Farm Bill Tradition vs. Federal Spending Concerns

Economists Carl Zulauf and Gary Schnitkey say the direction of future farm bills may be determined by the political reaction of lawmakers representing farming areas.

Published on: Jul 24, 2013

One of the key divisions at play in this farm bill debate is the desire on the part of those concerned with the level of federal spending vs. traditional farm bill supporters, write ag economists Carl Zulauf, Ohio State University College of Food, Agriculture, and Environmental Sciences, and Gary Schnitkey, a professor of agriculture and consumer economics at the University of Illinois at Urbana-Champaign.

"What makes this division even more interesting is that many members of Congress who are most concerned about federal spending are representatives from rural America, an area that traditionally has backed the farm safety net. Thus, which of these divisions win out could well go a long way to deciding how the 2013 farm bill debate is resolved," the authors say.

Farm Bill Tradition vs. Federal Spending Concerns
Farm Bill Tradition vs. Federal Spending Concerns

To help farmers and consemrs better understand the debate about the future of the 2013 Farm Bill, the two policy wonks have issued a summary that provides a detailed overview of the debate and examines the farm bill situation from political, process and content perspectives.

The Republican-led U.S. House of Representatives passed a version of the farm bill last week (7/11) that does not include the Supplemental Nutritional Assistance Program for the first time since the 1970s, according to Carl Zulauf, an agricultural economics professor in Ohio State's College of Food, Agricultural, and Environmental Sciences.

The Senate's version of the farm bill, passed June 10, included the food assistance program. The Obama Administration had said it supported the Senate version of the bill but indicated that it would veto the House bill.

Carl Zulauf
Carl Zulauf

The work is an effort to help growers, producers and other interested parties understand the current status of the farm bill debate, Zulauf has co-authored the 2013 Farm Bill Update with Gary Schnitkey, a professor of agriculture and consumer economics at the University of Illinois at Urbana-Champaign.

The economists conclude:

Many paths forward exist, with these four likely spanning the possible outcomes:

(1) The Conference Committee reaches an agreement that is enacted into law.

(2) The Conference Committee does not reach agreement and the current 2008 farm bill extension is extended for another year. As an aside, a 2-year extension could occur if Congress wants to avoid a farm bill debate in a Congressional election year.

(3) The Conference Committee does not reach agreement and the 2008 farm bill is extended again but in a different version. For example, some observers have discussed reducing direct payments if another extension occurs.

(4) The Conference Committee does not reach agreement and permanent law is repealed, ending farm commodity support programs. This outcome seems unlikely but we do not think its probability is zero. Should this outcome occur, the farm safety net becomes the insurance program, meaning multiple-year losses would not be covered by the farm safety net.

The interplay of politics, process, and content will determine in part which of these paths or if an entirely different path is taken. Senate leadership and President Obama have both indicated they will not accept a farm bill without a food assistance title. A farm bill with a food assistance title would require a very different coalition in the House than the coalition that passed its farm bill. Specifically, the support of a large number of Democrats would be needed. Is such a coalition attainable?

Weather and price/revenue trends matter in a farm bill, if for no other reason, than farm program payments are based on production, price, and revenue. A decline in price/revenue will increase the budget baseline of the ACRE program and the target price programs in the 2008 farm bill. On the one hand, this consideration could enhance the likelihood of another extension since a higher budget baseline for a 2014 farm bill increases the ability to address legislative concerns. On the other hand, farm groups may wish to lock in the higher target prices of the 2013 House farm bill. Groups concerned with Federal spending will not favor this outcome.

This publication is also available online.