US Senate Clears Farm Bill

13 June 2013

The US Senate passed its version of a five-year Farm Bill on Monday, less than a month after that chamber’s agriculture committee cleared the legislation. Many observers warn, however, that the real fight will be when the House of Representatives attempts to pass its own version of the agricultural spending legislation.

The Senate version approved this week is set to cost taxpayers US$955 billion over ten years. Along with covering agricultural spending, the Farm Bill touches on other areas of US policy, such as international food aid and environmental conservation.

What the Senate passed earlier this week is “almost the same” as what the body had approved last year, according to long-time Farm Bill watcher and National Journal columnist Jerry Hagstrom. The Senate bill eliminates direct payments to farmers, expands crop insurance, and trims nutrition payments to achieve US$24 billion in cuts over a ten-year period when compared to the 2008 Farm Bill.

The bulk of the spending continues to go towards nutrition - $US760 billion over the coming decade. Crop insurance and commodity spending are the next big ticket items at US$89 billion and US$41 billion, respectively, over the same period. Amendments to the bill include a limit on crop insurance premium subsidies for farmers earning more than US$750,000 per year.

The Senate’s bill also includes a controversial provision, Adverse Market Payments (AMP), that some lawmakers fear could be successfully challenged at the WTO. (See Bridges Weekly, 23 May 2013) The proposed programme sets up a system of target prices that Southern rice and peanut farmers had sought, but ultimately did not include, in last year’s bill.

Critics argue that the target prices set are too high and that such a programme could distort planting decisions, while ensuring healthy returns for farmers of certain crops.

House fight forthcoming

Despite this week’s Senate action, Farm Bill observers worry that the full House may not bring its version of the Farm Bill to a vote, just as it failed to do last year. The Republican leadership of the House, however, haspromised that the bill will be debated this month.

With a smaller share of members from rural America, many of whom are participating for the first time in a Farm Bill, the House today is said to be a far more challenging environment for authorising nearly one trillion dollars in farm spending, according to many following the issue. Some members of that chamber have been particularly sceptical, with Speaker John Boehner, a Republican from Ohio, calling the dairy programmes in the bill “Soviet-style.”

Farm Bills have historically been a compromise between food stamp-concerned urban districts and rural members interested in spending on commodities. A partisan divide on food stamps may upend this delicate balance.

Overall, the House legislation cuts US$40 billion per year over the next decade, when compared to the bill’s 2008 iteration. Nearly half of those savings, US$20.5 billion, come from a reduction in nutrition programmes. The Senate’s recently approved bill cut similar programmes by only US$4 billion.

Many Democrats in the House have vowed to fight the cuts, while some Republicans have called for removing food stamp-related nutrition spending from the bill altogether.

Although the tussle in the House could broaden to include crop insurance and commodity programmes, observers say that the chamber fight is likely to centre on nutrition. Final passage of the bill may ultimately depend on whether the House is a “legislative body or stage,” said Urban Lehner, Editor Emeritus at DTN, a farm news publication.

ICTSD reporting; “Lawmakers Need to Show Strong Leadership to Move Forward With Farm Bill,” NATIONAL JOURNAL, 9 June 2013; “Moment of Truth for the Farm Bill,” DTN, 10 June 2013.

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