidies. It replaces automatic direct payments with a shallow loss revenue-based payment and limits payments to not more than one farm manager per farming operation.

Under current law, which has been criticized by some, very large farms collect multiple payments worth millions of dollars because many investors and landowners are also counted as farm managers.

The National Sustainable Agriculture Coalition's policy director Ferd Hoefner, said he was happy to see the committee include common sense rules for commodity payments and end years of abuse by closing program loopholes.

"Thanks to Senator Chuck Grassley's (R-IA) tireless leadership, the Committee was able to make sure that hardworking farmers - not mega farms and absentee investors - are the key beneficiaries of farm programs," Hoefner said.

The committee also enacted a nationwide "sodsaver" provision to protect native grass and prairie lands. The provision reduces crop insurance premium subsidies and tightens program rules in a manner that will reduce the taxpayer-funded incentive to destroy important grassland resources.

That provision was championed by Senators John Thune (R-SD), Sherrod Brown (D-OH), and Mike Johanns (R-NE).

While praising the committee draft for making progress on these issues, Hoefner said there are several gaps in proposed changes to the farm safety net.

"By failing to place limitations on crop insurance subsidies and to re-attach soil erosion and wetland conservation requirements to crop insurance programs, the committee has failed to do the full reform that is needed," he said.

The bill reauthorized certain local food and organic programs, such as the Farmers' Market and Local Food Promotion Program, and National Organic Certification Cost Share but didn't provide much funding for the Beginning Farmer and Rancher Development Program.

The bill was also criticized by Hoefner for not funding the rural development title or making improvements in farm-to-school programs.



DAIRY TITLE INCLUDES

NMPF PROVISIONS

The dairy title of the draft legislation includes many of the provisions that were included in the Dairy Security Act that was introduced last year, which in turn was based on a blueprint from the National Milk Producers Federation (NMPF.)

The Senate legislation includes a new, voluntary margin protection program, endorsed by NMPF, to better safeguard farmers against disastrously low margins, such as those generated by the low milk prices and high feed costs that cost dairy farmers $20 billion in net worth between 2007 and 2009.

"The Senate has taken a huge step in the right direction by including the dairy reforms modeled after NMPF's Foundation for the Future program," said Jerry Kozak, president and chief operating officer of NMPF.

Kozak said the dairy title contains a better safety net for farmers in the form of the Dairy Production Margin Protection Program, which offers them a basic level of coverage against low margins, as well as a supplemental insurance plan offering higher levels of protection jointly funded by government and farmers.

Those who opt to enroll in the margin program will also be subject to the Market Stabilization program that asks them to reduce milk output when margins are poor. That's a part of the program that has not met with support from Wisconsin's Dairy Business Association - to say the least.



DBA OPPOSES

SUPPLY CONTROL

The DBA board of directors unanimously voted to oppose the supply control mechanism included in the draft bill, saying that government interference in the milk supply will hurt Wisconsin's dairy industry.

In a statement, the DBA board also said that "supply control policies will cap the success dairy producers could achieve" at a time when the U.S. dairy industry is positioned to meet the predicted global increase in demand for dairy products.

"Supply control policies will not allow the U.S. to consistently participate in the global dairy markets," DBA said.

The Committee approved two amendments to the dairy title of the farm bill.

The first, offered by Senators Johanns and Robert Casey (D-PA) authorizes a review of the Market Stabilization program at the end of the five-year farm bill lifespan.

A second amendment, offered by Sen. Kirsten Gillibrand (D-NY) extends the MILC program through June 2013, at a reduced rate, so there is a safety net in place while the USDA implements the new dairy margin insurance program.

"We're very appreciative that members of the Agriculture Committee have preserved the carefully crafted economic and political compromises that went into the creation of Foundation for the Future," Kozak said.

Steve Etka, coordinator of the Midwest Dairy Coalition, a group of dairy interests from the Midwest that includes many Wisconsin dairy cooperatives, said the draft bill includes changes that were made after his members brought their concerns to Congress.

Earlier this month, the Midwest Dairy Coalition wrote to the Senate Ag Committee leadership outlining concerns it had with the original Dairy Security Act that has served as the basis for this bill.

In that letter, Etka said, members told lawmakers that they were not going to endorse the measured as it was introduced, stating that the DSA did not adequately address the economic needs of most Midwest dairy producers.

Members believe that the federal milk marketing order reform provisions of the original DSA would exacerbate regional inequities that already exist under the current milk marketing order system, Etka said.



