NACIA Farm Bill Update -- Senate Farm Bill Conference Debate
5/15/08

As we just reported, on the afternoon of May 14, 2008, the House approved the Conference Report accompanying H.R. 2419 by a roll call vote of 318 yeas to 106 nays.  Following the vote on the Conference Report, the House passed by unanimous consent an agreement to extend current law until next Friday, May 23. 
 
Shortly following House passage, the Senate initiated debate on the Conference Report.  No votes were taken, but they are expected tomorrow, Thursday May 15.  During a break in debate, the Senate also passed by unanimous consent the current law extension. We expect Senate consideration of the Farm Bill Conference Report to resume tomorrow morning.   
 
Please note Senator Roberts’ comments on crop insurance. 
 
Below is a summary of the Senate Floor debate from this evening. 
 
Senator Harkin (D-IA) – Here we are after a long process.  It has been a long road, but I have had good friends and colleagues to travel with.  This is a strong bill that has just passed the House with 318 votes.  I have never seen a Farm Bill with this much support.  It has over 500 groups supporting it.  It is not just about farm programs.  It is called the Food, Conservation, and Energy Act.
 
Regarding food – every single penny of the $10 billion in the over-the-baseline spending was put into nutrition, as well as an additional $400 million.  Over the last several years, we have seen the erosion of food and nutrition assistance in this country.  For the Food Stamp Program, the standard deduction has been indexed to inflation.  We also indexed eligibility to inflation.  In addition, we expanded eligibility requirements to exclude retirement savings and remove the cap on childcare costs.  We also raised the minimum benefit and indexed that to inflation.  We increased funding for TEFAP and food banks.  We know that many Americans have the highest rate of diseases related to poor diets.  Low-income people have hard choices to make and find it difficult to purchase healthy foods because the foods that are cheap are not healthy. To address this, we dedicated $20 million for a program directed to providing low-income Americans incentives to purchase healthier foods.  All the national nutrition and anti-hunger groups support this bill.  In addition to domestic nutrition, the McGovern-Dole International School Lunch Program gives children across the world one healthy meal a day and an incentive to go to school.  In this bill, we just about doubled support for that program. 
 
There are two new titles for livestock and specialty crops.  We have included new funding directed to transitional support for organic production, new funding for organic research, and new funding for farmers markets for organics and locally grown food.  When the fruit and vegetable snack program was established in 2002 bill to provide free fresh fruits and vegetables, many people doubted me.  However, 100 schools in four states voluntarily entered, and they are all still in it today.  We expanded the program in this bill to every state.  By the time we are done, nearly every low-income child in America will have access to free fresh fruits and vegetables. 
 
Regarding conservation – the Administration bill only contained  $2.4 billion, but this bill adds $5 billion more to provide incentives for farmers to be good conservationists.  We put in $15.8 million in EQIP, and put in $12 million over ten years into a reformed CSP.  These are important programs because they deal with working lands.  Not all conservation programs take land out of production.  We needed to have more land come into production due to a high increase in the demand for agriculture goods.  As a result, we provided incentives to producers to be good stewards.  The European Union can subsidize their farmers so much and still be WTO compliant due to the green payments for conservation.  We can do that too.  These programs will enroll about 13 million acres a year.  This will ensure that farmers can grow crops and make a profit, but in an environmentally safe way.  In addition, we included a Chesapeake Bay provision consisting of $438 million to protect the watershed.
 
Regarding energy – prices at the pump are hurting people, especially in rural areas.  Studies show that without the ethanol supply, gas prices would be 29-40 cents higher.  So, we recognized the need for more production of cleaner energy.  We increased our movement towards cellulosic ethanol production and biomass production with over $1 billion in funding.
 
For rural development – we included money for rural broadband access and the reduction of the backlog of issues regarding water and wastewater facilities in rural communities.
 
