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October 24, 2007
Today's Senate Mark Up Report -- ACR Amendment
In Washington, the NACIA team is burning the midnight oil trying to figure out what to make of the Senate Agriculture Committee mark up that started this morning. Of note is that Senator Roberts (KS) offered an amendment today in mark up to amend the ACR program on which we have been reporting to you. Below is an overview of the amendment and the ensuing debate, as well as a general overview of the entire day’s proceedings. The Roberts amendment will not be voted on until tomorrow (when markup continues at 9:00 a.m.), ostensibly giving Senators time to contemplate and form an opinion. While we have not seen all of the underlying language, which is still being finalized, we recognize that Senator Roberts is attempting to address many of the concerns with the ACR program that we have raised. However, due to the pay-as-you-go funding requirements currently in place, savings that would have come from the ACR program now are coming from a three point A&O reduction. The House-passed Farm Bill reauthorization legislation contains a similar A&O reduction. As the process continues from Mark up to Floor consideration to Conference, we will continue to work with Members to address problems for crop insurance agents with the implementation of this new program.
Roberts Amendment
The amendment would change the program to a one-time option for the life of the farm bill instead of an annual option. It would also fix payments to 85 percent of acreage instead of 100 percent, implement a $60,000 payment cap on counter-cyclical payments, include crop insurance payment timing issues, and institute a three point reduction in A&O funding for the crop insurance program.
There was extensive discussion on this amendment. Senator Roberts asked several question of USDA and Committee staff regarding the ACR proposal. His questions included:
- Can USDA implement the ACR program as written? USDA claimed they would have to converge two systems with high costs to RMA and FSA.
- Does the ACR program discriminate against farmers who farm in a high-risk area? USDA said they had not analyzed that yet.
- Does the bill language require a crop insurance premium re-rate for just ACR participants or for everyone? Staff said it was a re-rate for participants only.
- What is the impact of re-rating crop insurance premiums on rates for those who participate in the traditional program? USDA could not provide a clear answer, but estimated that it would probably not be great..
- Why do producers in the traditional program receive payments on 85 percent of their acreage, while the ACR program allows payments on 100 percent? Will this be a problem in the WTO? USDA said the 85 percent vs. 100 percent is not relevant in regards to the WTO. If a payment is green box, it does not matter how many acres the producer is getting paid on.
- How does the program save money if it pays on more acres? Staff said that it works on the assumption that the program attracts lower average payment crops; so there will be less money spent on direct payments and that crop insurance premiums will be lower.
Senator Brown questioned USDA if certain “safe areas” of crop production were currently subsidizing crop insurance in other “riskier” areas. USDA stated that there are places in the country that subsidize other parts, but to a very small degree. Depending on participation levels, the Roberts alternative could create less of an impact.
Senator Conrad stressed that the ACR program is a complicated program that could have unintended consequences. He said that people do pay insurance – on everything, not just crops – so that others can use it during a disaster. That is how the system works.
Senator Thune expressed concerns with the impact on crop insurance rates. He questioned if the rates for those who do not select the ACR program would increase.
Senator Chambliss said that the Roberts alternative addressed the questionable issues with the ACR program, including removing the penalty on farmers who opt in to the ACR program and buy insurance.
Senator Harkin agreed to hold the amendment for a vote tomorrow to allow the Committee to review all aspects of the amendment.
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Overview of the Senate Farm Bill Markup – October 24, 2007
The Senate Agriculture Committee began their markup of the 2007 farm bill this morning. Senator Harkin offered time to each Committee Member for opening statements, and these statements are summarized below.
