Rep. Earl Pomeroy got a good laugh with a comment about one of the proposals considered by the House General Farm Commodities Subcommittee when it met to consider changes to the commodity title of the new farm bill last month.
“It’s kind of a flaky bill,” the North Dakota Democrat said of a commodity title amendment proposed by Reps. Ron Kind, D-Wis., Jeff Flake, R-Ariz., and others that would overhaul major features of the current farm law.
While the joke may have angered hard-line farm bill reform advocates, Pomeroy’s comments were mild compared to the language some farm organizations have used to describe the Kind amendment in recent days. Their concern: Although the subcommittee rejected the amendment, it could come up again on the House floor.
“Reps. Kind and Flake say their bill would offer reforms to the farm safety net, but their legislation would actually gut the farm safety net by completely repealing it — much of it immediately and the rest over a short period of time,” says Jeff Harrison of Combest-Sell and Associates.
A policy analyst with the consulting firm begun by former House Agriculture Committee Chairman Larry Combest and his chief of staff, Tom Sell, Harrison said it’s questionable whether many farmers could stay in business if Kind-Flake was adopted.
“A soon-to-be-released study will show that while some farmers might be able to survive Kind-Flake in times of higher commodity prices, many farms and ranches would not be able to survive even a modest dip in prices unless Congress approved additional emergency relief, which is both costly and unbudgeted.”
Most of the major farm bill organizations have also had less than flattering things to say about the Kind-Flake. A letter signed by 38 of the groups was recently sent to all House members urging them not to co-sponsor the Food and Risk Management for the 21st Century Act, the name the authors have given their bill.
The authors say Farm 21, as it is also called, would “modernize the farm safety net, institute fiscally responsible reforms and reallocate the savings to programs that will help more farmers and more regions of the country through resource conservation, better nutrition and renewable energy development.”
Under their proposal, they say, counter-cyclical, loan deficiency, income loss and direct payments would gradually be transitioned to a more “cost-effective and responsive system” of farmer-held risk management accounts and revenue insurance tools.
Farmers could use RMAs to weather market ups and downs, make investments and plan for the future. Supporters claim the accounts would streamline a “redundant revenue insurance system” of Title I farm subsidies and a federal insurance program that supposedly covers 80 percent of subsidized acres.
The accounts would cover “shallow” losses not addressed by crop and revenue insurance policies with withdrawals being permitted when sales fall below 95 percent of a farmer’s five-year rolling average. The program would help stabilize farm income and prevent the need for disaster payments, proponents say. Accounts would also act like a pension.
The accounts would cost an estimated $20 billion less than current farm programs over the next five years and $55 billion less over 10 years, according to Flake, Kind and other supporters.
“Not only does our federal farm policy hamper free trade, but it’s simply not fiscally sustainable,” says Flake. “Farm policy is in bad need of reform. This legislation is the first step in putting farm policy on a more trade-friendly and financially responsible path.”
But at what cost to farmers? Policy analyst Harrison says Kind-Flake would decimate the programs that have helped corn and soybean farmers remain in business so they could enjoy the current higher prices for those crops and kept cotton and rice farmers from bankruptcy.
“Kind-Flake would immediately repeal the heart and soul of the farm safety net for millions of farmers by immediately eliminating the non-recourse, marketing-assistance loan that provides a basic level of protection against the lowest of low prices for these farmers,” he said.
“It would also repeal in one year the counter-cyclical program that restored the safety net in 2002 to avoid future need for additional costly and unbudgeted ad hoc emergency economic relief.”
The proposal would phase out direct payments between 2008 and 2014 to 65 percent, 45 percent, 20 percent and 10 percent. At the same time, an increasing percent of the remaining payment – 50 percent in the first two years, 75 percent in the second two years and 100 percent after that – would be withheld in a risk management account.
Farmers could only access those funds under limited circumstances. A farmer’s adjusted gross income would have to drop to 95 percent of the previous five-year average even though four of the previous five years involved depressed prices. He could request the funds from USDA to avoid insolvency, to purchase crop insurance or make an investment.
“However, even a portion of the amount of direct payments that would be made available to the farmer would still be withheld unless the farmer performs certain activities on the farm or ranch that cost money to implement, effectively rendering the direct payment meaningless,” says Harrison.
“Few, if any, states would avoid the economic harm caused by these provisions given the breadth of crops impacted.”
The proposal would also have a negative impact on the safety net for fruit and vegetable growers, dairy farmers and sugar producers by phasing out or immediately eliminating income protection programs for those crops, according to Harrison.
Flake-Kind would also reduce reimbursements for federal crop insurance at a time when Congress has been moving toward greater reliance on crop loss protection to avoid more ad hock disaster assistance bills.
It could also hurt, rather than help, conservation efforts by reducing the incomes farmers need to implement the cost-share conservation practices funded in the farm bill’s conservation title.
“While proponents of Farm21 suggest that increased conservation funding would somehow keep farmers and ranchers on the land in order to carry out conservation practices, economic experts doubt that claim,” Harrison writes in a briefing paper on the proposal.
“The equity this legislation offers the nation’s farmers and ranchers is an equal share in nothing,” he said. “And, as ironic as it is sad, the first exodus under a Kind-Flake farm bill would be small and beginning farmers and ranchers in whose name, ‘reform’ is being advanced.”
Most of the country’s major commodity groups agree with many of those observations, saying the Farm 21 proposal by Reps. Kind and Flake go too far in its attempt to change the direction of farm policy.
“The Kind amendment is not kind to production agriculture,” said National Corn Growers Association President Ken McCauley. “NCGA agrees farm programs must be reformed to meet the challenges producers face. To completely upend farm programs, however, will not help producers or taxpayers.”
Groups that signed a June 22 letter to the House of Representatives also said they believe in meeting the country’s obligations to the World Trade Organization. “But the farm bill can accomplish this without gutting the critical safety net needed by producers,” the letter said.
“U.S. farm policy should continue toward a more level playing field in the global market by providing assistance to America’s farmers. However, this goal is not achieved by writing a farm bill that complies with what someone assumes will be the potential outcome of the WTO negotiations.”
“Reform-minded” farm bill observers, meanwhile, say it’s the criticism of Kind-Flake that has been overdone. When some members of the House General Farm Commodities Subcommittee compared Farm 21 to Freedom to Farm, a farm policy analyst for Environmental Defense objected strongly.
“The Kind-Flake proposal would not eliminate all subsidies, as Congress did in 1996,” said Scott Faber, who manages ED’s Healthy Farms, Healthy Food Campaign. “Instead, Farm 21 would replace current subsidies with the system of risk management accounts that would cover shallow losses not covered by crop or revenue insurance.
“Every measure of farmer wealth — farm household income, net farm income, debt-to-equity ratios — are off the charts. Most commercial farmers are doing much better than the average American, and the credit for this success belongs to our farmers, not to depression-era subsidies.”
In his weekly press conference July 12, House Agriculture Committee Chairman Collin Peterson said he did not expect the Kind-Flake proposal to come up again when the committee debated the final version of its farm bill July 17-19. “There’s no support for it and no purpose,” he said. “We’ve been through that before.”
But most observers expect its authors to offer it as an amendment to the farm bill when it comes to the floor in late July.
Meanwhile, Rep. Pomeroy has been named along with Rep. Marion Berry, D-Ark., to serve as co-whips for the 2007 farm bill when it reaches the House floor. Thus, Pomeroy may get a chance to say a lot more about Flake-Kind before the debate is completed.