Farm Bill Faces Veto Threat

As proposed farm bills go, the one that has just emerged with overwhelming support within U.S. House and Senate nonetheless proceeds under a cloud.

Even as Congress has expressed overwhelming support for the bill, President Bush has vowed to veto it.

But given its support in Congress, it’s possible the bill could survive a presidential veto, says Dr. Jim Novak, an Alabama Cooperative Extension System agricultural economist and Auburn University professor of agricultural economics.

“The margins of support for the proposed bill in the House and Senate alike are sufficient to override a presidential veto,” Novak says.

The farm bill passed both House and Senate last week with substantial majorities - 81 to 15 in the Senate, 318 to 106 in the House.

What is certain, he says is that the nutrition title will be the big winner if the congressional version of the bill ultimately is enacted into law.

“There really hasn’t been an inflation adjustment to the food stamp and other nutrition programs in many years,” says Novak, adding that the bill allocates a badly needed increase in funding for nutrition-related programs totaling more than $10 billion.

Predictably, the biggest obstacle to passage of a farm bill remains the commodity title.

The Bush administration has vowed a wholesale reform of farm commodity programs, particularly farm subsidies — an issue that boils down to the hotly contested and contentious question: should taxpayers subsidize the wealthy.

A practice that has drawn withering criticism from watchdog groups such as the Environmental Working Group is the longstanding practice of subsidizing people who don’t farm but who own agricultural land and earn money from a portion of the crop.

The farm bill en route to the president this week would limit eligibility to farm subsidies to individuals with an adjusted gross farm income of less than $750,000. Couples would be limited to $1.5 million. That’s down from the current cap of $2.5 million for couples, though the Bush administration wants to pare it down further to $200,000.

The proposed bill also would do away payments ascribed to individuals who exceed program payment limits. Payments to individuals would also be limited to those individuals who"actively participate" in producing a commodity.

Deficit concerns are another factor behind efforts to reduce commodity supports.

“We have a massive budget deficit and the current cost of commodity title is between $ 7 and 9 billion a year, really a very small number in the federal budget,” Novak says.

“With the current high prices associated with farm products, there is a perception in some quarters that subsidies are no longer needed.” "However with a decline to more normal growing conditions we could very well see a decline in prices and a need for commodity programs in the next three to four years," he says.

There’s also the added uproar about the types of crops currently subsidized - in the view of some critics, crops that have contributed to the widespread obesity epidemic in the United States.

And, some critics also contend that current U.S. farm subsidies also contribute to the impoverishment of farmers in developing countries.

“There really has been a concerted, multifaceted attack against the commodity title,” says Novak, adding that despite the criticisms, the basic structure of the 2002 farm bill remains, with some reform.

One new option outlined in the bill, known as ACR - the Average Crop Revenue program - would emphasize a revenue-based payment structure as opposed to current subsidy structure. Selected pulse and oilseed crops have been added in the bill and will be eligible for commodity program payments starting in 2009.

Posted by Jim Langcuster at May 21, 2008 08:27 AM