Senator Harkin (D-IA)
The Chairman’s Mark makes significant achievements in energy and conservation, improves the diets and health of Americans, and provides a strong safety net. The Commodity Title continues the basic, successful features of the 2002 farm bill and offers a new option beginning in the 2010 crop year for a state-level revenue protection system (ARC program). The Chairman’s Mark increases food stamp benefit levels; provides rural access to day care, health care, and broadband; and provides funding for energy initiatives such as farm-based energy and transition to biomass production. The Chairman’s Mark provides $4 billion in new budget authority for conservation programs. It includes an expansion of the Conservation Stewardship Program, which allows for 13 million acres per year, the continuation of the Wetlands Reserve Program and the Grasslands Reserve Program (GRP), and provides funding for the restoration of the Chesapeake Bay. It is good for the agriculture industry, good for the economy, good for rural communities, and good for promoting health. And it does all of these things under the constraint of a pay-as-you-go budget.
Senator Chambliss (R-GA)
This proposal does not answer all of the problems the agriculture industry faces today, but considering the budget constraints, it provides everyone with something positive. There is a complexity in the industry, and the Committee has worked to craft a bipartisan bill that strikes a chord with every Committee Member. The Committee must ensure that this bill provides balance for everyone involved. There are provisions in the bill that Senator Chambliss would typically not support if they stood alone, but he is committed to getting a bipartisan bill out of the Committee and passed on the Senate Floor. Senator Chambliss also expressed concern with raising taxes to cover new spending and hopes the Committee avoids that route.
Senator Conrad (D-ND)
Considering budget constraints and the need to increase initiatives for specialty crops and energy, this bill is a good example of working in a bipartisan way to get things done. Senator Conrad applauded Senators Baucus and Grassley for being very helpful in dealing with funding problems. This bill builds on the strength of the 2002 bill, but it also strengthens energy policy, working toward reducing our dependence on foreign oil. It also improves nutrition policy, expands conservation programs, and begins real reform such as eliminating the triple entity rule, tightening the AGI limitation, and moving toward direct attribution.
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Senator Lugar (R-IN)
This bill shows dedication to investments in energy, rural development, and nutrition. The ACR program is a good revenue-based program that is an improvement over the status quo, but it could be better. Senator Lugar scrutinized the current payment programs and mentioned an alternative to the out-of-date subsidy program that he will bring to the Floor. Senator Lugar praised the additional $4 billion provided for hunger relief, the improvements in the food stamp program, and the expansion of the nutrition program to help disadvantaged children. This bill also improves research and marketing opportunities, as well as improving environment and conservation programs.
Senator Baucus (D-MT)
This bill provides a safety net that farmers will feel secure with. It also includes conservation, disaster assistance, and will help strengthen the crop insurance program. Farmers want to broaden their ability to earn income, so they will benefit from the energy provisions included. Farmers want to contribute to energy independence, and this bill offers them the ability to do so.
Senator Roberts (R-KS)
The rural utilities broadband program included in this bill is very important, as well as the provision on rural hospitals. The agriculture security title is very important to ensuring food safety in the United States.. Clarifying the role of DHS, USDA, and HHS in an agricultural emergency is an important step toward ensuring that a proper structure is in place. It is important that this bill does not cut direct payments, however Senator Roberts is concerned with what happens to the crop insurance program with the ACR proposal. Senator Roberts is working with others who have very serious concerns with this on an alternative that would help farmers and not have extreme administrative costs.
Senator Leahy (D-VT)
This bill is not perfect, but it is a good bill. The extension of the MILC program is important, as well as the improvements made in conservation and nutrition. Senator Leahy praised the bill for providing opportunities for organic agriculture, including EQIP participation and transition programs.
Senator Graham (R-SC)
There may be things people disagree with regarding our farm programs and in this bill, but we must be doing something right to have the safest, most abundant, and affordable food supply. Senator Graham stressed the need to continue to work on labor problems in the industry and focus on agriculture production as a national security issue.
Senator Lincoln (D-AR)
This bill paves the way for renewable energy production, economic development in rural areas, cutting edge research, and food aid for needy regions around the world. The Committee has tried to produce a fair and balanced bill on a tight budget, and Senator Lincoln believes it is a strong package under these circumstances. This bill shows the most significant reform in program payments, especially with the tighter payment limitations.
