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May 5, 2017
On May 4, the Senate passed a spending package (79 – 18) for the remainder of 2017. The bill largely preserves funding levels and priorities established under the Obama administration, with a few notable exceptions, including $15 billion additional for defense, and permanent reauthorization of the United Mine Workers of America’s healthcare fund ($1.3 billion over 10 years).
While federal agency funding remains flat or slightly increased in most cases, the absence of a ‘fix’ for cotton and dairy programs translates to an increasingly tough road ahead for other non-baselined programs in the 2018 Farm Bill. Finding approximately $2 billion to fix issues for the cotton and dairy industry will leave even less for other non-baselined programs. According to CRS, the non-baselined programs tally $2.6 billion and include most of the Energy Title ($444 million), portions of the Conservation Title ($455 million), the Research Title ($400 million) as well as the Nutrition ($355 million), Rural Development ($228 million) and other areas.
The Farm Bill Baseline
If programmatic changes to dairy and cotton farm bill programs had been added to the 2017 budget, they would have been ‘baselined.’ The budget baseline is used by the Congressional Budget Office (CBO) to develop budgets. Without a baseline, a program is considered as new spending and requires new funding authorization.
According to the Congressional Research Service (CRS), “Having a baseline essentially gives programs built-in future funding if policymakers decide that the programs should continue.” This is especially important for the Farm Bill, as CRS notes, “Programs without a continuing baseline beyond the end of the farm bill do not have assured future funding.”
When the CBO develops a budget for the 2018 Farm Bill, they will consider the monies appropriated for all baseline programs. Therefore, non-baselined programs would be considered as new spending. Currently, there are 37 non-baselined Farm Bill programs, spread across the research, energy, and conservation titles. To include these programs in the 2018 Farm Bill will require taking money away from other baselined programs.
Without a baseline for dairy and cotton – the 2018 Farm Bill negotiations will only become trickier, as these two items are considered ‘must-pass’ by lawmakers. Other imperiled non-baselined programs include the Biomass Crop Assistance Program (BCAP), the Bioenergy Program for Advanced Biofuels, and the Biorefinery Assistance Program. With appropriators cutting funding for both the Department of Energy’s office of Bioenergy Technologies (BETO) and the Biomass Crop Assistance Program (BCAP) in 2017 appropriations, bioenergy efforts in the 2018 Farm Bill have a steep hill to climb.
Producers Seeking Changes to Dairy, Cotton Programs
Both dairy and cotton producers have claimed that programs created in the 2014 Farm Bill to help producers weather sustained low prices have provided inadequate coverage. According to Gary Adams, President of the National Cotton Council of America, cotton farmers are facing shortfalls that average $168 per acre over the past three years. Last year the Council reported to Congress that U.S. acreage is at a 30-year low and prices are at an 8-year low. More recently, Shawn Holladay, the Plains Cotton Growers President, stated that, “cotton is in a very bad place, (and) long periods of low prices is not sustainable.”
Classifying cotton as an oilseed could help producers weather the downturn. This would make cotton eligible for price loss coverage programs, which pay out when the price of a commodity falls below a certain benchmark. The cotton industry sought to change the program under Secretary Vilsack, but there were questions on whether it was legal to do so. It was estimated that covering cotton could cost up to $1 billion a year.
The dairy industry has also been victim to sustained low prices. The Dairy Margin Protection Program (MPP), which pays farmers when margins go below a threshold, has also seen declining enrollment. According to the National Milk Producers Federation, the way the MPP is calculated in the 2014 Farm Bill has resulted in insufficient protection levels through the program.
Issue Portends Woes for 2018 Farm Bill Negotiations
Earlier this week – things sounded rosy for both industries, with House Agriculture Ranking Member Colin Peterson (D-MN) commenting to reporters that conversations with ranking Senate appropriator Leahy (D-VT) about the fixes were positive. “Whether this bill passes or not, I don’t know, but I think we have some chance of getting something in there which will give us a baseline in those areas moving forward,” commented Peterson.
However, when lawmakers emerged from the weekend with a completed FY2017 budget, both dairy and cotton were missing.
House Agriculture Committee Chairman Conaway (R-TX) blamed Senators Stabenow (D-MI) and Leahy (D-VT), in a press release, stating the Senators “insisted on an $800 million plan [for dairy] that was cobbled together last minute, unvetted, and totally unpaid for, and when they did not get their way, they blocked critical relief for both cotton and dairy farmers.”
According to sources close to the negotiations, Senators Leahy and Stabenow wanted to shift “pay-fors” in the cotton proposal to dairy, thus adding to the overall cost of both fixes. Talks broke down over the weekend on the topic. The result is both fixes will now count as non-baselined programs in the next farm bill, and will impact negotiations going forward.
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