Kent Thiesse

Every five or six years when we write a new farm bill in the United States, the commodity title, which involves direct and counter-cyclical payments, the marketing loan and loan deficiency payments and grain facility loans, usually gets the most attention by farm organizations, the agricultural media and members of Congress from Midwestern and Southern states.

However, there are many other “titles” in a farm bill that affect everything from conservation programs, ag exports, renewable energy, forestry programs and rural development, to food stamps and school lunch programs.

Some of these other farm bill titles are getting much more attention during the writing of a new farm bill in 2007, than they have in recent farm bills. First of all, many organizations and members of Congress would like to see the funding and focus for some of the farm bill titles, other than the commodity title, expanded. Some members of Congress feel that the funding and support level in the commodity title can be reduced in the 2007 farm bill, without adversely affecting most grain producers, because of the higher commodity market prices in the past year. Also, there are many new members on the U.S. Senate and House Agriculture Committees, which are putting together the design of the 2007 farm bill. Many of these newer ag committee members represent regions of the United States with less traditional types of agricultural production, many of which are not addressed by the current commodity title in the farm bill.

One of the areas that has received a lot of attention, since the last farm bill became law in 2002, is how the 2007 farm bill should address the needs of fruit and vegetable producers. Recently, U.S. Agriculture Secretary Mike Johanns released the U.S. Department of Agriculture’s recommendations for specialty crops for the new farm bill. These inclusive recommendations included the following provisions for specialty crops in the various titles that will likely be included in the new farm bill.

Commodity title

Allow total planting flexibility for fruit and vegetable crops, similar to corn, soybeans, wheat, cotton and other program crops. The 2002 farm bill placed restrictions of acreage for fruit and vegetable crops, which has been viewed negatively by the World Trade Organization.

Nutrition title

Allocate an additional $2.75 billion in funding over 10 years to purchase fruits and vegetables for USDA Nutrition Programs, such as the School Lunch and Breakfast Program. Also, programs would be added to encourage more fruits and vegetables in the diets of school-age children and lower-income Americans.

Conservation title

Enhanced targeting of existing conservation programs for fruit and vegetable producers, including the Environmental Quality Incentives Program, the Wetlands Reserve Program and the Private Lands Protection Program.

Trade title

More emphasis on fruit and vegetable exports through the “Market Access Program” and other USDA trade enhancing programs.

Rural development title

Target more Rural Development Value-Added Grants to projects involving specialty crops.

Research title

Invest $1 billion over 10 years into ag research projects specifically targeted toward productivity and technology advancements for specialty crops.

Energy title

Initiate a new, temporary program to provide direct support to producers of cellulosic ethanol, which is derived from crop wastes and biomass feedstock resulting from specialty crops.

A different farm bill approach

There has been much discussion in recent months regarding the issue that the commodity title in the current farm bill does not equally reach or assist agricultural producers of various types, sizes, and locations. Sen. Rosa DeLauro, D-Conn., and Sen. Wayne Gilchrest, R-Md., have introduced the “Farm, Nutrition and Community Investment Act” as an alternative to the more traditional type of farm bills that have been passed in recent decades. The goals of this farm bill legislation would be the following.

• Adequate funding and improvements for the Food Stamp Program.

• Expand programs that facilitate consumer access to healthy foods, and promote specialty crops.

• Expand the Women, Infant and Children Nutrition Programs.

• Expand the availability of fruits and vegetables for School Lunch Programs.

• Provide funding to states, and allow the states to direct the funding to projects and programs of the greatest importance in their state.

• Greater USDA cost-share on crop revenue insurance for new and beginning farmers.

• Extend the Milk Income Loss Contract program.

• Improve the working operations of USDA conservation programs, and provide greater emphasis on regional differences in farming practices to qualify for conservation programs.

• Increased funding for the Environmental Quality Incentives Program.

• Full funding for the Conservation Security Program.

• New loan guarantee programs for producers to install conservation systems and practices.

• Expand the ability of states to access and develop various sources of renewable energy produced by agricultural operations, and improve energy efficiency at the farm level.

• Greatly expanded research and development efforts targeted toward the production of renewable “bio-based” fuels.

• Ensure that Dairy Programs reflect the unique needs and milk markets that exist in various regions of the United States.

• Create a National Organic Certification and Transition Program.

• Adjust crop insurance programs to better fit the production practices or organic producers.

• Increased funding for promotion of “Farmer’s Markets.”

• Strengthen the Farmland Protection Policy Act to protect existing farm and ranch land from unnecessary development.

Finding the funding for new programs

The Congressional Budget Office has released their “baseline funding” estimates for various farm bill titles, and the scenario is much different than those used in the current farm bill. This latest CBO estimate for the new farm bill could greatly restrict the ability of Congress to find the funding for many new or expanded programs or initiatives in the next farm bill, unless there are reductions in funding for some programs in the existing farm bill titles. Following is a summary of the comparison of CBO estimated baseline funding for some of the farm bill titles for 2008-17 compared to the baseline funding estimates used to write the 2002 farm bill.

Commodity title — 42.7 percent less funding authority in 2007 than in 2002 (mainly due to higher projected commodity prices from 2008-2017).

Rural development — 51.9 percent less funding authority in 2007 than in 2002.

Trade title — 28.8 percent less funding authority in 2007 than in 2002.

Crop insurance — 54 percent increase in funding authority in 2007 compared to 2002.

Food stamps and child nutrition — 46 percent increase in funding authority in 2007 compared to 2002.

Conservation title — 32.3 percent increase in funding authority in 2007 compared to 2002.

Given the current level of commodity prices for corn, soybeans, wheat and other grains, it will be difficult to generate much interest in adding more dollars to the CBO “baseline funding” in the commodity title of the new farm bill. With the high level of interest by general public and some members of Congress to provide more funding for new and expanded programs for conservation, food and nutrition, rural development and renewable energy, there may be efforts to reduce funding even more for the commodity title in the new farm bill.

It is also possible that there could be some changes proposed within the commodity title of the new farm bill. Some would like to see the current “price-based” CCPs replaced by “revenue-based” (price and yield) CCPs. Others would like to eliminate Direct Payments, and use those funds for other programs, such as a new permanent disaster program. Still others would like to increase Direct Payments, and reduce CCPs and LDPs, since the Direct Payments are more “WTO-friendly” than CCPs, LDPs, or commodity marketing loans.

Bottom line

There is a lot of support for enhanced specialty crop programs, such as those outlined by Johanns, conservation programs such as CRP, WRP, EQIP and the CSP, food and nutrition programs, rural development programs and for new initiatives for renewable energy. The main problem is “where will the money to fund these new and expanded programs come from?”

There is not likely to be many new dollars available to fund programs for the 2007 farm bill, which means that most new spending on farm bill programs, will likely have to come through reductions in other farm bill programs.

Reducing funding for some programs, such as the traditional commodity title programs for corn, soybeans, wheat and cotton, in order to increase funding for new and enhanced programs in other farm bill titles will not be an easy task for members of Congress.

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Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.

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