2007FARM BILL OVERCOMES LAST MINUTE OBSTACLES;
PASSES HOUSE BY 231-191 VOTE

Friday, July 27, 2007                                  By Shawn Wade

      Withjust a few Republican members deciding to cross over, the House ofRepresentatives voted July 27 to approve the Farm, Nutrition, and Bioenergy Actof 2007 by a vote of 231-191.

      Thefinal vote, which fell almost strictly along party lines, was almost derailedby the late announcement that a funding offset needed to up nutrition programspending in the final bill would come from a proposed change in the tax code.

      Theoffset amendment was specified by the House Committee on Rules, and included inthe Final Rule that governed overall parameters for the floor debate of theBill, after the House Committee on Agriculture approved it.

      Republicansdescribe the funding offset as a potentially damaging tax increase onforeign-owned companies doing business in the United States. House Democratscounter that the change isn't a tax increase, but the closure of a tax loopholethat has allowed foreign company's doing business in the U.S. to avoid payingtaxes.

      Bythe end of the debate, which began July 26, virtually the entire Republicancaucus ended up voting against the measure. Included in the Republican tallyvoting "No" to the final bill were House Agriculture Committee members Rep.Mike Conaway (R-11th) and Rep. Randy Neugebauer (R-19th) and fellow West TexanRep. Mac Thornberry (R-13th).

      Followingthis afternoon's vote the three West Texas Congressmen began the process ofgetting the word to their constituents about why they felt it necessary to takethe position they did.

      Allthree West Texas Representatives cited the last minute inclusion of the taxprovision without consultation as the straw that broke the back of what wasthought to be a rock solid bipartisan coalition supporting the legislation.

      Glimpsesof that coalition, and the strength that it brought with it, were clearlyvisible to those closely following the debate. How else could you explain therelatively easy way an amendment from Representatives Ron Kind (D-WI) and JeffFlake (R-AZ) was defeated late Thursday night?

      TheKind/Flake amendment was felt to be the biggest challenge to the House bill'splanned extension of the safety net provisions enacted in the 2002 Farm Bill. Asimilar amendment garnered 200 votes during debate of the 2002 farm bill,leading many to believe it might be a serious challenge this time around aswell.

      Instead,a strongly bipartisan 309-117 vote defeated the Kind-Flake amendment, whichwould have essentially gutted the current farm program safety net and left manycommercial sized family farming operations on the outside looking in, andshowcased a bipartisan effort that many had hoped would exist in the broaderdebate on final passage of the bill.

      Despitethe rough landing the House Farm Bill ultimately had, the bottom line is thatthe House of Representatives has now passed what is largely an extension ofcurrent U.S. Agriculture policy which is good news for farmers and ranchers.

      TheHouse bill retains critical safety net programs important to the High Plainscotton industry, makes industry prompted changes to the cotton marketing loanprogram designed to keep cotton competitive, and makes substantial, but notunworkable, reforms to farm program eligibility guidelines and paymentlimitations.

      Astrong House Farm Bill in the books, the agriculture community's focus will nowshift entirely to the Senate Agriculture Committee and Chairman Sen. TomHarkin.

      Boththe House and Senate will adjourn for the traditional August recess next week,meaning consideration by the Senate Agriculture Committee will not come beforethe middle of September according to most sources.

      Withthe 2002 Farm Bill set to expire September 30, an incredible amount of pressureis now on the Senate to develop a bill that addresses all the issues that bodyhas identified, without sacrificing important safety net components extended bythe House. Few concrete details have thus far emerged from Sen. Harkin's officeto indicate where he might ultimately be headed.

      Thechallenge for agriculture groups will likely be ensuring the Senate billretains the bulk of the farm program provisions approved by the House.

      Continuinga workable safety net and retaining enough similarity with the House bill toallow for a successful conference will be the top priority for farm policysupporters over the next month.

      Forthose that may have missed the recap of the major provisions important tocotton, the following is brief description of some of the changes approved inthe Farm, Nutrition, and Bioenergy Act of 2007 by the House of Representatives.

 

Direct Program (DP). H.R. 2419 reauthorizes direct payments for the 2008through 2012 crop years at the same levels established in the 2002 farm bill,including the DP payment rate for cotton of 6.67-cents. Other significantchanges proposed for the DP is the allowance for producers to request a single22 percent advance payment each year and the proposed elimination of advancedirect payments in 2012.