MODIFICATIONS SOUGHT

Of primary concern to the Midwest Dairy Coalition were three modifications it sought to the original DSA bill:

• Removal of federal milk marketing order provisions and exclusion of any FMMO provisions that artificially deflate the value of milk used for manufactured dairy products;

• Addition of a two-tier premium structure to the Supplemental Margin Protection Program provisions, allowing for lower premiums for the first 4 million pounds of a producer's annual production. This would reduce the cost of margin insurance for all participating dairy farmers, but would be particularly helpful for farmers who are transitioning from the Milk Income Loss Contract (MILC) program, which is eliminated under the bill;

• Inclusion of provisions to reinforce that a producer's production base under the Dairy Market Stabilization Program would be a temporary, rolling base and would in no way limit a producer's long-term production decisions and options.

"We appreciate the Committee's willingness to address these concerns as it worked through the dairy provisions of the Farm Bill," Etka said. "We believe these modifications will make for an improved program that better meets the needs of dairy producers in today's economically challenging environment."



CONSERVATION CUTS

Rep. Ron Kind, a Democrat who represents western Wisconsin in a district that runs along the Mississippi River, said that the committee overlooked "clear waste" while cutting $6.3 billion from conservation programs.

"These programs are vital to our family farmers and our clean water supply," said Kind. "In addition, many state economies, including Wisconsin's, rely heavily on outdoor conservation and tourism. This is the wrong time to be making these drastic cuts to conservation."

Kind said conservation funding supports incentive-based land and water programs to help reduce sediment flow that would otherwise pollute rivers, and is vital to helping farmers be good stewards of the land.

"Today, more than half of the farmers applying for conservation programs are turned away due to inadequate funding. Coupled with rising commodity prices driving highly erodible land back into production, support for these programs is more important than ever," he said.

The Farm Bill needs reform, he said, but deep cuts to conservation programs are not the answer. "There is waste to be found - including the billions of dollars in farm subsidies supporting few but very large agribusinesses or the taxpayer funds going to subsidize Brazil's cotton industry. (See sidebar.) We've got to weigh our priorities here and ensure a smart farm and food bill for the 21st century."



One of the programs where money could be saved in creation of a new Farm Bill, if you ask Wisconsin Rep. Ron Kind, is to quit making payments to Brazil's cotton farmers each year.

Kind, along with Rep. Jeff Flake (R-AZ) and Rep. Earl Blumenauer (D-OR) introduced legislation this week to put an end to the $147 million in taxpayer dollars that go to the Brazilian cotton industry each year.

"Failing to reform our own domestic cotton program has resulted in millions of taxpayer dollars unnecessarily subsidizing Brazil's cotton industry," said Kind.

"This has got to stop. It's clear that the Agriculture Committees aren't going to make the common sense reforms we need to eliminate these payouts - which is why I've authored this bill. We've got to get our priorities straight to ensure a fiscally responsible, smart food and farm bill for the 21st century."

The payments to Brazilian cotton interests came about as the result of a World Trade Organization decision, based on the structure of federal subsidies to U.S. cotton growers.

In 2008, Brazil successfully argued before the WTO that U.S. agriculture subsidies to cotton producers violated previously forged trade agreements. Following that dispute panel ruling, Brazil threatened retaliatory tariffs and sanctions against U.S. businesses.

Kind says that instead of reforming the cotton program at that time, Congress and the Administration agreed to pay the Brazilian cotton industry $147.3 million a year - the amount was determined by the amount of loss Brazilian cotton farmers incur as a result of U.S. cotton subsidies.

The United State is the world's second largest producer and largest exporter of cotton, due in large part to the closure of U.S. textile mills.

The new legislation to eliminate this funding simply stops all payments to the Brazilian Cotton Institute. As such it should put pressure on the House and Senate Agriculture Committees, the three lawmakers figure, to make the necessary program reforms to be WTO compliant in U.S. cotton programs.

Because of the non-compliance of our own cotton subsidies and Congressional unwillingness to reform U.S. cotton programs, taxpayers have had to make the payments to Brazilian cotton farmers for years, said the lawmakers.

"Eliminating this penalty funding will put much-needed pressure on Congress to actually rein in our cotton subsidies so they're WTO-compliant," said co-sponsor Flake.

Blumenauer said that rather than continuing to spend millions of taxpayer dollars in this way, "American cotton farmers need to get their own house in order. This legislation is an important step in reducing the cost of the cotton program to the American taxpayer, while simultaneously encouraging reform."

Kind said the Senate Agriculture Committee had an opportunity to put an end to these Brazilian cotton subsidies but instead created an entirely new, heavily subsidized "insurance" program for American cotton producers, which covers shallow revenue losses, and costs $3.2 billion over 10 years.

"Adding a new shallow revenue loss program with unlimited payments will only burden taxpayers more and will surely be challenged again by Brazil at the WTO, risking another loss and even more costly, unnecessary payouts to foreign producers," Kind said.