The White House says we did not include enough reform.  We have gone an extra mile, ten miles, hundred miles, in trying to obtain what the Administration would like.  We require direct attribution, eliminated the three-entity rule, and put a limit on adjusted gross income (AGI).  Current law allows you to have $2.5 million of non-farm income and still receive payments.  The Administration wanted to reduce that number to $200,000.  We reduced the allowable non-farm income to $500,000.  We also capped the on-farm income at $750,000.  Some people might not like it, but it is light-years away from what we have done in the past.  We have also created a new, optional, revenue-based program entitled ACRE.  Farmers have the choice to stay in their current programs or to enroll in the optional program.
 
This Farm Bill has the support of over 500 groups—clean energy groups, commodity groups, nutrition groups, and conservation groups.
 
Senator Chambliss (R-GA) – All Conferees on the Senate side remained loyal to the commitment we made to each other through this process..  Bipartisan support of this bill is strong.  The bill provides certainty to American farmers and ranchers, while also providing nutrition assistance to those who are in need.  Conservation and wildlife groups, renewable energy activists, nutrition groups,  and commodity groups have all joined to support the bill.  We know high commodity prices will not last forever, and this bill is our commitment to provide farmers and ranchers the ability to survive with our assistance when times are bad and without our help when times are good.  This bill maintains the safety net.  I simply do not understand critics who say they want to “help farmers,” but oppose this bill.  Less than one-fifth of spending goes to production agriculture programs.  All funding for commodity programs combined is less than 0.25 percent of federal outlays.  Conservation, nutrition, and energy spending is 75 percent of the bill. 
 
The White House thinks the bill does not have enough reform.  Critics say the bill raises food prices domestically and globally, causes food crisis worldwide, and pays farm subsidies to millionaires.  This has caused the White House to issue a veto threat.  The cotton program has been reformed to be more WTO compliant.  The AGI limit has been reduced by 80 percent.  This bill eliminates the three-entity rule and requires direct attribution, as well as eliminates base acres on land developed for commercial use.  There is more reform in this bill than any other prior bill. 
 
Working land, cropland, and grazing land account for two-thirds of this nation’s land area.  This Farm Bill continues the tradition of protecting working lands.  This bill moves toward energy independence with incentives for production of cellulosic ethanol.  It also includes reform of the Commodity Futures Trading Commission.  There is a new title for specialty crops, horticulture, and organic production.  These groups deserve a spot in major agriculture policy.  School children will get increased access to fresh fruits and vegetables, food banks will receive more funding, and farmers markets receive increased funding as well.  We also made improvements to the Food Stamp Program.  It has been renamed the “Supplemental Nutrition Assistance Program.”  Accessibility to this program has been increased due to eligibility expansion and indexing certain program aspects to inflation.   I am very disheartened that the President does not think our reforms and the additional provisions are good enough for his signature.  This has been a truly bipartisan effort in the Senate. 
 
Senator Gregg (R-NH) – I understand that the bill will probably be passed, but I still want to discuss its weaknesses.  There is a significant amount of spending in this bill.  What happened to all the economists when theSoviet Union failed?  We must have put them in the Midwest.  This bill undermines the concept of supply and demand.  It includes budget gimmicks, customs fees, and timing shifts so that it gets around pay/go budget rules.  Real farm income is up; prices are up.  And yet we are still setting up a subsidy program to pay farmers who make large incomes on products that are doing really well in the market.
 
The bill also formed a slush fund for disaster assistance.  This will create an incentive for an aggressive attempt to call everything an emergency.  Supporters claim there is a real effort to reform subsidy payments, but AGI limits truthfully add up to a $2.5 million limit.  The bill allows farmers to lock in prices when they are low and then collect subsidies and sell their crops later when prices are high.  Also, when we should be encouraging people to use ethanol, the bill maintains the ethanol tariff.  This penalizes people in the Northeast.  The sugar program never made any sense, and this bill does nothing to make it better.  The bill makes it even more egregious than it was before.  There are new programs such as the asparagus program, the chickpea program, and a national sheep and goat industry provision.  There are a variety of earmarks, including a stress assistance program and a fisheries disaster program.
 
I will offer a point of order against this bill in regards to Section 203 of the 2008 budget resolution. This provision states that a bill cannot raise the deficit in excess of $5 billion.
 