 

Counter-cyclical Program (CCP). H.R. 2419 reauthorizescounter-cyclical payments and establishes Target prices for covered commoditiesfor the 2008 through 2012 crop years. The proposal specifies an Upland cottonTarget price of $0.70 per pound, 2.4 cents below the Target price establishedby the 2002 Farm Bill. Producers would also be allowed to request a singleAdvance CCP payment each year equal to 40 percent of the projected paymentrate. Advance CCP payments would also be eliminated beginning with the 2012crop year.

 

New Revenue Based Counter-cyclical Program (RCCP). The bill authorizes theestablishment of a new revenue counter-cyclical program for the 2008 through2012 crop years and provides producers a one-time choice between participatingin the current counter-cyclical program or the new RCCP on farms for which baseacres and payment yields are established. RCCP payments would be made when thecalculated national revenue per acre is less than the national target revenueper acre.

      To carry out this program thelaw would establish a national target revenue per acre for program crops (seetable below) and a national payment yield per acre for each commodity. Thesefigures would then be used to calculate a National Payment Rate for RCCPpayments as follows: (Nat. Target Rev/acre) minus (Calculated Nat. Rev/acre) divided by (Nat. Payment Yield)

      When triggered, RCCP paymentswould equal the National Payment Rate multiplied by a producers current CCPpayment acres and payment yield.

 

Nonrecourse Marketing Assistance Loans. H.R. 2419 reauthorizes nonrecourseloans for loan commodities for the 2008 through 2012 crop years. The proposalleaves the loan rate for base quality Upland cotton at $0.52 per pound.

 

Upland Cotton Loan Provisions. In addition to the changes notedabove, specific adjustments were also made in the Upland cotton loanprovisions. Among the changes to the cotton loan incorporated in the proposedbill are adjustments to the calculation of the Adjusted World Price (AWP)designed to make U.S. cotton more competitive in the world market, authorizingpayments to domestic users of cotton, and the proposed elimination of uplandcotton storage credits in 2012.

 

Payment Limits and Program Eligibility.

      When it came to calls for programreform, one of the biggest targets for farm bill critics were rules regardingprogram eligibility and payment limitations. In order to address these issuesthe Committee adopted the following proposed reforms.

 

Adjusted Gross Income Cap for Farm Bill BenefitEligibility.

The proposed rules regarding program eligibility say noperson with an adjusted gross income of greater than $1 million per year mayreceive any commodity or conservation payment under the Farm Bill, period. Further, no person with an adjusted gross income of greater than $500,000 peryear may receive any commodity or conservation payment under the Farm Bill,unless 67% or more of the adjusted gross income is derived from farming,ranching, or forestry.

 

3-Entity Rule to Direct Attribution. Total benefits paid to a person maynot exceed the established limits (discussed below) and will be subject tocomplete transparency, with all payments to a person tracked to his or herSocial Security Number.

 

Cap on Direct Payments and Countercyclical Payments. No person may receive more than$125,000 per year in direct and countercyclical payments. This includes nomore than $60,000 per year in direct payments and no more than $65,000 per yearin countercyclical payments.

 

Marketing Assistance Loans/Loan Deficiency Payments. Repeals generic certificates andinstead directly authorizes a person to receive a basic level of loanassistance on all of his or her crop.

 

Conservation Programs

      In the area of Conservationthe HAC proposed the following changes to meet the needs of farmers andranchers under the 2007 Farm Bill.

 

Conservation Reserve Program (CRP). The CRP would be extended through 2012with the current acreage cap of 39.2 million acres maintained for the life ofthe bill.

 

Wetland Reserve Program (WRP). The WRP would be extended through2012 with the maximum enrollment level increased to 3,605,000 acres.

 

Conservation Security Program (CSP). The HAC proposal would create a newCSP program for fiscal years 2012 through 2017 that collapses the currenttier-based payment structure and replaces it with a new stewardship enhancementpayment. The HAC language would allow no new contracts to be entered intounder the current CSP program, but would allow for the continuation of paymentsand modifications to existing contracts until they expire.

 

Grassland Reserve Program (GRP). The GRP is extended through 2012with the requirement that an additional 1,000,000 acres be enrollment betweenfiscal years 2008 and 2012.

 

Environmental Quality Incentives Program (EQIP). The HAC proposal would extend theEQIP program and increase funding from the current base line level of $1.3billion to $2 billion by 2012.