Ag Appropriations Bill Passes Senate;
Budget Reconciliation Debate Moving In Senate

Friday, November 4, 2005                          By Shawn Wade

      Senate passage of theconference report on the FY 2006 Agricultural Appropriations bill means gettingPresident Bush's signature is the last hurdle to clear for implementation ofthis year's USDA budget package.

      The conference report wasapproved by the House of Representatives on October 27 and provides $17.1billion in discretionary spending authority for agriculture programs during thegovernment's 2006 fiscal year. The bill also includes approximately $83 billionin mandatory spending.

      The final version of the FY06Agriculture Appropriations Bill amounted to a 1.5 percent spending increaseover spending levels enacted in FY05. The final vote for passage by the Senatewas a solid 81-18.

      Of interest to High Plainsresidents is the inclusion of some $9 million in research program funding thatwill be directed to Texas Tech University.

      With the AgricultureAppropriations Bill now headed for implementation the only question aboutagriculture spending in FY06 and beyond is the ultimate impact that the BudgetReconciliation legislation now working its way through the Senate and the Houseof Representatives will have on Agriculture's mandatory spending programs.

Budget Reconciliation Clears Senate;

Grassley Attempt At Pay Limit Reform Fails

     Figuring out the relationship between the appropriations process and budget reconciliation can be confusing. In a nutshell though, Agriculture program budget cuts developed as part of the Budget Reconciliation process are applicable to the mandatory spending programs under the purview of the House and Senate Agriculture Committees and authorized each year in the appropriations process.

      Most of the action on the Budget Reconciliation front the past few days has been focused in the Senate, where legislators have spent most of the last week debating amendments and, late Thursday, passing the Deficit Reduction Omnibus Budget Reconciliation Act of 2005. The Senate Budget Reconciliation package was approved on a 52-47 party line vote.

      For Agriculture, the Senate debate held a significant amount of danger in the form of an amendment put forth by Senator Charles Grassley to make significant, and potentially devastating modifications to current payment limit regulations, the marketing loan program and definitions of what constitutes a person being "actively engaged" in a farming operation.

      Thanks to the strong support of Senate Agriculture Committee Chairman Saxby Chambliss, and with the support of Texas Senators John Cornyn and Kay Bailey Hutchison and fifty other members of the Senate, the Grassley amendment was defeated during a strong 53-46 procedural vote.

      Chambliss explained to his fellow Senators during the debate that the Grassley amendment would cause more producers to be adversely affected by financial pressures of the additional limitations at a time when the deficit reduction focus should be on trimming spending.

      Chambliss also noted that Budget Reconciliation was not the place to attempt to secure such changes and that in-depth discussion of possible farm policy changes should be reserved for the 2007 farm bill debate.

      Plains Cotton Growers joined with the National Cotton Council and commodity groups nationwide to prevent any changes to the agriculture portion of the Senate Budget Reconciliation package.

      For PCG and the NCC the effort was more than a philosophical exercise to keep the legislation as clean as possible. For cotton producers and much of southern agriculture the changes proposed by Senator Grassley would have been extremely detrimental and significantly reduced the effectiveness of the farm program safety net provided by the current program.

      As passed, the Senate Budget Reconciliation bill included an across the board reduction of 2.5 percent in all commodity program payments received by producers in the 2006 through 2010 crop years. The Senate reductions would be applied to direct payments, counter-cyclical payments, marketing loan gains, and loan deficiency payments authorized under the current farm program. Under the Senate plan these payment reductions would be eliminated for the 2011 crop year.

      The Senate bill also includes a reduction in the advance direct payment amount from a maximum of 50 percent to 40 percent. The lowering of the amount a producer could request for the advance direct payment would not affect the overall amount of direct payments a producer would receive, but would shift a greater share to the final direct payment amount.

      The Senate bill also includes language to terminate the upland cotton Step 2 program at the end of the 2005 marketing year on August 1, 2006.

      The Agriculture Committee of the House of Representatives appears to be taking a slightly different tack and has proposed a different mix of proposed cuts that touch on all elements of mandatory spending under the Committee's jurisdiction including food and nutrition programs.

      In regard to commodity program cuts proposed by the Agriculture Committee the House legislation reduces farm program direct payments by 1 percent for 2006-2009, mirrors the elimination of the upland cotton Step 2 program at the end of the 2005 marketing year and also includes modest food stamp program reforms.

      The House proposal also maintains funding levels for the Environmental Quality Incentives Program (EQIP) that has proven to be very beneficial to producers and landowners in the last few years.