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2013 Farm Bill

2013 Farm Bill. Roman Keeney, Amber Remble & Otto Doering Outlook Update—Fall 2013. Overview. Timeline 201X Farm Bill: Learning from process Current policy options and status Eulogizing direct payments Asking… are we getting good public policy from this process?

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2013 Farm Bill

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  1. 2013 Farm Bill Roman Keeney, Amber Remble & Otto Doering Outlook Update—Fall 2013

  2. Overview • Timeline • 201X Farm Bill: Learning from process • Current policy options and status • Eulogizing direct payments • Asking… • are we getting good public policy from this process? • what drives changes in ag policy? • Outlook for passage and final bill provisions

  3. 2012 (June) 2012 (July) 2011 (November) House Ag Comm. approves new bill; doesn’t pass floor Senate approves new bill 2012 (September) 2008 Farm Act expires Joint Select Committee terminates 2008 Food, Conservation, and Energy Act implemented 2013 (January) Joint Select Committee convenes Dairy Cliff 2011 (August) 2013 (June) Senate approves another new bill 2013 (July) Now What? House approves new bill (sans nutrition)

  4. September: Congress working on budget deal • October 1st: 2014 Fiscal Year begins, budget/CR or shutdown • November: Debt Ceiling must be raised • January 1, 2014: Dairy Mountain CONFERENCE COMMITTEE

  5. 201X Farm Bill • I started calling it this during outlook 2011… • Still not willing to put in the last digit • The role of politics: Doering • Redistricting from 2010 Census • Many races for House are primary only • Who can get far enough right and be as hawkish on budget as possible, but be a friend to agriculture • Rural district representatives want to preserve as much baseline spending as possible

  6. Politics and Farm Bill • House of Representatives • Bipartisan bill from House Ag Committee could not get to floor in summer 2012 • Cantor would not allow it due to upcoming election and its divisiveness within the Republican party • Leadership could not get House Ag Committee bill passed on floor in summer 2013 • Amendments from floor on nutrition withered bipartisan support

  7. Current Policy Playing Field • Senate passed version of full farm bill • Similar to what was passed in 2012 by the Senate • House passed version of farm bill without a nutrition title • Nutrition: 78% of Farm Bill spending • Importance of baseline & CBO scoring versus actual spending • Nutrition was to be 67-70% of 2008 farm bill spending

  8. Points of Contention • Agriculture support side of bill: Business as Usual Compromise • Differences on target price versus target revenue • Rolling average revenue protection versus statutory price setting as protection • Recoupling • How close will the final linkage between farmer decisions and level of farm payment be? • Nutrition side of bill: differences might be insurmountable

  9. Options for final bill passage: Shultz • Conference committee • Must have a nutrition title for President Obama’s signature per White House • Attachment to budget process • Continuing resolution financing government through first quarter of 2014 FY • Attachment to debt ceiling deal • Raising the government’s allowable debt

  10. Alternatives to 2013 Farm Bill • Extending current farm bill provisions ahead of 2014 planting, dairy mountain • No one was scared of the cliffs in December 2012 or January 2013, will they be this time? • Closer we get to these, the more likely a temporary extension becomes • Harry Reid: Senate will not extend with direct payments included in the bill

  11. Everyone agrees to do it, but…Why kill direct payments? • Imagine a corporation with one thriving division, the rest flailing with terrible margins • New management arrives • 1) Cost cutting across the board • 2) Within the thriving division • Replace the known cost mechanism with a specific unknown cost mechanism… • …a specific unknown cost mechanism rejected by that division as best practice for five years

  12. Direct Payments • 15 years underpinning the US agriculture sector • 15 years of analysis has failed to find any strong coupling between payments and decisions • 15 years of analysis has failed to find any generalized use of these payments by farm operators • Outside of land value increase, no real generalizable findings…even capitalization is debatable

  13. Direct Payments Politics • In a budget reform-driven environment, the known outlay of direct payments should be a virtue • Political process has claimed them as ‘indefensible’: • Framing the debate • “direct fixed support to agriculture that gives farmers a variety of options” • “giving the exact same amount to a farmer in a low or high income year”

  14. Outlook: Predictions • Second frame has won out • First lock prediction: • No direct payments in new farm policy • Second lock prediction: • Error between baseline farm bill spending and actual spending will increase

  15. Outlook: Predictions • Most likely outcome • Conference committee will fail to arrive at a workable nutrition title • Farm bill can be extended 1 more year, direct payments included • Why this might be good: many have learned to operate efficiently within the current system and did not opt into ACRE/shallow loss • Why this might be bad: 2014 is House election year and 201X farm bill lives on!

  16. The End

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