Senator Coleman (R-MN)
Senator Coleman expressed concerns with the ACR program. Minnesota is a large state with very diverse crops, and this program would not be beneficial to all of its producers. They have different disaster needs and different revenue levels, and the state-based part of this program would not work in Minnesota. However, Senator Coleman does believe the bill provides much needed funding for nutrition programs.
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Senator Stabenow (D-MI)
The disaster relief provision from the Senate Finance Committee is a great addition, especially with the recognition of specialty crops. Senator Stabenow is proud that for the first time there is a subtitle for specialty crops. Specialty crop farmers are not asking for direct payments, but for research funding, market access and trade assistance, pest disease protection and school food programs, which all are helpful. The inclusion of alternative energy, conservation, and rural development language are all very important. Senator Stabenow also praised the bill for including language to reiterate what is already law – that USDA should be buying American products.
Senator Crapo (R-ID)
Senator Crapo praised the conservation provisions and the continuation and expansion of programs for specialty crops and organic production. Senator Crapo also applauded the expansion of the Fresh Fruits and Vegetables program and the expansion of the Market Access Program. He did however say that broader investment was needed in EQIP and GRP; the reauthorization and growth of the milk income loss program is a mistake; cash for foreign food aid programs is misdirected; and the ACR program will have a significant impact on the crop insurance program.
Senator Nelson (D-NE)
The energy provisions of this bill are very important. Bioenergy is important to rural America and to the future of our nation becoming energy independent. Senator Nelson stressed the importance of energy producing crops and raised concerns with the ACR program and its impacts on the crop insurance program. He wondered if the ACR program would be an effective program for producers and what the long-term effects would be.
Senator Casey (D-PA)
The substantial increase in nutrition programs was applauded, as well as the inclusion of a subtitle on specialty crops. Senator Casey also mentioned the importance of the inclusion of the Chesapeake Bay funding for restoration in the Conservation Title and concerns with the dairy provision.
Senator Salazar (D-CO)
The strong conservation programs in this bill are very important, as well as the energy priorities and the safety net that is provided. Senator Salazar emphasized that food safety and energy independence are intertwined and that they are both important to keep farms and ranches going. The energy provisions in this bill are more robust than every before, and the nutrition and specialty crop provisions are important.
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Senator Brown (D-OH)
This bill provides benefits for low-income and family farmers. It strengthens the farm safety net to protect farmers from disasters, low yields, and low prices. The ACR program offers a much-needed choice for farmers, and has been scored at a savings of $3 to 3.5 billion. This bill offers significant reform, but Senator Brown is disappointed that the Senate did not provide funding for the McGovern-Dole nutrition programs.
Senator Klobuchar (D-MN)
This bill rebalances the commodity program to be more profitable for northern crops, and the permanent disaster relief provided is a wise policy move. The strengthening of MILC program and the new program between ethanol and sugar will both be beneficial. The inclusion of a strong cellulosic ethanol program is important, as well as support for the beginning farmer and rancher program. However, more reform is needed and that will be dealt with on the Floor. The elimination of the three-entity rule was good, but we need to do more.
Senator Grassley (R-IA)
The inclusion of country-of-origin labeling (COOL) language is a very important step, as well as the inclusion of language banning packer ownership.. The ACR program may be a very good program, but Senator Grassley raised concerns that it would be burdensome for the farmer and detrimental towards destroying the crop insurance program. Senator Grassley is afraid that it is only beneficial for Iowa farmers. The payment limitations were disappointingly not enough, and he plans to offer more reform on the Floor.
Senator Thune (R-SD)
The inclusion of a biofuels provision is very important. The ACR program plays a role in finding savings, but he does have reservations and concerns to how beneficial it will be for farmers. South Dakota producers have a wide range in yields, which could complicate the program. There are also concerns with how it affects the crop insurance program. Senator Thune disagrees with the changes made to the loan deficiency payment beneficial interest provision and will offer changes on the Floor. He will also offer a bipartisan amendment to create a new classification of county agriculture offices that will continue to deliver farm programs in the absence of FSA offices.
