Legislative Update

1. Stephen Frerichs February 2013 Legislative Update

2. What we know • Election did not significantly change politics or players • One change in Agriculture Committee leadership – Senator Cochran ranking member instead of Senator Roberts • American Taxpayer Relief Act of 2012 extended farm bill through crop/fiscal year 2013 2

3. What’s Ahead • March 1 – Sequester kicks in • March ? – President releases budget • March 27 – Continuing Resolution expires • April 15 – Congressional budget deadline • May 19 – Debt ceiling reached • Farm Bill -- ??? 3

4. Sequester • A result of 2011 Budget Agreement to raise the debt ceiling • Applies to most Federal Programs with some exceptions including Social Security, Medicaid, Medicare and food stamps • Roughly a 7.3% reduction in defense and 5.2% reduction in non-defense spending • Applies to DCP, ACRE, Conservation programs except CRP and existing contracts • Does not impact crop insurance 4

5. Opportunities for Entitlement Reform • The pain of the sequester results in Congress pursuing a global budget agreement to cut spending • Congressional Budget due in April is an opportunity to reach an agreement to cut spending • The possible debt ceiling breach in May acts as an additional incentive to reach an agreement 5

6. What does this mean for the farm bill? • Chairwoman Stabenow and Chairman Lucas are saying they will wait on the farm bill until budget picture becomes clearer • Farm bill or significant parts of a farm bill could be part of a deficit reduction package in the context of raising the debt ceiling/ or voiding the sequester 6

7. If not in budget deal, then what? • 112th Congress failed to complete farm bill • Election did not significantly change politics or leaders • Farm bill completion as a stand-alone bill unlikely without some clarity on budget cuts, especially regarding food stamps • Supplemental Nutrition Assistance Program (food stamps) cut and dairy policy remain key sticking points. 7

8. Potential Outcomes • If completed in 2013, farm bill policy will likely be very similar to Senate passed and House Agriculture Committee reported bills. • If completed in context of deficit reduction, cut could be larger than Senate passed $23 billion. • Commodity policy will include some version of higher target prices 8

9. What Will Next Farm Bill Look Like? • Past is prologue • Committees do not anticipate holding many, if any, hearing before going into a mark-up • Neither Committee is likely to want to change much, if anything • With Senator Cochran as new ranking member, Senate Agriculture Committee will be forced to change its commodity title somewhat to better accommodate southern commodities 9

10. 2012 CBO Farm Bill Baseline 10

11. House v. Senate Committee Savings 10 Year Savings, CBO Scoring of Senate Bill and House Chairman’s Mark 11

12. Commodity Title 12

13. Target Price Comparison 13

14. Crop Insurance Title 14

15. Senate v. House Crop Insurance Scoring 10 Year Savings, CBO Scoring of Senate Bill and House Chairman’s Mark 15

16. Supplemental Coverage Option --SCO • Area (county) coverage wrapped around individual coverage to cover deductible • Pays based on relationship between county yield guarantee and actual county yield • Underlying individual coverage impacts payment • County must have 10% loss • If enrolled in ARC, 21% deductible; not available if enrolled in STAX or RLC 16

17. Stacked Income Protection Program -- STAX • Cotton only • Additional area coverage either as stand-alone or on top of individual coverage • Up to 30% coverage or amount of deductible of individual policy, whichever is less 17

18. Conservation Title 18

19. 113th CongressSenate Agriculture Committee 19

20. 113th CongressHouse Ag Committee – Republicans (new members bold) 20

21. 113th CongressHouse Ag Committee – Democrats (new members bold) 21

22. Thank You