Senator Conrad (D-ND) – I move to waive the point of order to continue the discussion on the Conference Report, and we can have the yeas and nays taken on this point of order at the appropriate time.
 
The description that Senator Gregg gives of this bill is largely fiction and has no relationship to the legislation before us.  Americans have less of their disposable income going to food than any other time in history of the world.  Again, Americans are enjoying cheaper food as it relates to their income than any other time in history.  This is the result of the extraordinary productivity of American farmers and ranchers and a genius farm program policy.  Producers get support when prices are low, but not when prices are high.
 
The disaster program is not a “slush fund.”  In the last few years, every state in the nation has received disaster payments, and none of the payments have been budgeted for nor paid for.  Now, we have these payments budgeted for and paid for in this bill.  Senator Gregg also suggested that millionaires could get payments.  Yes, and lightening strikes twice too.  We have reduced the payment limit from $2.5 million to $500,000, and also included an on-farm income limit of $750,000.  But Senator Gregg claims that a person could have a $750,000 on-farm income and a $500,000 non-farm income, as well as be married to someone who also was in that situation.  I received information from the Internal Revenue Service on this issue just moments ago.  I asked them for this information because Senator Gregg and the press keep talking about this.  How many U.S. citizens would have both these incomes?  According to the IRS, zero people in the entire United States would be in this situation.
 
Many ask why we need to support farmers at all.  We are in a global economy in which our trading partners have decided to strongly support their producers.  Our major competitors are the Europeans.  The European Union (EU) spent $134 billion to support their producers, even after their so-called CAP reform.  The United States spent only $43 billion.  The EU spends over three times what we do.  What would happen to our producers if we stopped our support system?  Studies have been done, and the results were that we would experience mass-bankruptcy.  We would start relying on foreign countries for our agriculture industry like we do now for our energy production.
 
The Conference Committee agreed to several of the Administration’s demands when working on this report, and they still want to veto the bill.  Some of the demands we agreed to include the spending limit, offsets with spending cuts, AGI limits, beneficial interest reform, a revenue-based counter-cyclical program, planting flexibility, food aid flexibility, and several miscellaneous provisions such as the privatization of food stamp programs.
 
I am extremely proud of this bill.  It passed overwhelmingly in the House today, even in the face of a Presidential veto.  All of the leadership on this bill has been tremendous.
 
Senator Grassley (R-IA) – This bill has been the most difficult bill to write and Conference that I have ever seen.  I do not give a blanket approval of the bill because I did not think it went far enough in payment limits and competition reform.  A packer ban on ownership did not withstand the Conference Committee, and competition in the livestock industry continues to become more integrated.  This trend makes it more difficult for individual producers to get a fair price in the market place for their livestock.
 
The Administration is threatening a veto and urging an extension of current law for one year.  The payment limits in the 2002 bill are laughable and are not even being enforced.  This bill is better than current law and must be passed.  The AGI limit is a step in the right direction.  For the first time, we have a limit for on-farm income.  We also have a non-farm income limit of $500,000.  These limits are still too high, but they are better than current law.  The bill also eliminates the three-entity rule, requires direct attribution, and offers an optional revenue-based counter-cyclical program.  We have a few years to see if the revenue-based program works.  The Administration continues to say that Congress cannot use timing shifts to make programs work, and that they should not count for budget purposes.  Well, they do count whether the White House wants to believe it or not.  The bill also gives African-American farmers a chance to have their claims heard in court. 
 
The Grocery Manufacturers of American paid thousands of dollars to hire someone to perform a public attack on ethanol.  Everything for the past few years regarding ethanol has been, “It is good, good, good.”  Now, all of a sudden, corn prices go up and everyone is mad at ethanol.  When Congress wanted an increase in renewable fuels, ethanol producers answered the call.  Actually, 95 percent of the grain in the world is eaten, not used for ethanol production.  Farmers in America planted more corn last year than ever before, and only 600 million bushels went into ethanol.  The other 1.7 billion bushels went to food.  Yet people are still complaining that ethanol is the reason that rice and wheat are high priced and scarce.  In fact, studies show that the price of gasoline at the pump would be 30 to 40 cents higher if not for ethanol.  Cellulosic biofuel is still science in the making.  This bill includes a new temporary cellulosic biofuels incentive.  This will be funded by the continuation of the ethanol tariff.
 