After all Members had concluded their opening statements, Senator Conrad moved to create a rule that any amendments that include money also require the necessary offsets. Senator Chambliss seconded the motion, and it was approved by a voice vote.
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Title I
Manager’s En Bloc Amendment
In addition to technical and conforming corrections, the en bloc Manager’s Amendments include the language addressing the following issues:
- A national loan rate and program for corn and sorghum;
- Adjustments to base acres for the production of fruits and vegetables within the ACR program;
- Evaluation of changes in advance milk prices;
- A $2.5 million cap on payments from conservation programs unless 66.6 percent of the individual’s or entity’s income is derived from farming;
- Clarification of covered payments;
- Risk Education program for Beginning Farmers and Ranchers;
- Federal cost-sharing to any state that provides assistance on producer-paid crop insurance premiums;
- $20 million authorized for the Grassroots Source Water Protection Program;
- Definitions of eligible and beginning Farmers and Ranchers;
- Clarification of De Minimus Acreage;
- The Great Lakes Commission;
- Buy American language addressing training, guidance, and enforcement of Buy American Statutory provisions;
- Minimum funding levels for fruit and vegetable purchases;
- Equalization of loan-making powers;
- Eligibility for horse farmers and ranchers for emergency loans;
- Loan insurance for domestic farm labor housing, authorized at $30 million;
- Inclusion of the term “biofuel”;
- E-85 Fuel Program;
- Research and Development of Renewable Energy;
- Northeast Dairy Nutrient Management and Energy Development Program;
- Future Farmsteads Program;
- A Sense of the Senate on Ethanol Blended Gasoline;
- Grading and Inspection Clarification;
- Ban on packer ownership of livestock;
- A Sense of the Senate on Indemnification of Livestock Producers;
- Congressional Bipartisan Food Safety Commission; and
- Stored quantities of propane.
Additional Amendments
Salazar Amendment
Senator Salazar offered an amendment to close a loophole in the commodity program. The amendment would reduce the base acreage for commodity payments on land used for commercial use. It is a no-cost amendment.
It was asked if this amendment is to address the “ranch starter kit” abuse. Senator Salazar agreed to withdraw the amendment and work with Senator Harkin to put it in a possible Manager’s Amendment on the Floor.
Klobuchar-Brown Amendment
This amendment highlights abuses in the current program with multi-millionaires receiving program payments. The amendment would lower the income limit for part-time farmers to $250,000 and full time farmers to $750,000.
Senator Lincoln noted that family farms can be large and have large incomes, and that we should not create restrictions that hurt these family farmers. The amendment was withdrawn to be offered on the Floor.
Senator Conrad asserted that press accounts of millionaires and dead farmers receiving payments did not give the full story, and that a GAO report on the subject clarified.
Casey-Brown-Stabenow Amendment
This amendment would introduce a feed cost adjuster supplemental payment to address the rising cost milk production due to the rising cost of feed. The adjuster is tied to, but separate, from the MILC program. Information on feed prices would be gathered monthly to determine payment. Senator Casey said there is no budgetary impact.
Discussion included concerns that the amendment only applies to producers in the MILC program. Another concern was that the amendment would create a bad precedent and could eventually cause other program payments to be included. The neutral budgetary cost was also brought into question.
The amendment failed a roll call vote of 12 nays to 9 ayes.
Casey-Brown Amendment
This amendment would increase mandatory price reporting on all dairy products from the current weekly report to a daily report. Exemptions would be granted to small processors (1 million pounds or less per year).
Discussions included that the amendment would follow the current practice of daily livestock price reporting. Concerns were raised as to whether this amendment increased spending. The Chairman suggested accepting the amendment, which could be removed pursuant to USDA cost estimates.
