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“In my 37 years with Delta Council, the fiscal outlook for writing a farm bill is about as bleak as I’ve ever seen for southern agriculture," says Chip Morgan, executive vice president of the Delta Council. As bad as fiscal 2011 federal budget cuts were, 2012 could be even worse — “cuts will be much deeper under all the proposals we’ve seen,” he says.
Penalized for success
Ironically, says Morgan, the success of the 2008 farm bill and higher commodity prices will have an adverse impact on the 2012 bill.
“Spending on the commodity titles, countercyclical payments, and the marketing loan haven’t cost as much as was expected when the 2008 bill was written. Because we’ve spent less, our baseline spending going forward will be less — in effect, having a success in the current law will penalize us in the new law.”
And, he says, direct payments “will have a big bullseye painted on them when it comes to cutting farm program spending, even though this is only about $5 billion per year for all crops. There’s just not much federal outlay on agriculture left to cut.
“The Congressional Budget Office is using March 2011 baseline numbers to determine market prices for the life of the next farm bill and, with the exception of soybeans, their projections show reduced market prices. This is pretty frightening, in light of the increases in farm input costs.”
“In all our talks with people in Washington, we don’t hear anything about expansion of farm programs — it’s just ‘cut, cut, cut.’”
Congressional staffs are looking at all the options, Morgan says, but “the big question is: Can agriculture take these kinds of cuts, and will there be anything left for continuation of effective farm programs?”
There are 38 programs in the 2008 farm bill that have zero funding for 2012, he says.
“It would take $8 billion to $10 billion to reauthorize these programs. If we want to maintain them in the future law, we’ve got to take money from somewhere else in the agriculture pie to offset the costs. Commodity, conservation, nutrition, and crop insurance programs are key targets because that’s where the funds are.”
One scenario Morgan fears: If the only objective is to save money, some would suggest that a great way to do it would be to update cotton bases, and not yields — but that would have a major impact on the value of farmland and a drastic impact on income protection.”