Senator Lincoln (D-AR) – Those of us who have worked on this bill are proud of our bipartisanship and our bill.  We can all rally around the bill and be supportive of the bill for our producers.  The finish line is in site, but it is not over yet.  I encourage strong support for the bill to send a message to President Bush.  This bill helps American farmers supply us with bountiful food and fiber.  The bill is all encompassing and has regional and bipartisan support.  We wanted this bill to be practical and to provide many of the things for which many of our constituents have been asking.  While there is not everything that everyone wanted, it is well rounded.  There has been a lot of give and take from day one.  The bill includes increased investment in nutrition, conservation, renewable energy, and rural development.  This bill provides $10.36 billion for nutrition to continue the fight against hunger.  This bill represents the largest effort to fight poverty and hunger in history.  This bill includes tax parity for the timber industry.  Conservation is also a big part of this package, including funding for the Wetlands Reserve Program.
 
I am not sure of the idea of doing means testing on farm programs.  Everyone shies away from means testing when people suggest it for other programs, but they will do it for farm programs.  We have provided sufficient cuts in commodity programs including the payment limits, but it still is not good enough for the Administration.  Are we going to means test the most efficient and effective producers in the world?  People mention that farm income is up, but no one mentions the restrictive trade laws, environment regulations, and production costs that are all increasing, especially for Arkansas producers.
 
Senator Crapo (R-ID) – We have the lowest per capita cost of food in the world.  When people are struggling around the world, we need swift enactment of this Farm Bill to continue to provide for our country and the world.  This bill has been difficult to put together through the Conference, and we have to give credit to those who made it happen.  I am encouraged by the endangered species reform in the bill, allowing economic compensation for landowners who find endangered species and help in their recovery.  The provision encourages private property owners to take an active role in protecting wildlife, which is very important.  Specialty crop producers are also greatly impacted by this bill with provisions on block grants, research, and pest and disease management tools.  The bill also includes significant assistance for victims of disasters.  Nearly $4 billion in new spending for conservation is included in this bill.  The commodity title is important to maintain the safety net for our producers.  Some have criticized this bill saying it spends too much money.  But this bill has major steps toward reform including the elimination of the three-entity rule and tightening the AGI limit.
 
Senator Harkin then offered a unanimous consent agreement for the immediate consideration of H.R. 6051, the farm bill extension recently approved in the House.  It was considered without objection.  


Senator Stabenow (D-MI) – This is a good piece of legislation for farm policy and energy policy.  We made excellent strides in the area of specialty crops.  We have new investments in renewable energy, permanent disaster assistance, rural development, and the commodity program safety net, all while achieving significant reform.  We are hopeful we will see the same support the House did when we vote, and we hope that we will send a strong message to the White House.  We have agreed on a monetary framework that is $10 billion above baseline.  We started with fewer dollars than the 2002 bill because of high prices.  So, it is significant that all of the new investments were done and the changes and reforms were also included.  The $10 billion all went to nutrition programs, ensuring that food assistance is available to families and children in times of need.  We also expanded assistance for fruit and vegetable growers by expanding the fresh fruit and vegetable school snack program, giving 81,000 Michigan students access to fresh fruits and vegetables.  We also expand access through the farmers’ market program and increased funding for food banks.  The expanded energy title is also very important.  The new cellulosic ethanol tax credit is a very strong component of the bill.  One of the strongest environmental investments ever made by the federal government is included in this bill.  Significant provisions are also included for natural resources across the nation, which are crucial for Michigan.  Soil erosion, run-off, and other issues are addressed in the bill.  The specialty crop growers have not asked for direct payments.  They have unique problems with pests and disease, disaster assistance, and trade barriers, and this bill addresses those issues. 

