U.S. House blows opportunity for real agriculture reform

WASHINGTON (July 11, 2013) – The R Street Institute today expressed deep disappointment that the U.S. House approved a five-year “split” Farm Bill without any opportunity to consider amendments that would better protect taxpayers or introduce market forces into U.S. agriculture policy.

Passed by a 216 to 208 margin, H.R. 2642, the Federal Agriculture Reform and Risk Management Act, includes only the agriculture-related provisions of the Farm Bill, with the nutrition title set aside for consideration as separate legislation.

According to R Street Senior Fellow Andrew Moylan, while the purpose of this approach ostensibly was to allow consideration of reforms that otherwise would be scuttled by the Farm Bill’s usual urban-rural coalition, any potential for improvement was stamped out when House leadership decided to move the bill under a closed rule that allowed no amendments.

“Rather than take advantage of the blank slate of a split bill to improve the bill’s operation or trim its cost, House Republicans have instead passed a bill that cuts $1 billion less from agriculture programs than the bill passed by Senate Democrats, and $25 billion less than the cuts proposed by the Obama administration,” Moylan said.

According to the Congressional Budget Office, the bill is expected to reduce the federal deficit by $12.9 billion over ten years, largely because it ends the $5 billion a year “direct payments” program. However, most of those savings are eroded by provisions that expand subsidies for crop insurance by $9 billion and the introduction of new “shallow loss” programs that would protect against drops in average farm revenue of more than 11 percent.

Moylan added that the bill fails to tie crop insurance subsidies to conservation compliance requirements and that it includes no means test for the subsidies, both provisions that were included in the Senate version of the legislation. Moreover, the proposed “shallow loss” programs have structural problems that could potentially result in them costing even more than the direct payments they replace.

“The ‘reference prices’ for commodity crops are set at near-record highs, thus ensuring that even modest drops from current peaks will trigger huge payments,” Moylan said. “What’s more, because the bill’s commodity title replaces what had been permanent law, this terrible bill would now serve as the new baseline for all future farm bills.”

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