Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Thursday 11/21/13

Notes on the Farm Bill from the Speaker's Lounge

Rep. Mike Conaway, R-Texas, talked to a handful of reporters Wednesday between votes outside the House chamber, an area known as the Speaker's Lounge. Conaway said House Speaker John Boehner, R-Ohio, has given congressmen a hard deadline that the House will adjourn on Dec. 13. "He told everybody in the room we are done at 11 a.m. on Dec. 13," he said.

Boehner's hard deadline may have helped push the four principal negotiators to begin more aggressive talks that started Wednesday night and will continue Thursday.

Conaway talked about a myriad of commodity issues. For instance, he is uncertain how the proposal pitched by corn, soybean and canola growers would work in the whole context of changes in the commodity title. Conaway said negotiators "have been knocking off all the little stuff" but declined to provide specifics.

Conaway also was asked about payment limits and changes to adjusted gross income (AGI) eligibility for farm programs

"Applying AGI limits to a risk management program -- crop insurance -- it makes no sense to me whatsoever," Conaway said. "The other thing is, we don't know what AGI is going to be."

The Senate version of the farm bill includes a floor amendment from Sens. Dick Durbin, D-Ill., and Tom Coburn, R-Okla., that would reduce crop insurance premium subsidies from 62% of the premium to 47% for farmers with AGI over $750,000. The provision saves $1 billion over 10 years. However, most members of the House and Senate Agriculture Committees oppose the language.

Conaway argues the possible tax reforms that could come from Congress could so change the structure of the 1040 and how the Schedule F is calculated that it there are too many unknowns to set a hard rule on AGI for a program such as crop insurance.

"If our colleagues in Ways & Means are convinced we are going to get tax reform done, they can't tell me what impact all those reforms are going to have on AGI," Conaway said. "So if you don't know what AGI is going to be over the next five years, how do you set a policy that is keyed to that number?"

Conaway also opposes making changes to the rule for defining active engagement in a farm. Rather than excluding those who aren't truly tied to the farm, Conaway said it would eliminate

"It's the inter-generational wreck of folks who are really actively engaged," Conaway said. "You have got folks who are grandfather and grandmother who bring the wisdom to the table on the farm operation -- how to make a plan, make a decision, those kinds of things -- I would argue that's just as important as a grandson driving a tractor."

Gibbs on Johanns

One member of the House Agriculture Committee who didn't get a seat at the conference table is Rep. Bob Gibbs, R-Ohio. Gibbs wasn't named to the conference despite being a former president of the Ohio Farm Bureau. Talking to him Wednesday, Gibbs continues to take a stance against the main House commodity provisions on target prices -- the Price Loss Coverage program. Like many Midwest senators, Gibbs opposes a target-price strategy. He praised a letter sent earlier this week by Sen. Mike Johanns, R-Neb., to conferees. Johanns also opposes the House target-price plan. "I thought that was an excellent letter," Gibbs said, adding that a heavy reliance on target prices would be a step backwards to the 1980s and 1990s. "The House PLC program starts moving us in that direction. That's why I am fighting it."

Johanns' letter told conferees that it would be better to have a farm-bill extension than create a program that raises target prices. Johanns wrote, "The House Price Loss Coverage (PLC) is a new target price program tied to planted acres. It does not look very expensive because CBO projects relatively high prices. But as we have seen in recent months, there is no guarantee that will last. With the EPA potentially scaling back the Renewable Fuel Standard and growth in Chinese demand slowing, among other factors, we could see a time of low prices again in agriculture. In fact, we have already seen corn prices fall nearly 40 percent in the last year.

"While no farmer wants to see a time of low prices, no taxpayer should want the open-ended fiscal exposure of a recoupled target price program that never adjusts with market conditions. The effect of the PLC program is to shield farmers from market incentives. Like all businesses, farms respond to incentives, and if Congress sets an artificially high price, farmers will respond to it and it will lead to overproduction—especially if farmers can get that higher price by planting more acres to a specific crop—increasing supply and driving prices down further."

A full copy of the letter: http://dld.bz/…

Follow me on Twitter @ChrisClaytonDTN

Posted at 7:13AM CST 11/21/13 by Chris Clayton
Comments (2)
What makes no sense is for government to continually be awarding those with the greatest probability of the greatest incomes the largest income guarantees as well as giving the largest insurance subsidies to those with the greatest income probabilities. What this is doing is privatizing profits and socializing losses Anyone with any math capabilities can understand that this is no win economic climate for smaller farmers. It is kind of like awarding the wealthiest congressmen with the largest salary. For decades this government created "largest farmers always get the largest government income guarantees" has been eliminating smaller farmers from the industry. It should be obvious to everyone that farmers respond in a big way to government income guarantees by the recent explosion in farmland values driven in a large part by government guaranteeing that farmers can gross $1000- plus per acre growing corn.
Posted by Wesley Kuster at 7:43AM CST 11/21/13
I'm sure Conway is opposed to a rolling average of actual planted acres. It is part of the strategy of cotton farmers (and rice farmers as will, I think) to continue sucking thousands of dollars of subsidies on "base" acres that are no longer planted to cotton and never will be again. Can't lose all that evil federal government money flowing to Texas, ya know!
Posted by LeeFarms at 7:56AM CST 11/21/13
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