President Bush and Secretary of Agriculture Mike Johanns would like to play major roles in shaping the next farm bill, but Congress is not likely to abdicate that chore, says Texas A&M Extension economist Joe Outlaw.
Outlaw, co-director of the Texas A&M Ag Policy Center, discussed prospects for the next farm bill during a recent risk management seminar in McKinney, Texas.
“As far as the president's budget, Congress will pretty much ignore it,” Outlaw said. “It's easy to get disheartened but neither the president, the Office of Management and Budget nor the secretary of agriculture will pass agricultural legislation. Congress has that responsibility and key leadership in both houses still supports the current farm law and they support agriculture.”
Outlaw said congressional leaders still “listen to what we say and believe that things are not all that good in farm country.”
“But the secretary of agriculture will be involved in farm bill debates and may have his own proposal. This could be the first time since the early 1980s that a secretary of agriculture submitted a farm bill proposal.”
He said close involvement, including recent listening sessions across the country, emphasize the administration's desire to influence farm policy. He said the administration is using the World Trade Organization and the budget to make significant changes. But WTO issues, he said, “seem well overblown from reality. And the House and Senate will not take the lead of the secretary of agriculture.”
He said the administration's claim that the farm sector is doing well does not hold up under close scrutiny.
“Our numbers are not as positive as the administration's,” he said. “We see soybean prices remaining flat. Cotton, wheat and rice may be up. But the index of prices paid show that costs do not come down to where farmers can make money.” He said fertilizer and fuel costs are the biggest factors.
“Real people are having real problems,” he said.
Outlaw doesn't assume that ag policy will sail through both houses of Congress without hitting some rough water.
“We have new leadership,” he said, “and payment limit issues will be crucial. We see divisiveness within the parties on payment limits.”
Outlaw said bi-partisan bickering also poses serious challenges to enacting a reasonable farm bill. “Legislators are not working together (across party lines). Now, Democrats and Republicans have to meet separately.” He said the current atmosphere reflects a sea change from the way Larry Combest and Charlie Stenholm conducted business across party aisles.
Outlaw expects little progress on farm policy this year with Congress looking at lobbyist scandals and house members facing fall elections. That may be good news in light of recent budget cut proposals. “It's hard for a legislator to cut budgets and run for re-election at the same time,” Outlaw said.
He expects no new farm law to be signed before 2008. “I don't expect the next farm law to be much different from what we have now,” he said. “I think it will include tighter payment limits. The legislators who kept it (tighter payment limits) from passing before are losing their resolve. They basically put it off.”
Other issues that will make the farm bill debate interesting include fruit and vegetable and livestock interests asking for a seat at the table. He said complying with WTO rules might be difficult if the farm bill maintains a fruit and vegetable exclusion. “The fruit and vegetable industry also want market access and help with disease and phyto-sanitary concerns,” he said.
“Livestock will be involved, too. So we have the same size (or smaller) pie being cut into smaller pieces.”
Outlaw said some criticize corn growers' ethanol allowances. “But everyone benefits from that program,” he said. “Still, it's a contentious issue.”
Renewable fuels will play an important role in the next farm bill debate, he said. “With fuel prices at $1.20 a gallon, ethanol made little sense for Texas,” he said. “But at $2 a gallon, it's a viable enterprise.”
He said disaster payments will be harder to come by. “Ever since the president required offsets (for disaster spending) Congress has been less willing to authorize disaster payments because they have to cut other programs.”
He said reluctance to provide disaster assistance could help secure a safety net in the next farm law.
Outlaw said trade issues continue to concern farmers. “We want market access and they (trading partners) want us to eliminate support payments. We're at a stalemate and it's a matter of who blinks first. But 150 countries have to agree.
“Free trade is hard to do,” he said. “But we do need a new Peace Clause.”
That clause prohibits a signatory of an agreement from suing another signatory. Losing that clause allowed Brazil to sue the United States over cotton subsidies.
“If we don't get an agreement we will continue to get sued, crop by crop.”