When consulted, Undersecretary Keenum stated that USDA would signify additional resources to implement.
The amendment was adopted by a voice vote.
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Casey Amendment
Senator Casey offered an amendment that would use updated USDA baselines on the cost of dairy processors to process liquid milk into dairy products.. It would allow the removal of those costs from the final price. The amendment would also require USDA to determine feed and fuel prices and use those up-to-date monthly prices whenever they consider changes to “make allowance” levels.
Senator Harkin asked USDA if they already take these elements into account. USDA confirmed that they do and stated that the proposed amendment would tie prices of the production of milk to the cost of processing dairy products.
Senator Casey offered a change to the original amendment to strike the word “use” and insert the word “consider,” and USDA found this change acceptable.
The amendment was approved by a voice vote.
Casey Amendment
This amendment would modify the Federal Milk Marketing Improvement Act in relation to the costs of production for dairy farmers. The amendment was offered and withdrawn.
Thune-Baucus-Nelson-Salazar Amendment to Title XI
Due to time constraints, Senator Thune was allowed to offer an amendment to Title XI. This amendment would designate certain FSA offices, called Critical Access offices, for the duration of the 2007 farm bill to provide technical assistance to producers. This new classification of office would not hinder FSA’s flexibility to close FSA offices, but would prevent closure of offices in remote or isolated areas.
Senator Harkin expressed support for the amendment because these offices will educate farmers of the benefits of the ACR program. Several Senators commented on the fact that, if adopted, the ACR program would require significant implementation and explanation to farmers. Senators Salazar and Lincoln also expressed support. Senator Chambliss urged the Committee to consider all the consequences of this amendment. He stressed that this amendment would probably not fix the problem.
The amendment was adopted by a voice vote.
Nelson Amendment
Senator Nelson offered an amendment requiring RMA to consult with an outside actuary to ensure the actuarial soundness of re-rated crop insurance premiums under the ACR program.
Senator Harkin said that the ACR program is a good program and the goal is not to hurt the crop insurance program. He questioned if the amendment would cost the RMA money. It was also questioned if the amendment includes unintended consequences.
The amendment was approved by a voice vote.
Thune Amendment
Senator Thune offered an amendment to address the issue of beneficial interest. Beginning in 2009, it would return the LDP program back to the current law. The amendment would enable a farmer to market his crop at the time of taking an LDP payment.
Discussion included Senator Harkin and USDA expressing opposition to the amendment. Senator Harkin accepted the amendment and agreed to work with Senator Thune before Floor consideration or Conference.
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Title II
Salazar-Nelson Amendment
Senator Salazar offered and withdrew an amendment that would require a minimum allocation of $3 million from the ground and surface water program to be allocated to the Ogallala Aquifer. Senator Chambliss spoke in strong support of this amendment.
Salazar Amendment
Senator Salazar offered and withdrew an amendment to increasing funding for the Farm and Ranchland Protection Program and the Grassland Reserve Program.
Roberts-Leahy-Crapo Amendment
Senator Roberts offered an amendment that would maintain the current EQIP payment limits at the 2002 farm bill level. The Chairman’s Mark limits EQIP payments to $240,000 over the life of the farm bill. The amendment would maintain the limit at $450,000. Senators Roberts, Leahy, and Crapo stated that the amendment was no cost.
Senator Conrad noted that only one quarter of one percent of EQIP contracts are above $240,000. He asserted that the amendment would allow large operators to receive higher payments at the cost of smaller operators.
Senator Harkin expressed strong opposition to the amendment, as he believes that EQIP was designed to help lessen the burden of compliance on smaller operators. He believes the language in the Chairman Mark’s will assist in directing money towards the backlog of those whose contracts are currently waiting for approval.
Extensive debate surrounded this amendment, with Senators also alluding to the payment limitation issue.
The amendment passed by a roll call vote of 13 ayes to 8 nays.
