The US House Committee on Agriculture continues its series of hearings for lawmakers to gather information that will help them develop the nations next farm bill. On March 22, dairy producers and processors testified before the House Agriculture Committee marking their 11th farm bill hearing. Previous hearings have included testimony from a total of nearly 30 advocacy interests like the livestock industry, nutrition advocates, specialty crop interests, international market development, conservation, rural development, and energy interests. Two additional hearings have been scheduled for March 28 & 29 on (Title I) Commodities and Credit. The House Agriculture Committee is expected to schedule multiple listening sessions and hearings on the next farm bill in several locations throughout the U.S. in coming months.
- The Ranking Member of the US House Committee on Agriculture
Collin Peterson (D-MN) drew a line in the sand early on saying he would like to see the Conservation Reserve Program (CRP) increase the allowable annual acreage enrollment from (current) 24 million acres to 40 million. Organizations including National Grain and Feed Association are opposed to increasing the annual allowable acreage in CRP. The average CRP land rental rate in the U.S. in 2015 was about $70 per acre. Using the average CRP land rental rate and applying it over the proposed increase of 16 million acres the potential increase in CRP acreage could reach as high as $11 billion over ten years.
- Due to complaints brought against the U.S. cotton industry by Brazil, the cotton industry was essentially omitted from traditional commodity programs in the 2014 farm bill. In 2015 commodity program payments for Upland Cotton reflected about $500 million in payments for the 2014 crop year under the Cotton Transition Assistance Payment (CTAP) program for upland cotton. CTAP was authorized in the 2014 Farm Bill to provide payments to growers of upland cotton as they transition from direct payments to the new Stacked Income Protection Plan (STAX) for producers of upland cotton. STAX was effective for the 2015 and subsequent crop years and is administered by the Risk Management Agency. In June 2016 USDA announced a new Cotton Ginning Cost-Share programs that provided up to $300 million in cost share payments to cotton producers. This was a one-time cost share program that provided payments based on a cotton producers 2015 reported acreage. CBO’s January 2017 baseline reflects an increase of over $300 million in FY 2016 for cotton program outlays. However, for the period FY 2017-2026 support for cotton producers wanes below the CBO March 2016 projections. The cotton industry is proposing another commodity program for cotton that is estimated to cost $10 billion over ten years.
- For milk producers, the Margin Protection Program (MPP) in the 2014 Farm Bill has not adequately provided a needed safety net. The program provides insurance based on the average actual dairy production margin that is derived from the difference between the all-milk price and average feed cost. Payments to producers occur when the margin falls below $4.00 per hundredweight (cwt) for a 2-month period. Payments apply to the operation’s production history with adjustments each year that reflect national average milk production increases. All milk producers are eligible to participate. Producers pay a $100 administrative fee if they select a coverage level at the minimum margin, or $4.00 per cwt of milk. Producers can buy a higher level of coverage, up to $8.00 per cwt if desired. The program is scheduled to expire on December 31, 2018. Since the beginning of the MPP participation has not reached expectations. In 2015, 55% of milk producers throughout the U.S. enrolled in MPP. Of those, 56% elected a coverage level above $4.00 per cwt. Also since the beginning of the program milk prices have declined and margins dropped along with them. However, milk producers have received little-to-no benefits from the MPP because margins did not fall low enough to trigger support. Only those milk producers electing the highest level of coverage, $8.00 per cwt received payments. In August 2016 USDA announced that milk producers enrolled in the 2016 MPP-Dairy program will receive approximately $11.2 million. The announcement meant that “dairy producers who enrolled at the $6 through $8 margin trigger coverage level will receive payments.” Milk producer groups are proposing changes to the MPP through adjustments in the program rates and feed calculations. These changes are projected to costs from $912 million to $2.2 billion over ten years.
- Livestock groups testified regarding the need for a vaccine bank for Foot-and-Mouth Disease (FMD), a severe, highly contagious viral disease. The FMD virus causes illness in cows, pigs, sheep, goats, deer, and other animals with divided hooves. Plum Island, New York is the location of the Plum Island Animal Disease Center of the U.S. Department of Agriculture. Currently Plum Island maintains a limited number of strains of vaccines for Foot-and-Mouth Disease (FMD). There are 23 known FMD strains around the world. If the U.S. were to detect a single FMD case it will likely stop international trade completely for a period of time. It is estimated that vaccine makers would need hundreds of millions of dollars to ramp up production and distribute the adequate amount of vaccines needed – an estimated 10 million doses needed for the ﬁrst two weeks of an outbreak and 40 million doses needed subsequently. The estimated cost of the FMD vaccine bank is $150 million annually.
- As we reported earlier in our blog, 37 programs in the current Farm Bill with spending estimated to total $2.607 billion (5-years) do not have a budget baseline after FY 2018.
In concert with the letter, Agriculture Committee leaders are quick to point
out that net farm income for the entire agricultural industry has fallen 50 percent over the past four years. They are also quick to remind folks that America’s farmers and ranchers have repeatedly answered the call for deficit reduction — with latest estimates on the 2014 Farm Bill saving $104 billion — four times the savings estimated during its adoption.