Farmers Oppose Budget Cut Proposals for 2012 Farm Bill

Speaking out against cuts in USDA programs, those testifying at hearing also worry about role activists are taking in dictating direction of farm policy.

Published on: May 3, 2010

Key members of the U.S. House of Representatives Committee on Agriculture gathered at the Iowa State Fairgrounds in Des Moines April 30 for the first field hearing to prepare for writing the 2012 Farm Bill.

Farmers and others involved in agriculture testified as to what they liked and disliked about the current federal farm bill, which became law in 2008. The field hearing last Friday lasted from 1 to 4 p.m. Those who testified recommended changes they want to see included in the 2012 legislation.

Farmers who appeared before the panel sent warning signals to the White House expressing disfavor with proposals from the Obama Administration to cut the budget for USDA programs which farmers depend on to help support crop prices.

Oppose cuts in USDA farm program direct payments

Richard Bayliss, who farms 2,000 acres with two sons and their families in Wapello and Keokuk counties in southeast Iowa, told the House Ag Committee hearing "I do not feel that the significant cuts President Obama has suggested are acceptable in the current financial structure for agriculture."

Specifically, Bayliss and others objected to proposals to cut USDA direct payments to large farmers and reduce spending on crop insurance and soil conservation programs.

Bayliss also spoke against what many bigger farmers feel is the Obama administration's moving away from large production agriculture in favor of smaller farming operations, organic production, etc. "Farms will not get smaller," Bayliss says. "We won't be going back to 80 or 120 acre operations where hogs and cattle are pastured on fallow ground and chickens peck in the yard."

Concern about activists dictating USDA nutrition policy

Varel Bailey, a former president of the Iowa and National Corn Growers Associations who farms near Anita, is concerned about the criticisms of corn-fed meat production that are being made by nutrition activists. Activists are urging Congress and the Obama administration to make changes in food stamp, school lunch and other federal food program nutrition requirements. These programs now make up 75% of the USDA budget.

"My fear is that a fringe group with a secondary agenda will attempt to use the USDA food and nutrition program to put their goals into effect," says Bailey.

House Ag Committee chairman Collin Peterson, a Democrat from Minnesota who is a farmer, says the 2012 farm bill will likely need to revamp the traditional USDA subsidy program for crops, and center it more on revenue protection and crop insurance instead of price supports. He cites upcoming battles in Congress to balance the mushrooming federal budget and he says federal farm programs are going to suffer a financial cut as USDA spending is reduced in coming years.

Why are they discussing 2012 farm bill so early?

Isn't it a little early to start discussing the 2012 farm bill? Congressman Leonard Boswell, a Democrat who represents a large portion of central Iowa, is a member of the House Ag Committee, and he hosted the hearing in Des Moines.

"We are a little early compared to when we started holding the hearings for the 2008 Farm Bill, but there are good reasons to start now," he says. "It's a big country, with many different regions, and so many different aspects of agriculture. So, looking at the world challenges we face, the U.S. budget deficit and everything else going on, we decided to get out early and review with farmers, processors and others in the food and agriculture industry as to what is going on."

Boswell adds, "We're having this field hearing April 30. In the coming weeks we'll hold field hearings in other areas of the country. Chairman Peterson has said that in July 2011, he hopes that we have the House version of the 2012 farm bill written." Boswell says the committee wants feedback from farmers and others in agriculture, "so our committee members who draft the next farm bill can learn as much as we can now, because we want this 2012 farm bill to work."

A changing world situation complicates new farm bill

Varel Bailey urged the committee to understand that the farm bill is more than just loan rates and food stamps. "What we're now talking about is an agreement, a contract, between agriculture and the rest of society," he says. "If the trust of the relationship between agriculture and society erodes or weakens, it jeopardizes not only the government but in the long-term those societies collapse."

The world has changed and overseas markets for U.S. farm products now play a larger role, and farmers have new U.S. markets too - ethanol is just one example. "All of this makes designing the next farm bill more complicated," says Bailey. "For example, the value of the dollar and of foreign currency is always changing and that affects U.S. exports."

"So in the farm bill we have to provide ways to help farmers control or reduce risk," he adds. "We've got to have some type of revenue buffering mechanism farmers can use to survive and to prosper, even when we have wild currency gyrations on world markets, international swings that are beyond the control of the United States and beyond control of the farm bill."

Rework ACRE program to make it more user-friendly

Crop insurance can help mitigate some of the risk, "but we also need farm programs that can help us cope," says Bailey. "I highly recommend Congress go back and take another look at USDA's Average Crop Revenue Election or ACRE program, and fine-tune it to make it a much more workable program. I think ACRE can be a very useful tool for farmers to use, for managing the risk in U.S. agriculture."

Looking back at the way Congress came up with the 2008 farm bill--the process was a discussion of policy and then they put the money with it. "I think it is extremely important to get the policy right this time because there isn't going to be as much money to put with it," says Tom Latham, an Iowa Republican member of the House Ag Committee.

He points out that "The U.S. government has a massive federal budget deficit and I believe the amount of money that will be allocated to the new 2012 farm bill isn't going to be all that great—for the parts of the bill that are outside the food stamp program and other human nutrition programs."

"So," says Latham, "we have to get the policy right and make sure every dollar we spend in the farm bill, that we spend it wisely and that it actually helps agriculture and helps the farmers themselves who need a farm financial safety net."

Effort to reduce huge federal budget deficit is expected

This year the U.S. is looking at a $1.6 trillion annual deficit. "I think after the elections this November you're going to see a concerted effort to reduce federal spending across the board," says Latham. "That's going to make less money available for agriculture and the new 2012 farm bill."

With this budget cutting in mind, Latham says "we're going to have to use risk management tools, beef them up and make them more farmer-friendly in the new farm bill. Those tools don't have as much of a federal outlay in dollars but they would still assure farmers that if they do get into trouble financially, the safety net is still out there.'

Things change quickly in agriculture now days. Only a couple years ago we had high grain prices and tremendous demand, notes Latham. "The shortages we had then are now abated and world grain supplies are growing again and we're looking at more of a surplus situation. Exports aren't controlled by the farm bill, but they are certainly part of the farm financial equation. It's a different scenario we have now, compared to what it was when we wrote the 2008 Farm Bill."

More things outside the farm bill affect agriculture

So far for corn, under the 2008 bill, farmers have received only 4% of their income from the farm bill. That's because prices have been good and farmers haven't had to rely as heavily on the federal government. "You go back 5 or 6 years ago and it was 40% to 50% of all the income in agriculture was from the federal government," says Latham.

Times change and markets change and the farm bill needs to change too, he adds. "Keep in mind there are many influences outside the farm bill that make a difference. For example, look at the situation today with the biodiesel industry sitting idle and plants shutdown. That's because the U.S. Senate fooled around and let the tax credit for biodiesel expire at the end of 2009 and hasn't restored it yet. That situation is destroying an entire industry - a real shame."