AFF Sentinel Vol.5#22

House and Senate Conferees announced the finalizing of the 2007 Farm Bill Thursday. They plan on voting next week and sending the bill to President Bush. The leaders spoke with some confidence of passage and having the votes to override a veto.

Ag Secretary Ed Schafer minutes later said the President would veto the bill, questioning whether any farmer would lose program eligibility under the mostly symbolic income caps in the bill.

The conference version placed income caps on farm payments, the direction of reform President Bush wanted. But while nodding towards relying on markets instead of taxpayer subsidies for farm income, the caps are too high to affect many farmers, Schafer indicated.

Farmers would no longer be eligible for direct payments or crop subsidies when their adjusted gross income (AGI) reaches $750,000. That cap had previously been $2.5 million. Those who are not farmers will lose payments when their AGI hits $500,000 (there was no cap previously). There will be farm income definitions, and a farmer's other farm- related businesses will count. Payments will go to individuals.

House Ag Committee Chairman Colin Peterson said to expect more movement towards a free market economy in the next Farm Bill. Making direct payments to farmers is not the way to do a safety net, he said. When commodity prices are at such high levels, it is hard to explain direct payments to his urban colleagues.

That may explain why Peterson and Senate Ag Committee Chairman Harkin believe they have the votes to override a veto. The conference committee figured they were finished some weeks ago, then learned the President would stick to his guns on payment reform.

Our guess is the ag conferees might have ignored the White House unless they hadn't also been getting pressure from House and Senate members, singed by food and fuel price complaints and no reform in the bill.

With income caps in place, the leadership thinks they can get votes from urban colleagues who want to support the mostly nutrition spending in the bill.

Probably also aimed at their urban colleagues, several members at the news conference emphasized that "Farm" Bill is a misnomer. Of the $300 billion in this Farm Bill, between $36 and 40 billion goes to farm programs. Roughly three-fourths of the money goes to "nutrition programs," and the conferees emphasized the bill's provisions to get food to the poor and children. Several noted that this Farm Bill started out with a spending baseline $58 billion less than the 2002 Farm Bill but that increased costs of food and commodities for feeding programs were mostly responsible for taking them over the baseline by $10 billion.

A comment from Sen. Saxby Chambliss (R-Ga.) revealed political pressures. He said in his state, one in ten citizens participates in nutrition programs. He applauded moving towards farm income from markets instead of taxpayers, even though he was believed to be getting intense pressure from southern cotton and rice producers opposing limitations.

Peterson said payment limitations on conservation payments had been discussed but shot down. He remarked on the volume of letters regarding payment limitations.

Harkin also responded to ethanol critical commentary. While he did not deal with the upward price pressures on feed by using 25-30 percent of the corn crop for ethanol, he bristled at suggestions that ethanol is contributing to world hunger. For one, he noted that the increased demand for more protein as incomes rise, particularly in Asia, has increased demand for feed grains. The weak dollar means buyers buy U.S. grain. For another, he pointed out that high energy prices ripple all through the food production, processing and delivery chain, contributing to rising food prices. Totally misunderstood is that corn for ethanol is field corn for animals, not sweet corn for humans, he said. And the aftermath of ethanol production is protein feed for cattle.

Finishing his educational lecture, Harkin quoted university studies showing the price of gas at the pump would be 29-40 cents/gal. higher without ethanol.

Perhaps Peterson capped perspective by observing that, "we sold food below the cost of production for 20 years and now there is a big reaction."

The stage is now set for a tug-of-war between farm state Republicans voting their districts or following the President's lead, while much of Congress nods to reform and votes for feeding programs. Schafer characterized the bill as against taxpayers and against the long-term interests of farmers and ranchers.

Next time: what having a new Farm Bill will mean for mCOOL.

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