Neither the House nor the Senate farm bill proposal veers far away from current policy, but each includes payment limitations and both face the likelihood of a presidential veto.

“(Conferees) probably will have to change some of the methods the bills use for increased funding and look for other savings,” said Joe Outlaw, professor and Texas A&M Extension economist during the recent Beltwide Cotton Conferences in Nashville.

“The administration objected to both the House and the Senate bills. Why?” Outlaw asked. “The previous secretary touted reform in his farm bill suggestions and this bill is not seen as reform.

“Also, they object to methods used to increase available money to fund increases in specialty crop, food program, conservation, and energy programs. Congress refused to raid commodity programs to fund these program increases.”

Both bills include an optional crop revenue program that would replace counter cyclical and direct payments and would convert a loan to a recourse loan program.

Outlaw said an analysis of the program indicates Texas farmers would not elect the counter cyclical revenue option. “They would stick with the CCP. In general, programs with a national trigger will be less likely to make a payment.” Outlaw said the program could be more favorable with a higher trigger level.

He said payment limits are also on the table. “They're looking at two aspects — means testing and limits on individual payments.”

Means testing sets adjusted gross income limits. Those are currently at $2.5 million with more than 75 percent of adjusted gross income required from agriculture. The House puts the cap at $1 million hard cap and $500,000 unless the producer derives more than 66.67 percent of adjusted gross income from agriculture.

The Senate proposal is similar but sets the cap at $750,000 unless the producer derives more than 66.67 percent of adjusted gross income from agriculture.

Limits on individual payments also change from the current $360,000 total limitation ($40,000 direct payment, $75,000 loan deficiency payment, and $65,000 counter cyclical payment with the three-entity rule).

The House proposal includes a $60,000 direct payment, and $65,000 for either counter cyclical or counter cyclical revenue option. There is no limit on market loan gains.

The Senate figures include $40,000 direct payment and ACR fixed payment, $60,000 for either counter cyclical payment or average crop revenue counter cyclical payment. The Senate bill also has no limit on marketing loan gains.

Target prices for some commodities differ in the two bills. Wheat, with a $3.92 per bushel target price in the 2002 law, changes to $4.15 in the House bill and $4.20 in the Senate. Corn, set at $2.63 in the 2002 law, remains at that level in both bills.

Sorghum remains at $2.57 per bushel in the House bill but increases to $2.63 in the Senate version. Upland cotton, $0.7240 per pound in the 2002 law, drops to $0.70 in the House bill and to $0.7225 per pound in the Senate.

Soybeans, $5.80 from 2002, increases to $6.10 in the House and $6.00 in the Senate.

Rice remains at $10.50 per hundredweight. Peanuts stay at $495 per ton.

Direct payment rates for cotton remain unchanged, $0.0667 per pound from 2002 in either bill. Wheat remains at 52 cents; corn at 28 cents, sorghum at 35 cents, rice at $2.35 per hundredweight, soybeans at 44 cents per bushel and peanuts at $36 a ton.

Outlaw said the House has tried to make “just a few tweaks here and there in the farm law. They try to increase spending for the fruit and vegetable industry, energy and nutrition programs without raiding commodity programs for funds. The Senate leadership wanted reform they couldn't pass but used the House bill as a starting point and added to it.”

Key factors in each bill include:

House

No change in structure from 2002.

Direct payments same as in 2002.

Nonrecourse loan programs with selected loan rate increases (wheat and small grains).

Counter cyclical payments with selected target price increases. The producer has an option for a revenue counter cyclical program with a national trigger set in the farm bill. This would take the place of the CCP program.

The House bill tightens payment limits with direct attribution and means test.

Senate

No change in structure from 2002.

Direct payments same as in 2002.

Nonrecourse loan program with selected loan rate increases (wheat and small grains).

Counter cyclical payments with selected target price increases.

Producers have an option for a revenue counter cyclical program. A state level trigger would be based on trend yields and federal crop insurance prices. This option would provide recourse loan and small fixed payments. The revenue counter cyclical program would take the place of direct payment, nonrecourse loan and counter cyclical payment programs.

Tightens payment limits with direct attribution and means test.

Outlaw said the president has threatened a veto of the House bill “over offsets.” The Administration objects to the Senate version because it is “bad policy.”

He said the administration says an era of “high prices is a good time for reform. They argue that farmers don't need a safety net as much, and that reform makes programs less offensive in the eyes of the WTO.”