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Texas Agriculture Archive

May 17, 2002

House, Senate agree
on new farm bill

By Lana Robinson
Field Editor

Finally! Congress passed The Farm Security and Rural Investment Act of 2002 in early May, giving farmers a bit more certainty going forward. The measure passed by a vote of 280-141 in the House of Representatives. The Democratic-controlled Senate approved the legislation, 64-35, over the objections of some Republicans who said it was too expensive and a step backward in policy.

Texas Farm Bureau President Donald Patman said passage of the bill gives assurances to bankers and other financiers of farm operations, as well as producers, that certain levels of funding can be counted on, rather than having to depend on the whims of Congress for ad hoc relief.

"As far as commodities, cotton pretty well got what was in the House Agriculture Committee's proposal," said Patman, who with his son, Steve, grows corn, wheat and cotton near Waxahachie. "Senator Daschle worked out a deal with Midwest corn farmers to raise loan rates in 2002 and 2003 and then go down again in 2004, in order to get the bill through the House. I believe the rate for corn is $1.89 now, and it will go up to $1.98 and then back to $1.95 after 2004."

Grain sorghum received a hefty increase, putting it on par with corn, at $1.98 per bushel. Under the bill, the price guarantee for wheat rises from $2.58 to $2.80 a bushel. Cotton and rice rates are unchanged. Soybeans, with a loan rate of $5 per bushel, will be eligible for the direct payments for the first time. The bill retains a provision of fixed annual payments to grain and cotton farmers regardless of what they produce each year.

(See a farm bill summary on pages 20 and 21 of this issue.)

"I think the fact that Charlie Stenholm and Larry Combest are both from the western part of the state was a real plus for Texas cotton farmers. Many farmers were in real bad shape and needed this kind of a farm bill in order to make their cash flow work. So it's a breath of fresh air for them," said Patman.

Congressman Combest (R-Lubbock), chairman of the House Agriculture Committee, also chaired the House/Senate conference committee which drafted the final bill. Combest said not only Texas producers, but farmers all across America are the winners in this bill.

"Agriculture is a vital partner in the success of rural America," said Combest. "As its title indicates, The Farm Security and Rural Investment Act of 2002 will build up rural economies while giving farmers and producers the support they need to survive this difficult economic climate."

Congressman Stenholm (D-Stamford), ranking minority member on the House Agriculture Committee and a negotiator in conference, agreed, emphasizing that the new farm bill provides for a strong safety net for ag producers that he felt was lacking in the previous "Freedom to Farm" legislation.

"The new bill retains the flexibility in production and reliability of decoupled assistance that were provided for in the 1996 Freedom to Farm Act," said Stenholm. "Above and beyond that, the counter-cyclical payments it provides to program crop producers will mean that Congress will not need to provide additional income support when prices are in decline. Marketing loan tools will continue to be available to program crop producers."

70 percent spending increase

Stenholm noted that as a result of the new farm bill, total agriculture spending will be increased by about $7.4 billion a year, an increase of 70 percent. Specifically, crop subsidy spending is increased by about $4.8 billion per year. Moreover, the new farm bill provides for an 80 percent increase in spending on farm conservation programs.

According to an independent analysis, Texas will receive the biggest increase of any state at $582 million. Texas would receive $1.15 billion this year under the new bill, more than double the $570 million that the state was estimated to get under the 1996 law, the analysis showed.

A Senate provision to ban packer ownership of livestock 14 days prior to slaughter was eliminated during the House and Senate Farm Bill conference. Stenholm said he would not be surprised to see Congress pursue further action to address what some view as "predatory actions on the part of the meat packing industry."

Voluntary labeling called for

The final bill also includes a "country-of-origin" labeling section, which calls for voluntary participation with regard to the labeling of meat, fish and produce, with mandatory labeling to start in the fall of 2004. The original House bill had included a labeling requirement on fresh fruits and vegetables only. Texas Farm Bureau supports country-of-origin labeling, arguing that consumers have the right to know where their meat products are coming from. Congressman Stenholm and several other members of the House Agriculture Committee were less enthusiastic about country-of-origin labeling and the burden it would impose on the nation's food industry, as well as the impacts of more regulation and paperwork on consumer prices.

"On the subject of peanuts, the new Farm Bill provides a quota buyout of 11 cents a pound per year over 5 years (55 cents total), and provides a target price of $495 per ton," Stenholm explained. "In addition, the farm bill allows for the payment of storage costs for peanuts under loan and provides a $355 per ton loan rate and a $36 per ton fixed payment rate."

Wool and mohair will receive marketing loans or loan deficiency payments based on a loan rate of $1 per pound for graded wool, 40 cents per pound for non-graded wool, $4.20 per pound for mohair, and 40 cents per pound for unshorn pelts.

"The dairy industry will end up with a national counter-cyclical program that would trigger direct payments to dairy producers when the Boston Class I milk price falls below $16.94 per cwt of milk," he added.

Also, sugar producers would no longer be required to pay a penny-per-pound penalty when they forfeit sugar that was pledged as collateral against governments.

The Senate had originally wanted a payment limitation cap of $275,000 per year. However, the House and Senate conferees ultimately settled on an annual limit of $360,000 per year. These payment limits will not apply to 2002 crops. The new law also makes unlimited use of generic certificates for marketing loan gains.

TFB's Patman said, "You know, it's hard to have any one bill that pleases everyone. Compromises were made. The Senate put $2 billion in the bill for conservation. They wanted $5 billion. Even though they didn't get that, they got an 80 percent increase over last year, so that was still good for conservation."

Specifically, the Conservation Reserve Program (CRP) provision, which pays farmers to set aside environmentally sensitive land, would be expanded from its current limit of 36.4 million acres to 39.2 million acres; the Farmland Protection Program, which pays farmers near urban areas to keep their land in production, would expand by nearly $1 billion over the decade, a nearly 20-fold increase; and the Environmental Quality Incentives Program (EQIP), which subsidizes manure cleanup and other improvements, would be increased by $9 billion.

Bush pledges to sign bill

Although President Bush complained that more subsidies would cause overproduction, worsening farmers' plight, he had some good things to say about the legislation and pledged to sign it. Bush was expected to do so the week of May 13.

Patman noted that if the bill is passed by the Senate and signed by the President, with it coming so late in the year, the provision giving farmers the option to adjust yields and acres may pose a bit of a problem.

"When we were in Washington, D.C. recently, a USDA representative told us they probably couldn't do that in a timely number and may have to hold off on that until the following year. It would seem reasonable. They just don't have the staff in local county offices to do that," he said.

Stenholm reported that Agriculture Secretary Ann Veneman, in early May, said farmers should not expect to see any money from the Farm Bill until autumn.

"She noted that last year USDA issued supplemental AMTA (Agricultural Market Transition Act) checks in August, but that farmers should not anticipate that schedule this year," he advised.

"Overall, we are pleased that a compromise has been reached. One of the things that I think is interesting is basically we've been going through sort of a mini farm bill process for the last four years. The farmers and ranchers in this country deserve more certainty than that, and that's exactly what having a bill now that is a six-year bill with a 10-year budget will do. This has been a difficult farm bill. There has been a lot of disagreement over provisions, and it's not just disagreement between people who are outside of agriculture and inside of agriculture. It is disagreement within agriculture about a lot of these provisions."
— Agriculture Secretary Ann Veneman speaking to the National Association of Farm Broadcasters in Washington, D.C. on May 5.