Farm Bill Uncertain With Super Committee Collapse

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It appears that what some have been calling “the secret farm bill” negotiated between the Senate and House Agricultural Committees is now uncertain to be introduced imminently due to the probability of a Super Committee collapse. According to sources close to the negotiations, the joint Committees have come to a basic agreement on the structure of a new Farm Bill including $23 billion dollars in cuts meant to appease the Super Committee charged with deficit reduction.

But as of today, the joint Ag Committees appear to be holding off on releasing their proposal. Speculation is that the Ag. Committees see no benefit to “showing their hand” in light of recent reports that Super Committee negotiations are on the verge of collapse, two days before the deadline to produce recommendations. Whether they will go ahead and unveil their farm bill proposal seems, at the moment, to be anyone’s guess. According to Chris Clayton of DTN Progressive Farmer “House and Senate Agriculture Committee leaders have decided they are waiting until they know there is a deal by the super committee before the aggies send the farm bill to the super committee members”.  But with an agreement apparently having been secured, it seems quite possible that this will be the package introduced under the standard Farm Bill process next year, even if the Super Committee process fails (which now seems likely) and the Ag Committees, as a result, decide to wait to introduce the bill.

Deep divisions between the 3 House, and 3 Senate Democrats and the 3 House and 3 Senate Republicans who make up the Super Committee appear to be the source of it’s inability to reach consensus on deficit reduction (surprise, surprise). CNN reports that “the bipartisan panel tasked with finding at least $1.2 trillion in budget savings over the next decade — will likely announce Monday that they have failed, according to both Democratic and Republican aides.”

So while we are still in the dark about what the new farm bill might look like, information leaked from numerous sources has suggested that it would entail significant cuts to conservation, and a shifting of direct commodity payments to a “risk management” system that would continue to pay large producers the bulk of farm subsidies, without the stigma of “direct payments” which have become increasingly difficult to defend.

A recent editorial in the DesMoines Register suggested that such a system is in essence yet another increase in the quickly growing “crop insurance” system, and that crop insurance would become even more expensive under current proposals to move direct payments in this direction since it would entail crop insurance programs covering smaller losses, and protect farmers from even “modest downturns” in market price. According to the editorial “This has been criticized even by the American Farm Bureau, which fears that such complete insurance coverage would encourage some farmers to take unnecessary risk and put marginal land into production that should not be cultivated and planted”.

While the breakdown of the Super Committee may throw some of this into flux, it appears that if they indeed fail, there will at least be the possibility of a more public process for developing a farm bill, even if the starting point remains identical to what would have been announced, had the Super Committee process not broken down. Failure by the Super Committee to reach a deal would trigger automatic across-the-board cuts to most federal programs including agriculture through a process called “sequestration”. Sequestration would lower the current $23 billion in proposed cuts from the Ag. budget significantly, with nutrition programs (which make up approximately 65% of the ag. budget) being exempt from cuts under this process. And while many within the agriculture sector are either publicly or privately rooting for the failure of the the Super Committee process because of its secrecy and finality, the worry now is that with a deal already have been struck, even open negotiations will be starting from a point of compromise.