As Congress gets organized for the 2007 Farm Bill, there will be extensive debate on the types and levels of commodity supports, expansion or contraction of conservation programs, how bio-fuels enter into the big picture, and how the Farm Bill will intersect with the US trading partners around the world. That is all well and good. Those issues should get some airing and Congress will eventually arrive at answers to the questions. However, the forces that push and pull and provide the torque to move the Farm Bill are much different. You can probably guess what they are, but instead of guess, read on…

Compliments of Policy Specialist Brad Lubben at the University of Nebraska-Lincoln, and Kansas State ag economists Sam Funk and Troy Dumler, both the casual observer and the intense farmer/lobbyist can get a good handle on what is driving the debate on the 2007 Farm Bill. They contend the policy will have to be written within an environment that will allow some things and prohibit others.

Economic issues will be a significant determinant of how far the Farm Bill goes. Prior to the 2002 Farm Bill, farm income averaged just over $30 billion per year without farm program payments, which added about $20 billion. With calls to increase the safety net, the 2002 Farm Bill created a crop of payment programs that helped farm income average in the $60 billion range. Congress will take into consideration the impact of the bio-fuels demand on commodities, which has pushed prices into rare high levels, and pointing to correspondingly high levels of farm income from the marketplace.

Budgetary issues will also be a factor. The safety net created in the 2002 Farm Bill was aided by a significant budgetary surplus that Congress allocated for farm programs. As the 2007 Farm Bill is being prepared, there is a significant budgetary deficit that Congress will allocate for farm programs, meaning agriculture will likely take some budgetary hits when it is finalized. The $248 billion deficit is the largest ever when a Farm Bill was being written. But thanks to current commodity prices, the USDA is not spending as much on farm programs as planned 5 years ago, “In the new baseline budget estimates released in January by the Congressional Budget Office (CBO), 10-year spending projections for mandatory farm support programs are $35 billion less than the 10-year projections issued in January 2006. This reduced spending does not technically count as savings to be allocated elsewhere, but it does change the political climate in which federal budget decisions will be made”.

Trade issues will be another factor determining the complexion of farm support programs. Much of the decision will be based on whether there is an international trade agreement, but if not, will trading partners continue to snipe at current farm support programs? Brazilian complaints have negated the cotton program, and Canada has filed complaints against the US feed grains program. To avert other nations slowly dismantling the Farm Bill, Congress will either have to make farm programs immune to trade complaints, or a new trade agreement will have to be finalized that allows certain US farm support programs.

The political environment has certainly changed, but not just party affiliation, but philosophies of the Congressional leadership about which programs are most important. Additionally, the Congressional Agriculture Committees have shifted from southern leadership to Midwestern leadership, which also changes priorities that relate to commodities. Past Farm Bills have also been enhanced by an agreement among several dozen farm organizations. However, the current environment includes a myriad of non-farm and food groups that want to weigh in on the legislation for their own purposes. One of the special interest groups has made public complete listings of farmers and the farm program payments they have received, all in an effort to re-direct some of those funds away from commodity programs to conservation programs.

Summary:
The 2007 Farm Bill will include many of the typical elements, including a safety net, conservation and rural development funding, as well as risk management programs and energy programs. However, they will all be pushed and pulled by the current farm economy, US budgetary constraints, international trade, and the changing political structure in Washington. As the Congress prepares to debate the administration proposal for a farm program, as well as receive input from many other groups, the elements in the 2007 legislation will all be functions of those four core issues.