US Farm Bill Legislation Advances Out of House Committee

26 April 2018

The US House of Representatives is set to consider legislation for a new Farm Bill authorising farm subsidy and domestic food aid spending for the next five years, after the bill passed out of the House Agriculture Committee on 18 April.

The US Farm Bill is the omnibus legislation governing agricultural spending in the United States and is up for renewal every five years, leading to a complex negotiating process on how to structure spending on farm support and domestic food aid. The current version under consideration in the House has fuelled intense debate among lawmakers over proposed changes to existing work requirements for food aid recipients that would lead to much stricter conditions for access.

House Agriculture Committee Chair Mike Conaway, a Republican from the US state of Texas, applauded the bill’s progress out of the panel in a press statement released after the vote.

“Today’s vote was about America’s farmers and ranchers. It was about a better future and greater opportunities for SNAP recipients,” said Conaway, in a reference to the Supplemental Nutrition Assistance Program (SNAP) of domestic food aid, also known as food stamps.

The vast bulk of Farm Bill spending has been on the food stamp programme. The scheme already has detailed work requirements in place, with limits on how long people who are “able-bodied” and without dependents can access food stamp support in a three-year period, among other rules. SNAP provides support to millions of recipients each year and has previously been described by the US Department of Agriculture (USDA) as “the foundation of America’s national nutrition safety net.” There is no requirement that food stamp recipients use that support for domestically sourced products.

A statement from Agriculture Committee Ranking Member Collin Peterson, a Democrat from the US state of Minnesota, emphasised the lack of bipartisan support for the committee's version of the draft legislation. He also cited concerns over the proposed changes to the food stamp system. “Let me be clear: this bill, as currently written, kicks people off the SNAP programme,” Peterson said.

The non-partisan Center on Budget and Policy Priorities has warned that the current House version of the draft Farm Bill would “increase food insecurity and hardship,” noting that SNAP is the US’ “most effective anti-hunger programme, helping 1 in 8 Americans afford a basic diet, with most SNAP participants being children, seniors, or people with disabilities.”

Timing in focus

US farm leaders welcomed the legislation’s progress in the House, noting the importance of having a new law in place before the existing version expires later this year. The current 2014 Farm Bill, for example, was reached one year behind schedule, leading to the previous version being extended until lawmakers could endorse a new bill.

“We look forward to working with members of both the House and Senate to complete work on a bipartisan, bicameral bill that can be signed into law by the president before the current law expires,” said Zippy Duvall, president of the American Farm Bureau Federation, in a statement.

Despite the advances in the House, the Senate Agriculture Committee is not at the same stage in the process. The panel has held a series of hearings, and the committee leader and ranking member have pledged to draft a bipartisan bill in their chamber.

“With low commodity prices, worsening conditions in farm country, and unmet needs in communities across the country, we need to get this Farm Bill right. We're working together as quickly as possible to produce a bipartisan bill that can pass the Senate and be enacted into law,” said Pat Roberts, the Kansas Republican who chairs the committee, and Debbie Stabenow, the Michigan Democrat who serves as ranking member, earlier this month.

Stabenow has separately issued a statement warning that the approach taken for the House version, which advanced out of committee without bipartisan support, will make the overall Farm Bill process far more challenging.

Traditionally, both the House and Senate Agriculture Committees have drafted their own versions of the Farm Bill following extensive hearings. If and when their versions advance out of committee, those bills move to the floor of their respective chambers for consideration, which includes the possibility of various amendments. Since the versions will likely differ, those same differences would need to be reconciled in order for final, identical versions to be approved by both chambers and signed into law by the president.

The Farm Bill is closely watched both in the US and overseas because of its role in authorising Washington’s extensive farm subsidy programmes – including payments classified as “trade-distorting” at the World Trade Organization. The US reported that its trade-distorting domestic support for agriculture amounted to US$14 billion in 2014, in its most recent report to the global trade body. (See Bridges Weekly, 26 January 2017) 

Cotton, dairy spending already settled

Key components of the US farm support programmes have already been included in the Bipartisan Budget Act of 2018, which US President Donald Trump signed into law on 9 February. 

This budget legislation allows seed cotton to be included under the Price Loss Coverage (PLC) programme, a scheme that was put in place under the 2014 Farm Bill. The PLC provides subsidised insurance pay-outs to producers when prices fall below a predetermined trigger price. US cotton producers have long lobbied for including cottonseed in Washington’s farm support programmes. (See Bridges Weekly, 20 June 2016

Trade experts have cautioned that new price-linked cotton support programmes could distort trade and reignite tensions with US economic partners such as Brazil, which successfully challenged some of Washington’s cotton support programmes at the WTO, leading ultimately to a negotiated solution. (See Bridges Weekly, 2 October 2014

“Those policies can have detrimental effects on world prices, which penalise foreign producers, many of those in poor developing regions such as Sub-Saharan Africa,” said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute (IFPRI), in a January 2018 research paper for the American Enterprise Institute. 

Changes to support for dairy producers under the Dairy Margin Protection Program include an expansion to cover small and medium-sized farms and use of monthly rather than bi-monthly reference prices, making the scheme more sensitive to sudden price shifts. 

Glauber told Bridges that while cotton producers mostly appeared to be satisfied with the outcome from the Bipartisan Budget Act, dairy farmer organisations were still eager to improve the dairy margin program or to re-establish a price support programme under the new Farm Bill. 

Trade tensions affecting farm sector

Some US agricultural producers have expressed concern that burgeoning trade tensions between the US and key partners could affect the farm sector, especially at a time when they are also seeing competitors expand access for farm goods in key markets in the Pacific region.

Beijing has recently announced that US sorghum exports will be subject to a tariff of 178.6 percent. Trade tensions have been on the rise between the two major economies following US tariffs on imported steel and aluminium, as well as planned tariffs on a host of goods in response to concerns over China’s alleged practices of forced technology transfers and other purported violations of intellectual property rights. 

Meanwhile, US farm groups are also watching to see whether competitive exporters in countries such as Australia, Chile, and New Zealand will capitalise on new market access arrangements under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), once it takes effect. 

The trade deal was revised and signed by 11 Pacific nations after the Trump Administration withdrew from the original version, which had been negotiated under former US President Barack Obama. (See Bridges Weekly, 19 April 2018

Separately, intensive efforts to update the existing North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the United States continue underway, with reports suggesting that ministers could soon announce an “agreement in principle.” (See Bridges Weekly, 19 April 2018 and related story, this edition) 

WTO dynamic

Farm subsidies have long been a major sticking point in agricultural trade negotiations at the WTO and were one of the main obstacles to achieving progress at the organisation’s ministerial conference in Buenos Aires last December.

While the US argues that WTO members such as China are unwilling to undertake any new commitments to reduce trade-distorting support, Beijing and others say that Washington should first agree to lower its own existing ceilings on farm subsidies. (See Bridges Weekly, 30 November 2017)

While various members put forward different negotiating proposals in advance of the Buenos Aires conference, ministers were unable to agree on any consensus decisions on agriculture or a roadmap for future work, leaving the future direction of the WTO negotiations unclear. (See Bridges Daily Update, 14 December 2017)

Separately, the US and China are involved in a legal case at the WTO, which Washington initiated against Beijing for allegedly exceeding agreed limits on support for rice, wheat, and corn. The case is currently at the panel stage, with a report currently expected for later this year. Those findings can later be appealed, if parties choose. (See Bridges Weekly, 19 January 2017)

ICTSD reporting; “China Hits $957 Million U.S. Sorghum Trade With Fresh Duty,” BLOOMBERG, 17 April 2018.

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