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Title III
Lugar Amendment
Senator Lugar offered an amendment allowing the President to submit to Congress corrective legislation of U.S. programs when/if they are found to violate WTO trade agreements. Congress would have 90 days to consider the legislation with an up or down vote.
Senator Harkin questioned if the corrective process would happen after the WTO has determined final adjudication or if there were still options in the appeal process. Senator Harkin expressed concerned over the inability of Congress to amend the legislation. Senators Conrad, Lincoln, and Chambliss also expressed opposition to the amendment due to the lack of amending authority given to Congress. Senator Chambliss noted the merit of the amendment, but said that it is still rough in its present form.
The amendment was withdrawn for possible inclusion in the Manager’s amendment
Grassley Commentary
Senator Grassley expressed the need for greater WTO transparency when addressing trade provisions. He hopes that Senator Chambliss will work with him on the issue. Senator Chambliss said he looks forward to working with Senator Grassley on the issue.
Roberts Amendment
Senator Roberts offered and withdrew an amendment addressing the Local and Regional Purchase (LRP) pilot program, which would shift foreign aid from in-kind commodity contributions to cash payments.
Harkin said there is a push for a cash aid program instead of commodity aid.. If done incorrectly, cash programs can be as disruptive as commodity programs. Working together prior to Floor consideration, Harkin stated that the pilot program for local food purchases could be moved out of Title III and the study referenced in the Chairman’s Mark could be commissioned by an entity other than U.S. AID.
Debate also included that cash aid would go to the purchase of commodities from U.S. competitors and the damage this would incur to the producer-foreign aid relationship.
Baucus- Amendment
Senator Baucus offered and withdrew an amendment to allow farmers to sell agricultural products to Cuba. Senator Coleman raised concerns with the amendment, and stressing that Cuba is not a thriving economy and that U..S. producers are not missing out on a significant opportunity, pointing out that other countries have been trading with Cuba for years and the economy has not improved.
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Title IV
Stabenow Amendment
Senator Stabenow offered an amendment that would change eligibility requirements for senior citizens’ participation in the Commodity Supplemental Food Program. The amendment would move the eligibility level of seniors from 130 percent of the poverty level to 185 percent, the same level as women, infants, and children.
Senator Harkin expressed opposition to the amendment due to limited funding.. In addition, people who are currently eligible for the program often do not receive benefits.
USDA expressed a similar position, stating that the funding level is limited, and increasing the eligibility may run the risk of those people most in need being unable to receive benefits.
Senator Stabenow withdrew the amendment to offer it on the Floor.
Lugar Amendment
Senator Lugar offered an amendment that would increase the household food stamp asset limit to $3,000 and increase the TEFAP asset limit to $4,000 for elderly or disable households, both with adjustments for inflation. There is an increase in the minimum food stamp benefit from $10 to $16. The amendment would also increase funding for TEFAP to $250 million over five years with adjustments for inflation. The increase in spending is offset by a $1.7 billion decrease over 5 years in the direct payment program. Senator Lugar noted that the direct payment program was never intended to be a permanent program.
In response, Senator Chambliss said we have made significant increases in these nutrition programs. While it is an important issue, Senator Chambliss does not agree with the proposed offset.
Senator Conrad agreed that the amendment makes major strides in an important area, but also does not agree with the offset.
Senator Brown agreed with the amendment. He stated that not everyone was privy to the “agreement” referenced by Senators Harkin, Grassley and Baucus, and the offset offered in the amendment should be acceptable.
Senator Chambliss reiterates that the Chairman’s Mark has an increase of $4.2 billion for food and nutrition programs with $2.2 billion going towards food stamp programs.
The amendment was not adopted. The roll call vote was 3 ayes to 18 nays.
Senator Harkin then declared the Committee in recess until 9:00 a.m. Thursday, October 25, 2007.
Brent W. Gattis
NACIA Washington Representative
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