Some good news: Agriculture in the South is set to get a boost of legislative gravitas and influence in 2013.
With Mississippi Sen. Thad Cochran as new ranking member on the Senate Agriculture Committee and Arkansas Sen. Mark Pryor chairing the Senate Subcommittee on Agriculture and Rural Development, “I don’t think there’s any question the Mid-South and South will have more influence than they had (in 2012),” said Joe Outlaw, Texas A&M agricultural economist, at the Ag Business Conference at Arkansas State University (ASU).
“If you watched the hearing and mark-up process for the (farm bill) last year, it was one where a lot of the Southern interests were basically left quite unhappy.
“When they finally conference two bills, I think there will be a lot of changes from what either (of the earlier bills) contain right now.”
Outlaw was joined by David Schweikhardt, professor of Agriculture Economics at Michigan State University, and Tom Erickson, vice-president for government and industry affairs for Bunge North America, in a panel/audience discussion regarding the current political landscape in Washington, D.C.
“It is increasingly true that the politics of the farm bill have become very much a part of the politics of Washington and the political life there,” said Erickson on the inability of Congress to pass a new farm bill last session. “That’s something a lot of organizations failed to see going into this year.”
A member of the audience asked the trio about updating the farm bill set-up. “We’re still using an antique model farm bill. We have more diversity and more difficulty passing something. I often wonder why we don’t have a new idea.”
Texas A&M’s Agricultural and Food Policy Center, “did about 35 different analyses of different plans that people have come up with,” said Outlaw. “This was a farm bill where groups came up with somewhat different proposals. But the fact of the matter is, we only have a certain number of levers to switch if you’re going to help people stay in business. Most of them are linked to the land, prices, and yields.
“Initially, the groups went away and did the ‘big thinking.’ But it always evolves back down to what’s available, what data is available. That isn’t necessarily right, but that’s how it was done. There was a lot of new thought” for the new farm bill compared to the 2008 farm bill.
Schweikhardt said many of the old policies that were the most market-distorting are gone. “When students sometimes come to me and want to talk about, ‘Gosh, there must be a better way to do X or Y,’ we usually have a long talk. ‘Well, there are only so many levers you can pull on — usually connected to price and quantity.’ So, I’m not sure we’ll see a lot of newness there.
“I do think we’ve got to continue to push on the research side, to continue to work on crop insurance products that work and are actuarially sound. That’s where a lot of the focus, if nothing new comes along, will continue to be.”
Erickson pointed out there was “significant change in 1996 with ‘Freedom to Farm.’ From there have been evolutionary changes more in the pattern prior to 1996.”
There’s also the issue, “certainly in the Midwest, that existing program payments are so out of line with market prices,” said Schweikhardt. “I don’t know that (the region) marshaled their political muscle as much as they might have. On the list farmers are thinking and spending time worrying about, farm programs aren’t very high, right now.
“I think Congress, when they went home and hadn’t passed the farm bill, might not have gotten the pressure they’d have gotten in past years. That’s simply because of where (current crop) prices are.”
Coalitions, renewable energy
An audience member brought up renewable fuels and the coalition between nutrition programs and agriculture interests.
“If the coalition between food stamp (proponents) and agriculture falls apart, we might not have another farm bill. But I’d argue, taking what was just said about the Midwest, that in this area the prosperity of agriculture isn’t related to the farm so much as it is to renewable (energy) — ethanol and biodiesel. If we have a choice between one and the other, I think most people would say we’re much better off with the renewable (energy) and let the farm bill go.
“What is the support in (Congress) for ethanol and biodiesel?”
Bert Greenwalt, an ASU agricultural economist who was moderating the panel, replied, “I’ve heard it mentioned that the Renewable Fuel Standard (RFS) is the biggest subsidy program that the corn industry has relative to the direct- and counter-cyclical programs. And it also has an impact on soybeans.”
Outlaw said it is likely, “we’ll be having a big push to relook at the Renewable Fuel Standard within a year. Sometime next year, there will be another push.
“While I don’t think (the RFS) has a chance of being defeated, I do think there’s a chance it will be adjusted. That’s especially true if it’s put off for long enough. (Iowa Sen. Tom) Harkin has announced he will retire and he’s been a big supporter of (the RFS).
“People have gravitated to, ‘The farm bill was there and was set so low that it really isn’t relevant. But this other thing (the RFS) is helping us a lot.’”
Outlaw also lamented the lack of lawmaker understanding of agriculture. “I do know that some of the partisan issues kept the new farm bill from being passed. That’s obvious. But I don’t think the average person in the audience knows how few (lawmakers in Congress) understand any of the stuff we do.
“Twenty years ago, when I began doing this, you’d have a meeting (on Capitol Hill) and there would be 20 people — members, not staff — asking intelligent questions.”
That has changed in a major way. “I just testified in front of the House,” Outlaw continued. “If there was more than three or four that understood what I was talking about, I’d be surprised. And it’s their job to know about this. The problem is there’s a lot of (lawmakers) who aren’t interested in agriculture as much as other issues.”
Erickson: “I think there’s a measure of truth to that. I come from South Dakota where there’s been a lot of de-population as farms have gotten larger. So, the farm voice isn’t as consistent in a lot of places as you might otherwise think.
“Look at the make-up of committees, as well. Even on the House Agriculture Committee this year we talk about how we can see a way to a farm bill. But on the Democratic side of the House Agriculture Committee, of the 21 members only eight were there (in 2012). And most of the people coming on to those committees aren’t from traditional agriculture (regions). They are there for the nutrition programs or conservation or something else.
“So, it isn’t a surprise that we see a dwindling base of expertise in Congress for a lot of things (agriculture) cares about.”
Outlaw also reiterated his belief that the Commodity Title is on its last legs. “I’ve already gone on record many, many times saying that this is the last farm bill we’d recognize as having a significant (Commodity) Title component.
“After this (farm) bill is passed — and I do think it will pass and direct payments won’t be part of it — we’ll be mostly crop insurance-oriented.”
As for students planning to return to the farm, Outlaw advised to, “look at your relative market prices and figure out what you can make money on. Stop worrying so much about organizing your (operation) to take advantage of government benefits. Once the government kicks in, the safety net will be low.”
What about means-testing crop insurance premiums?
“That’s coming,” said Outlaw. “Whenever the only safety net is crop insurance, then it gets all the spotlight.”