Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Tuesday 05/14/13

CBO Breakdown of Two Farm Bills

With the Senate holding its markup of its version of the farm bill on Tuesday, the Agriculture Reform, Food and Jobs Act of 2013, the Congressional Budget Office released budget scores for both the Senate bill and the House version. The House bill is called the Agriculture Reform and Risk Management Act of 2013 and will be marked up on Wednesday.

The Senate Ag Committee meeting begins at 9 a.m. CDT. You can watch it here: http://www.agriculture.senate.gov

The CBO projects the cost of spending over 10 years, in this case from 2012-2023.

Senate version: $955 billion in total spending over 10 years. It would reduce baseline spending by $18 billion over 10 years. But the CBO also gives the legislation credit for sequestration cuts over the next decade, amounting to roughly $6.4 billion over 10 years. Thus, the Senate bill, overall would reduce spending by $24.4 billion over the next decade.

House version: $940 billion in total spending over 10 years. The bill would reduce baseline spending by $33.3 billion over 10 years. Adding in the $6.4 billion in sequester cuts, the House version would reduce spending by $39.7 billion over the next decade.

It should be noted that in a broad array of programs the majority of spending comes in the final five years of the CBO budget score, when it would be likely that a new version of the farm bill, say the 2018 or 2019 farm bill, would be drafted and take effect.

Here's a breakdown of the bills in some major areas:

Commodities: Title I

The Senate bill shows $17.2 billion net savings from commodity spending. Savings from eliminating direct payments, counter-cyclical payments and ACRE total $47 billion, but much of that is recovered by creation of the Agricultural Risk Coverage program ($23.7 billion in cost), the Adverse Market Payments -- a revised counter-cyclical program ($3.4 billion in cost) and Ag disaster programs, ($2.2 billion in cost).

The House bill shows $18.6 billion in net savings from commodity programs. Eliminating direct payments, the counter-cyclical program and ACRE come to $46.2 billion because of "transitional payments" to cotton producers. The Farm Risk Management Election Program --- a combination of a shallow loss and target price program from which farmers will choose an option --- ($23.4 billion) and disaster programs ($3.7 billion) reduce the savings.

As far as commodity programs overall, you can say some major crops truly "gave at the office," so to speak.

Corn: Under the Senate version, corn sees a $6.9 billion reduction in commodity spending over 10 years. In the House bill, corn sees a $9.6 billion reduction in program spending over the next decade.

Wheat: $5.8 billion in reduced spending in the Senate bill; $4.9 billion less spending in the House bill.

Upland Cotton: $6 billion less spending in Senate bill; $5.3 billion less in the House bill. (See STAX program in crop insurance programs)

My favorite commodity program, the great Mohair program, survives in both the House and Senate farm bills with no cuts. Talk about a great lobby.

Conservation: Title II

Senate version: $3.6 billion in savings, mainly from $2.7 billion in less spending on the Conservation Reserve Program by phasing down the cap in CRP to 25 million acres by 2018. The Conservation Stewardship Program also would see a $2 billion cut, but the Environmental Quality Incentives Program would be boosted by $1.4 billion in spending over the 10 years.

House version: $4.8 billion in savings. CRP would be cut $3.3 billion by phasing down the cap to 24 million acres. CSP would see a $3.3 billion less in spending also. The bill also repeals the Wildlife Habitat Incentives Program, saving $596 million. The House version adds $974 million in spending to EQIP, but also adds $1 billion in spending for the Agricultural Conservation Easement Program.

Crop Insurance: Title XI

Senate version: $5 billion in new spending to the various crop insurance programs. The big-ticket item is $3.7 billion for the cotton-exclusive Stacked Income Protection, or STAX, program. The Supplemental Coverage Option producers can buy also would cost $2.2 billion over 10 years. Other changes translate into scaling back some program costs.

House version: $8.9 billion in new spending. STAX would again cost $3.7 billion. The SCO coverage in the House bill is more lucrative and would cost $3.9 billion as well. Adjusting producer yield history for years of multiple disasters would add $936 million in spending as well.

Nutrition: Title IV

Again, if there is one major disparity between the two versions of the farm bill, it comes down to nutrition programs.

Senate version: $4 billion in savings, mainly by changing the standard utility allowances. States would have to spend more on low-income heating assistance to automatically qualify someone for the Supplemental Nutrition Assistance Program (food stamps).

House version: $20.5 billion in savings. The House bill gets rid of broad-based categorical eligibility enrollment for people, reducing spending by $11.6 billion over 10 years. The House version also changes standard utility allowances, but makes more extensive cuts, saving $8.7 billion. Repealing bonuses to states for efficiency also would reduce spending $480 million over 10 years.

Energy: Title IX

The Senate version has $780 million in mandatory spending programs for various energy programs.

The House version has zero mandatory spending for energy programs.

The full CBO scores for both bills can be found here: http://www.cbo.gov/…

(Note: My numbers here were rounded to $100 million.)

I can be found on Twitter @ChrisClaytonDTN

Posted at 6:14AM CDT 05/14/13 by Chris Clayton
Comments (1)
Still no Farm Bill. Only thing I read is, Food and Jobs.
Posted by Bonnie Dukowitz at 10:41AM CDT 05/15/13
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