Reset Button Has Been Hit on the 2012 Farm Bill

The failure of the Joint Select Committee on Deficit Reduction (commonly referred to as the “Super Committee”) to come to agreement on $1.2 trillion in spending reductions and revenue enhancements over ten years means that the accelerated process of writing the 2012 Farm Bill within the context of fiscal and budgetary pressures has come to an abrupt stop.  The failure of the “Super Committee” to reach agreement on a bipartisan plan triggered automatic program reductions – including an estimated $15 billion in spending reductions to agriculture beginning January 2013.  There is a chance the automatic reductions for agriculture won’t go into effect if Congress passes the next farm bill prior to expiration of the current legislation in September of 2012.

However, the leadership of the Senate and House Agriculture committees was able to develop a foundation upon which they can construct the next farm bill.  In a joint statement issued by Senator Debbie Stabenow (D – MI), chairman of the Senate Agriculture Committee and Representative Frank Lucas (R – OK), chairman of the House Agriculture Committee noted that the “House and Senate Agriculture Committee leaders developed a bipartisan, bicameral proposal for the Joint Select Committee on Deficit Reduction that would save $23 billion.  However, the Joint Select committee’s failure to reach a deal on an overall deficit package essentially ends this effort.”  The intent of the Senate and House committees is to continue the process of reauthorizing the next farm bill in the months that lie ahead, with public hearings likely throughout the first half of 2012.

As various proposals from the agriculture committee continued to surface throughout the month of November, there was a growing chorus from stakeholders of every stripe that the process being utilized to craft the comprehensive proposal was the least transparent in memory.  There were concerns that, without the opportunity by stakeholders to be fully engaged in the process that the committee recommendations would not reflect the commodity and geographic differences inherent in modern-day agricultural production.

There are positive signs that the work of the agriculture committee leadership was not in vain.  A summary of the proposed recommendations to the “Super Committee” released by the Senate Agriculture Committee in mid-November provides clues as to the direction the committees will go in crafting the next farm bill.  Although not set in stone and open to revision, there were a number of interesting aspects worth noting within the recommendations.

The Commodity Title would have seen substantive changes, with Direct Payments, Counter-Cyclical Payments (CCPs), the Average Crop Revenue Election (ACRE) and the Supplemental Revenue Assistance Payments (SURE) programs would be allowed to expire resulting in an estimated $15 billion in savings.  The crop insurance program would be strengthened and supplemented by a new Ag Risk Coverage (ARC) Program designed to protect against both yield and price losses.  Individuals and entities with an Adjusted Gross Income (AGI) of more than $950,000 would have been ineligible for program payments under the Commodity Title and individual producers would not have received any payments in excess of $105,000 from the ARC programs.

The dairy sector would have also seen significant changes, with two new programs replacing the Dairy Product Price Support Program (DPPSP) and the Milk Income Loss Contract (MILC Program.  A voluntary Dairy Producer Market Protection Program (DPMPP) would have provided margin-based assistance for producers equal to the difference between the all-milk price and a national feed cost.  In addition, the Dairy Market Stabilization Program (DMSP) would provide incentives for producers participating in the DPMPP to scale down production when the market is oversupplied.  In the past the latter has proven to be controversial amongst dairy producers and organizations and is likely to face renewed scrutiny in the months that lie ahead.

Although the Senate and House Agriculture committees now have a chance to hit the reset button, stakeholders across the spectrum will have the same opportunity to rally their troops in support of favored programs and policies.  With the current farm bill set to expire at the end of September 2012, the question now becomes the likelihood of passing the new bill during an election year or if the legislation will be delayed until 2013.

Copyright © 2011 RDL & Associates, LLC.  All rights reserved.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s