Looking for farm bill balance

WASHINGTON – Lawmakers writing the 2007 farm bill have about $30 billion worth of requests per year for funding from the commodities portion of the bill.
Unfortunately, there will likely be only $7 billion to give out each year.
“There’s just a lot more requests for money than we can fulfill,” said Mary Kay Thatcher, American Farm Bureau lobbyist.
Lawmakers on Capitol Hill heard from dozens of Ohio farmers March 6-8 during the Ohio Farm Bureau’s annual county presidents trip to Washington D.C. Farm Bureau members told legislators where they stand on several farm bill issues.
Break it down. In 2002, Congress gave $465 billion to the farm bill and $99 billion (21 percent) of that went to commodity programs over the bill’s six-year duration.
Nutrition programs received $318 billion (68 percent), conservation programs took $21 billion (5 percent) and the remaining 6 percent of funds were divided into other categories.
Spending for the next farm bill is projected at $488 billion, but the money will be doled out differently than before.
Nutrition programs are expected to receive $366 billion (74 percent) and conservation funding could rise to $29 billion (6 percent). Funding in other categories will probably remain at 6 percent.
When the Congressional Budget Office released its new baseline earlier this month, the commodity baseline fell to $45 billion over six years. This decrease is due to the increase in ethanol and biofuels production and the impact on corn and soybean prices.
Think ahead. Those prices make the 2007 farm bill a tricky project.
“Some people say this is the most dangerous time to write a farm bill,” said Bob Goodlatte, R-Va., ranking member of the House Agricultural Committee.
While current crop prices have been kind to farmers, Thatcher said no one can predict what the picture will be by the time the next farm bill expires in 2013.
“We don’t write a farm bill for one year,” Thatcher said. “When we write a farm bill, we write it for the long term.”
Jerry Lahmers, Tuscarawas County Farm Bureau president, said farmers understand money is short, but they don’t want to be left out.
“We’re just asking we not be cut more than some of the other programs,” he said.
Commodity payments. One of the more controversial aspects of the proposed 2007 farm bill is lowering the adjusted gross income limit to $200,000. This means that if a producer has an average adjusted gross income of $200,000 or more for three years, he or she is not eligible for commodity payments the following year.
Adjusted gross income is not the same as gross income. To calculate adjusted gross income, farm expenses and depreciation are deducted, as are self-employed health insurance, half of the self-employment tax and contributions to retirement. Overall, there are 25 categories of expenses that can be deducted from adjusted gross income.
According to USDA, data from the Internal Revenue Service shows only 2.3 percent of all Americans have an adjusted gross income of $200,000 or more.
USDA Deputy Secretary Chuck Conner said the proposed limit will likely only affect farm owners who have another source of income.
He added that the limit is being considered because it’s hard to justify giving income support to Americans who are already “fairly well-to-do.”
“These are people who probably do not depend on their farm income,” he said.
Safety net. Conner went on to say the farm bill should be a safety net during bad years, not an income support when farmers harvest 250 bushels of corn per acre.
“We want to be there, and be there in a big way, during those worst years in ag,” he said. “Farming is a year-to-year operation and we appreciate that.”
Hope. Although the future of commodity programs is uncertain, the 2007 farm bill does offer some hope in other areas.
Sen. Sherrod Brown, D-Ohio, said the new bill is a good opportunity to expand and improve conservation programs. He also said it can be a tool for keeping young people interested in agriculture.
Conner agreed, saying the new legislation puts a “great deal of focus on new and beginning farmers.”
It won’t offer a permanent welfare state for those producers, but it will provide things like higher direct payments for the first five years of operation.
The 2002 farm bill must be renewed or extended before Sept. 30. According to Bob Young, American Farm Bureau chief economist, the best scenario would be an extension of the current farm bill.
“The easiest possible outcome now is to say, ‘let’s change the dates of the farm bill and move ahead,'” he said.
(Reporter Janelle Skrinjar welcomes feedback by phone at 800-837-3419, ext. 22, or by e-mail at jskrinjar@farmanddairy.com.)