Failure of US ‘Super Committee’ Puts Farm Bill Process on Hold

23 November 2011

Congressional leaders have called quits on an effort to cut the US fiscal deficit in time for a self-imposed 23 November deadline. The recent push to develop a plan for curbing farm spending has, as a result, been set aside.

In a statement calling off the rush to a compromise, the six-member Joint Select Committee on Deficit Reduction, better known as the Super Committee, expressed hope that Congress would continue to build on its work to rein in government outlays.

Congressional agriculture committees had earlier committed to US$23 billion cuts in the five year 2012 Farm Bill period. The omnibus legislation is projected to cost US$480 billion over the same period, with funds going primarily towards the food stamp programme.

Under the now defunct farm bill negotiations, US$15 billion in cuts would come from programmes subsidising or insuring particular crops and US$8 billion from conservation and nutritional programmes.

Although a proposal from the Senate farm committee to the Super Committee was leaked on Friday, the final output of weeks of work is not likely to be disclosed immediately.

Next steps uncertain in ‘highly politicised' environment

The bipartisan Super Committee was tasked with shaving US$1.2 trillion over a 10 year period out of an estimated $40 trillion federal budget. Its failure to reach a compromise will likely mean US$1.5 trillion in automatic across the board cuts - affecting politically sensitive programmes such as national defence, Social Security, and Medicare.

In farm spending, food stamps and conservation would be the only programmes spared from the automatic cuts. Analysts at the National Sustainable Agriculture Coalition (NSAC), citing US Congressional Budget Office calculations, expected US$15.6 billion to be culled largely from crop and revenue insurance programmes under the automatic cuts.

The NASC is a Washington-based alliance of grassroots organisations that advocate for federal policy reform to advance the sustainability of agriculture and natural resources.

In recent weeks, many observers conceded the inevitability of reduced direct payments in exchange for a strengthened crop and revenue insurance programme that would make for up to 90 to 95 percent of losses on commodity crops. Ferd Hoefner of NSAC told Bridges that direct payments were now in "the dustbin of history."

The process for updating the Farm Bill still remains murky, with Hoefner commenting that "nobody knows" where it might be headed. Observers in Washington suggested several possibilities - a farm bill written in 2013, with an extension of the current legislation passed to hold farmers over; a bill written and passed in 2012 through the usual process; or a bill reached through an alternative compromise on the deficit.

Long-time farm bill watchers emphasised the fragility of the upcoming process. An agricultural economist at Ohio State University, Carl Zulauf, whose specialties include the current crop revenue (ACRE) programme, told Bridges that many variables - including crop prices - would drive the time, place, and nature of discussion around the next farm bill.

Presidential politics and the importance of early primaries in farm states, such as Iowa, may also set the tone for the year. Charlotte Hebebrand of the Washington-based International Agricultural Trade Policy Council told Bridges that, while the failure of the Super Committee might be a good thing by leading to increased transparency in the farm bill talks, it would still be a more difficult process since a consensus view "exists less and less," she said.

Projections of uncertainty might be well-rewarded. Ambassador Clayton Yeutter, who was the US Secretary of Agriculture during the late 1980s and early 1990s, told Bridges nearly three weeks ago that there was "no way they can produce a completed product this year."

Citing a "highly politicised" environment, he noted the likelihood of a 2013 Farm Bill where sugar and dairy do well, "as always," and that includes a strengthened crop insurance programme. Predicting that those with the greatest political influence would emerge with the "fewest policy/financial scars" he added that traditional crop subsidies would likely be "reduced substantially."

WTO and development a marginal consideration, experts say

In the view of Congressional agriculture committees, farm bills are written "in Washington, DC and not in Geneva," said Yeutter. Others observed a complete absence of WTO rules from the Congressional negotiating process. Hoefner told Bridges that the attitude of those writing the farm legislation in recent weeks towards the WTO was "so what!"

The possibility of the US eliminating direct payments and shifting towards ‘amber' box, or more trade-distorting support, is an area of concern for some WTO members, as the US Congress might be quietly aware. At an event last week, Joe Glaubber, the US Department of Agriculture's Chief Economist, told a Johns Hopkins audience that Congressional staffers had been regularly consulting with his office on the size and nature of farm payments that would be allowed under WTO rules.

In the absence of a final Doha Round agreement, US spending must remain under the Uruguay Round Agreement on Agriculture limits. Hebebrand argued that the limits would not be the "first consideration" for US lawmakers; even so, adhering to those limits would still leave lawmakers "a lot of leg room."

Reaction from a Geneva-based developed country agriculture delegate was muted, with officials in Geneva occupied with the upcoming WTO ministerial conference. Commenting on the proposals circulated thus far, "reductions in farm spending," he said "don't always lead to a more trade-friendly policy. "When you cut in one place you have to increase payments elsewhere," he added.

Some development organisations in DC have been critical of the thus-far closed farm bill process. Eric Muñoz of Oxfam noted a particular lack of concern for developing the country's small holders. The US Congress, he argued, has "abdicated responsibility for a farm bill that is responsive to the interests of people that are affected by our farm policy."

ICTSD reporting.

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