House and Senate Envision Similar Agriculture Cuts

While U.S. House and Senate draft versions of the Agriculture Reconciliation Act will have to be hammered out, they jibe in one respect, with both calling for additional cuts in agricultural programs.

Working with Larry Sanders, his professional counterpart at Oklahoma State University, Dr. James Novak, an Alabama Cooperative Extension System economist and Auburn University professor of agricultural economics and rural sociology, recently compared both versions of the bill.

Novak says the cuts are being driven by several factors.

“They reflect the budget situation, the need to finance the war in Iraq, calls for more disaster assistance in hurricane-ravaged areas along the Gulf Coast, and other factors,” he says.

Calls for tax relief and smaller government, he believes, also are playing a role.

While both bills are different enough to require compromise, some similarities reflect a common vision.

Both chambers, for example, call for reductions in direct farm payments for the 2006-09 crop years. Moreover, the Step-2 cotton program, a program the National Cotton Council has deemed vital to the U.S. cotton industry, would be ended by Aug. 1, 2006. The program has come under heavy fire from some critics, including the Environmental Working Group, who contend the program constitutes a violation of World Trade Organization provisions. The Senate version of the bill goes further by calling for a 2.5-percent reduction in all commodity payments.

Both versions also would reduce the "advanced Direct Payment" from 50 to 40 percent of the 2006 crop year. However, the bills differ on implementation. The reduction would be restricted to 2007 under the House bill, while the Senate bill would reduce the payment to 29 percent for 2007-11.

Farmers would receive the remainder of the Direct Payment due in October minus the reductions in payment mandated by law, Novak says.

Meanwhile, the Senate version also would reauthorize the Milk Income Loss Contract, though the provision is not included in the House version.

In what Novak considers something of a surprise, both House and Senate versions call for cuts in the Conservation Security Program.

“I thought given the fussing and fighting that has ensued over CSP that it would not get cut that much,” he says.

The Environmental Quality Incentives Program and Conservation Reserve Program are slated for cuts in the Senate bill but are not touched in the House bill, though the Agriculture Management Assist and Watershed Rehabilitation programs are.

Other programs tagged for reduction in the House, but not the Senate, include energy, rural development and food stamps. For example, stricter limitations would be established for food stamp eligibility and the five-year waiting period among legal immigrants for eligibility would be increased to seven years.

The House version, however, envisions an increase of what is described as “net food stamp hurricane relief.” This would increase the federal cost share for food stamp administration costs from 50 to 100 percent for disaster food stamp benefits cases within Hurricane Katrina- and Rita-affected areas. The House bill also calls for $12 million in additional funding of the Emergency Food Assistance Program to replenish food stocks for hurricane relief efforts.

Both the House and Senate and would reduce funding for the Initiative for Future Agriculture and Food Systems.

Novak and Sanders say both bills exceed the $3 billion targeted cuts in mandatory agricultural spending established by earlier federal legislation.

Posted by Jim Langcuster at November 1, 2005 04:23 PM | TrackBack