Farm Bill Differences Present Negotiation Challenges

Several differences exist between the two bills, economists say

Published on: Nov 20, 2013

As the farm bill progresses through Congress' legislative process, several major differences exist in the House and Senate versions of the bill, says Carl Zulauf, an economist with Ohio State's College of Food, Agricultural, and Environmental Sciences says.

Zulauf and Jonathan Coppess, clinical assistant professor at the University of Illinois at Urbana-Champaign, outlined the differences in a policy brief, released this month.

In the brief, Zulauf and Coppess say some of the key differences include:

* Nutrition assistance programs: The biggest spending difference between the House and Senate versions of the farm bill is in relation to nutrition benefits, mostly in the form of the Supplemental Nutrition Assistance Program, or SNAP, authors say. The House version of the bill calls for $39 billion in cuts to nutrition benefits over a 10-year timeframe, largely by reducing the number of eligible beneficiaries. Meanwhile, the Senate version calls for $4 billion in cuts over the same period.

Several differences exist between the two bills, economist says
Several differences exist between the two bills, economist says

* Type of multiple-year crop programs: Zulauf and Coppess say general belief is that the most divisive of these differences is whether crop payments should be based on historical base acres planted to the crop or on current planted acres, followed by whether the reference price and income targets should be fixed by Congress over the life of the farm bill or whether they should follow the market up and down.

"Both of these issues revolve around a broader issue, the degree of distortion that farm programs can introduce into farmers' crop planting decisions," the brief says. "In particular, how much does distinction increase when current planted acres and fixed reference prices are used?"

* Crop insurance: While both bills increase spending on crop insurance, the House bill increases spending by more. The Senate version also requires farms to comply with a conservation plan in order to receive the crop insurance subsidy, and a farm's insurance subsidy level is reduced by 15 percentage points if the farm's yearly gross income exceeds $750,000. Neither requirement is in the House version, the brief points out.

* Dairy program: Both versions of the draft legislation include provisions to replace the current farm bill dairy programs with a risk management program focused on the margin difference in the price of milk and feed. However, the Senate bill includes a provision to control supply by encouraging supply reductions when margins are low, while the House version does not feature a supply control provision.

Finally, though some have speculated that cuts to the nutrition programs will be the most decisive, Zulauf and Coppess suggest otherwise.

"It is easy to point to nutrition programs as the likely reason that a new farm bill will not occur," they wrote. "However, we think the farm safety net issues are just as, and maybe more divisive."

To read the full brief, click here.

Source: OSU