 
Senator Roberts (R-KS) – Those who claim that this bill is bad and does not provide reform do not know anything about agriculture and probably have not even set foot on a farm.  We could see history repeat itself and return to low prices.  Producers in high-risk states like Kansas may barely scrape by for two, three, four, or even five years before times get better.  They may finally be able to pay down debt or take a family vacation for the first time in five years.  Then, they get flack from the media for getting farm subsidies.  All of a sudden they are automatically rich.  The safety net is needed to help producers weather the storm in times of uncertainty.  Two programs have worked to ensure the availability of a safety net: direct payments and crop insurance.  These two programs have been lifelines for Kansan farmers.  Yet, this Conference Report cuts direct payments, which should be called safety net payments, and crop insurance.  These two programs have been used as a bank for this bill.  Even though both the House bill and the Senate bill passed without cuts in these two programs, that is not what came out of Conference.  These cuts may not unravel the crop insurance program in low-risk states, but they are dangerously close to doing so in high-risk states.  I am also concerned that producers will have to pay their premiums earlier.  This will mean they might have to secure loans before taking out policies. 
 
The agriculture tax relief package in this bill is important.  It invests in rural communities, lessens our dependence on foreign oil, and provides tax assistance for tornado victims in Kansas.  We do have important provisions in this bill, and there are farmers who are planting who need and deserve the predictability and stability this bill provides.
 
Senator Brownback (R-KS) – This bill is important to farmers, but it is not strong for wheat and sorghum producers.  We need the certainty this bill provides.  The spring planting season is over in many places, and the bill needs to get done.  It is not a perfect bill, but it is a bill that needs to get passed.  Producers are tired of the constant wrangling back and forth, and they just want the bill to get passed.  They are not completely happy with the commodity title, but they want the certainty it provides.  There are good things in the bill, including tornado disaster assistance for Kansas, biofuels production incentives, and credits for cellulosic ethanol.  Ethanol is not the culprit for rising food prices.  In fact, it is a decreasing factor in gasoline prices.  We should be supporting both cellulosic and grain ethanol production.  I am pleased that the livestock title does not contain provisions that prevent producers from getting closer to the consumer.
 
Senator Salazar (D-CO) – Tonight we should celebrate what can be done when people come together for a common goal.  This bill helps protect land and water, and it helps secure clean energy for our future.  Nowhere is it more important than on farms and ranches and in small communities.  The bill stimulates rural development, broadband access in particular.  The bill makes significant investment and changes in nutrition programs.  It ensures that healthy and safe food is on tables across the country.  The bill will close loopholes in the commodity title and bring true reform to ensure there is a safety net for producers.  The bill will help provide a clean energy policy forAmerica.  We will see in the future that rural America is devoted to energy independence.  Renewable energy tax credits and research stimulation are included to help provide more of our nation’s energy.  I am glad that we could expand Chairman Harkin’s fresh fruit and vegetable school snack program.  Colorado will be able to provide fresh fruit and vegetables to 80,000 school children.  We have moved forward with a disaster program that will hopefully help us address the disasters that have happened in rural America.  The bill eliminates the three-entity rule and eliminates payments for land used for commercial purposes.  I urge support for this Report when we vote tomorrow.  I will be very proud to bring this bill back to my constituents in Colorado.
 
Senator Harkin – The Agriculture Committee got this bill together in a bipartisan fashion.  We got through our Committee markup in a day and a half, and we had 79 votes on the bill in December.  I have been privileged to chair a really great Conference Committee.  It is a very caring group of people who all want to represent their constituents.  A lot of legislation is passed in Congress that would leave our rural constituents in the dust.  So, it falls upon the shoulders of those of us on the Agriculture Committee to make sure their voices are heard and their interests are met.  Many people ask why we have a farm program.  It is because the agriculture industry is so unique.  The producers provide the food and fiber for this country and for the world.  The President said in his State of the Union address that the U.S.. trade deficit had shrunk, and he should have said that it was due to our farmers and ranchers.  Hopefully we will have a strong vote on this tomorrow.
 
The Senate is expected to resume consideration of the Farm Bill Conference Report tomorrow morning.

We will continue to monitor the situation and let you know as it progresses. 

Brent W. Gattis
NACIA Washington Representative