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House committee vote may presage farm bill debate

Issue Date: June 8, 2011
By Christine Souza

Programs important to farmers and ranchers that are operated by the U.S. Department of Agriculture and other federal agencies may be scaled back, under a spending plan approved by the House Appropriations Committee last week. The committee approved legislation that reduces federal agriculture programs in fiscal year 2012 by 13.4 percent from the current fiscal year.

California Farm Bureau Federation Manager of National Affairs Jack King called the committee action a sign of things to come, saying it sets the stage for 2012 Farm Bill discussions.

"There's no question that budget cuts are coming on several fronts: the vote on extending the federal debt, current negotiations on the 2012 fiscal budget, which begins on Oct. 1, and ultimately passage of a new farm bill next year," King said. "This is a continuation of what was started when they crafted budget cuts earlier this year. It is about setting limits on farm programs, cutting conservation spending, and payment limits on farm program recipients."

The Appropriations Committee legislation, which will determine annual spending levels for USDA and related agencies, includes $125.5 billion in both discretionary and mandatory spending. Overall, the bill results in a 13.4 percent reduction in discretionary spending from fiscal year 2011. Discretionary spending is reduced by $2.7 billion from last year's level, a cut of more than $5 billion from what the Obama administration requested. With this reduction, spending would be below fiscal year 2008 levels.

In recent meetings with members of Congress, King said, Farm Bureau asked them to avoid cuts to programs that are critical to the vitality of California agriculture.

"We've indicated that we understand the need to make budget cuts, but we've urged members of Congress to do so wisely, avoiding cuts in areas such as pest eradication and exclusion, research and other such areas where the federal government plays a vital role," he said. "Regarding cuts in farm programs, we think that debate should occur in the context of the larger farm bill discussions."

He said debate on the 2012 Farm Bill should start in earnest later this year, in advance of the current bill's expiration at the end of next year.

The Agriculture Appropriations bill sets funding for a wide variety of federal agricultural programs, mostly within USDA. These programs include agricultural research; education and extension activities; natural resources conservation programs; food safety, marketing and inspection activities; rural economic and community development activities; telecommunications and electrification assistance; and various export and international activities.

The committee adopted an amendment to prohibit funds for certain direct farm bill payments for applicants with adjusted gross incomes exceeding $250,000. The current limit is $500,000 from off-farm sources or $750,000 in on-farm income.

Fresno County cotton farmer Dan Errotabere said the purpose of direct payments was to keep stability in commodity markets.

"The reason we're seeing high prices now is because we've had production problems around the world and declining acres and when you move away from subsidy programs—not that I'm an advocate for it—you encourage more volatility in the marketplace," Errotabere said. "For me, that may not be a bad thing because volatility provides marketing opportunities. For the up-the-chain users, volatility is probably a bad thing because they want to see some stability in their sources. So that is what you are trading when you decide to move away from the program and let the market dictate the acreage committed, but usually there is a lag factor that could mean wide swings in the marketplace."

As a result of higher prices for cotton, more acres have been planted in California this season: an estimated 180,000 acres of acala and 262,000 acres of pima, which operates largely outside the cotton program. The total acreage estimate reported in May is up 137,000 acres from last year's final estimate.

"Prices are doing exactly what they are designed to do—encourage production. If it is overdone, we'll see dramatically lower prices later and if it is underdone or not satisfactory, we can see even higher prices," Errotabere said. "There is more cotton planted this year, but we're only one segment of the world's production."

Colusa County rice grower Don Bransford said he's not dwelling as much on what took place last week in the Appropriations Committee, but looking ahead to what this may mean for the 2012 Farm Bill.

"This is an indication of what is coming in the new farm bill, that there are significant changes coming and hopefully there will be a viable safety net that comes out as a result," Bransford said. "This is going to impact us one year before a new farm bill is written. If it does pass, some will argue that's a baseline going into a new bill. It greatly impacts any program crop grower, with a (spending) baseline being that low."

Looking ahead to the farm bill, Bransford said, "This is going to be the toughest farm bill we've faced in the last four or five because of the budget deficits, the ag baseline will have dropped significantly, and you'll have fewer dollars to start with than you had before."

In provisions of the bill affecting food-safety programs, the Appropriations Committee approved $750 million for the Food and Drug Administration to carry out new guidelines enacted as part of the Food Safety Modernization Act. The funding in the House bill is a 21 percent cut from the administration request and a 10 percent reduction from the current fiscal year.

The committee vote sends the Agriculture Appropriations bill to the full House, which is expected to bring up the bill as early as next week.

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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