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News and Views Getting to a Farm Bill from Here Daren Coppock, CEO, National Association of Wheat Growers Congress is now back in session, and with their return to Washington comes a hope of action on a Farm Bill in early 2002. After rancorous debate in December failed to produce a bill, the Senate returned to consideration of the Farm Bill on February 6. House Members and staff are eagerly awaiting Senate action and the start of conference committee deliberations. Perhaps more so than in previous Farm Bills, the actual provisions will materialize in the conference committee. Regardless of which provision passes from the Senate – the Harkin bill or the Cochran/Roberts substitute – both will require compromise with the measure that has already passed the House of Representatives on a strong bipartisan vote. At this point, the Harkin bill appears to be the most likely to pass the Senate, though some objectionable provisions relating to water will need to be removed. These provisions were not discussed in the committee hearings on the bill; they were sneaked into the bill between the committee mark-up and the Senate floor. We also anticipate a spirited debate over payment limitations, brought about at least in part by interests who wish to use the limitation issue as a Trojan horse to attack farm spending in general. NAWG visits to Capitol Hill in early February have focused on bridging gaps between the Democratic and Republican positions in the Senate, and encouraging dialogue and compromise between the two parties. Our overriding priorities are getting a bill out of the Senate and into conference, assuring that a broad geographic and crop representation is provided on the conference committee, and getting a bill finalized early in the year. Our ultimate goal in the process is for a bill very close to the House-passed bill to emerge from conference, be approved by both houses, and signed by the President. While both primary Senate proposals have attempted to include the same structural elements, the House bill comes closest to what NAWG initially proposed. NAWG’s original proposal, introduced to the House Agriculture Committee in March of 2001, called for maintenance of the provisions of the 1996 bill, while adding a countercyclical payment triggered by price but decoupled from production. Several other national commodity organizations, including cotton, sorghum and rice, as well as the American Farm Bureau, have also supported the House bill. While the countercyclical structure in some ways resembles the old deficiency payment setup, NAWG’s countercyclical proposal differs in one important way from the old deficiency payments: the countercyclical payment (CCP) is not tied to production. In this way, payments do not go up with production increases, and the program avoids a direct planting incentive. Critics of loan rates also point out that you must raise a crop to get support under a high loan rate program; NAWG’s CCP proposal also avoided that pitfall by severing the link to actual production. Some argue that the best way to provide the necessary support to farmers is through higher fixed payments. NAWG agrees that fixed payments are the least-distortive way to provide support, and we support their increase and continuance in the new bill. We also prefer to see them remain constant throughout the life of the bill. However, the NAWG CCP was designed so that it activated only when prices were low, avoiding the publicity problems of high prices and high fixed payments in the same year. The accompanying chart compares some of the features of NAWG’s proposal, the bill which has passed the House, and the Harkin bill in the Senate. Some notes of explanation are appropriate. • The fixed payment is constant in the House bill, but declines over time in the Senate bill. • The House bill has a higher target price, but the Senate bill pays on 100% of program production. Once prices are greater than $3.45, however, the Senate bill support stops; House bill support continues at 85% up to a price of $4.04. • The Senate provides dramatically higher loan rates; while both are within the range proposed by NAWG, we prefer the loan rates in the House bill. The lower rates ties less of the support to actual production, and allows for target prices to be set at higher levels. • NAWG proposed freezing both bases and yields. Adjusting acres and yield based on production over the last 4 years adversely impacts wheat states, many of which experienced drought during that period. Also, base and yield updating is very expensive, with most of the gains going to areas other than wheat states; we believe better to set target prices at appropriate levels than to allow expensive updating. There is not enough money for both. At this point, base updating looks like it will happen; yield updating is up in the air. • NAWG (and nearly every other farm organization) also opposed any expansion in CRP acreage due to detrimental impacts on rural infrastructure and communities. NAWG and several other commodity groups have been working hard to get a farm bill passed sooner rather than later. We’ve taken some criticism for pushing last fall on a farm bill. Why is it so critical for prompt action on a bill? • Budget considerations – the current Congressional budget resolution reserves $73.5 billion for increased agricultural spending over the next 10 years. The next budget, which will begin to take shape in March and April, may not be so generous. • Certainty for producers who have already planted their last FAIR crop – farmers and their lenders need to know what safety net will underpin their operations. • The House has been through a “deliberative process” already – some in Washington opposed Senate consideration of the farm bill last fall because the Senate had not had time to go through a thorough discussion and debate of the issues. NAWG believes that the House did go through such a process, and their production and passage of a farm bill should have surprised no one. • Momentum – once movement starts on a bill, it’s important not to waste the opportunity. • Avoid election-year politics in 2002 – farmers don’t want to become political footballs in the upcoming elections. NAWG and its member states are continuing to work on this important issue, and we hope to be able to report success in the very near future. Our ability to develop and promote a comprehensive proposal, and our successes to date, are the result of hard work by many people in the NAWG family. You can be proud of the work done by your officers and board on behalf of the industry. NAWG is viewed in Washington as a credible source of information and representative of the opinions of its members. Maintaining this link to our “wheat roots” is vital, and requires the personal involvement and support of individual members in their state associations and strong links between NAWG and the states. On behalf of your wheat team in Washington, thank you for the support you have given, and thanks in advance for your continued efforts on this and other critical industry issues.
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