Next Farm Bill will not be like previous legislation; direct payments will be target
Even though representatives from farm groups disagree on many topics connected to agriculture, they agree that the next Farm Bill will not be patterned off previous farm legislation and direct payments to producers are not likely to continue into the future.
"The budget problems will make it not possible to pass a carbon copy of last time," Farm Bureau President Kevin Paap said during a Farm Bill panel discussion Tuesday at Farmfest southeast of Redwood Falls. "Everyone's going to be fighting for a slice of that much smaller pie."
Only 12 to 14 percent of the legislation known as "the farm bill" is what people consider "farm" spending, the payments and support programs for agriculture production and conservation, according to Doug Peterson, Minnesota Farmers Union president.
He expects pressure on the funding for farm programs, especially the direct payments to producers included in the current farm legislation.
Peterson expects the direct payment funding to be moved into risk management tools. "Crop insurance is comfortable," he said, in part because people on the outside of the agriculture industry can understand how the insurance works.
The Farm Bill discussion on Tuesday was one of several topic forums and special speakers slated during the three days of the agricultural trade show. Farmfest continues today and Thursday.
The next five-year Farm Bill, which is due to be passed in 2012 but is more likely to be finished in 2013, will have to balance the traditional farm support programs with spending cuts, according to Dave Ladd, president of RDL & Associates.
"How will policy makers fit the farm programs into the budget constraints," he asked. "There will be a greater emphasis on crop insurance."
With the creation of the so-called gang of 12 super-committee in Washington -- members of Congress tasked with cutting the deficit, the members of the Senate and House ag committees will have to lobby those committee members to protect farm bill spending, according to Chris Clayton, ag policy analyst for DTN. He expects a "major, continuing power struggle" and said that agriculture spending will be pitted against spending for government support programs for the elderly and the poor.
Paap gave forum attendees what he called "a history lesson" regarding the farm legislation and the overall federal budget. U.S. Department of Agriculture funding, including the farm bill, is less than 4 percent of federal spending and that percentage hasn't changed much in the past 40 years. Meanwhile, federal spending was $196 billion in 1970 and is currently $3.729 trillion.
"We can't have a farm bill discussion without understanding the budget," Paap said. Medicare and Medicaid are 30 percent of the budget, with Social Security counting for 22 percent, defense spending 15 percent and interest payments taking 14 percent. That leaves 19 percent of the budget for everything else that the federal government does.
On top of that, the nutrition support portion of the farm bill is growing as more people rely on food stamps. In 2002, one-third of the farm bill was commodity and conservation programs and half was nutrition programs, including food stamps and school nutrition programs.
In 2010, 12 percent of farm spending was farm and conservation and 80 percent was nutrition supports, Paap said. Agriculture's share of the federal budget is $8.4 billion.
Farm-state legislators and agriculture groups need to make sure that funding cuts to the farm bill are in proportion to agriculture's small portion of the federal budget, he said.
"We know the cuts have to be made, but the cuts need to be fair," Paap said.