Stephen FrerichsFebruary 2013

Election did not significantly change politics or players

One change in Agriculture Committee leadership – Senator Cochran ranking member instead of Senator Roberts

American Taxpayer Relief Act of 2012 extended farm bill through crop/fiscal year 2013

2

March 1 – Sequester kicks inMarch ? – President releases budgetMarch 27 – Continuing Resolution

expiresApril 15 – Congressional budget

deadlineMay 19 – Debt ceiling reachedFarm Bill -- ???

3

A result of 2011 Budget Agreement to raise the debt ceiling

Applies to most Federal Programs with some exceptions including Social Security, Medicaid, Medicare and food stamps

Roughly a 7.3% reduction in defense and 5.2% reduction in non-defense spending

Applies to DCP, ACRE, Conservation programs except CRP and existing contracts

Does not impact crop insurance4

The pain of the sequester results in Congress pursuing a global budget agreement to cut spending

Congressional Budget due in April is an opportunity to reach an agreement to cut spending

The possible debt ceiling breach in May acts as an additional incentive to reach an agreement

5

Chairwoman Stabenow and Chairman Lucas are saying they will wait on the farm bill until budget picture becomes clearer

Farm bill or significant parts of a farm bill could be part of a deficit reduction package in the context of raising the debt ceiling/ or voiding the sequester

6

112th Congress failed to complete farm bill

Election did not significantly change politics or leaders

Farm bill completion as a stand-alone bill unlikely without some clarity on budget cuts, especially regarding food stamps

Supplemental Nutrition Assistance Program (food stamps) cut and dairy policy remain key sticking points.

7

If completed in 2013, farm bill policy will likely be very similar to Senate passed and House Agriculture Committee reported bills.

If completed in context of deficit reduction, cut could be larger than Senate passed $23 billion.

Commodity policy will include some version of higher target prices

8

Past is prologue Committees do not anticipate holding

many, if any, hearing before going into a mark-up

Neither Committee is likely to want to change much, if anything

With Senator Cochran as new ranking member, Senate Agriculture Committee will be forced to change its commodity title somewhat to better accommodate southern commodities

9

$ in billions FY 2013 – 2022 Total

Percent of Total

Total $994.6

Nutrition $771.8 78%Crop Insurance $89.8 9%

Conservation $65.2 7%Commodity

Programs$62.9

6%All Other $4.9 0%

10

House Senate

Commodity Title -$23.6 billion -19.4 billion

Conservation -$6.1 billion -$6.4 billion

Nutrition -$16.1 billion -$4 billion

Research $546 million $681million

Energy $0 million $780 million

Specialty Crops $428 million $359 million

Crop Insurance $9.5 billion $5.0 billion

Total -$35.1 billion -$23.1 billion

10 Year Savings, CBO Scoring of Senate Bill and House Chairman’s Mark

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Senate Bill House Bill

Eliminates direct, counter cyclical, ACRE programs

Continues loan programs with change for cotton to make WTO compliant

Continues Sugar Program, Reforms Dairy Program

New Agricultural Risk Coverage (ARC)

Price Loss Coverage (PLC) or Revenue Loss Coverage (RLC)

AGI Test at $750,000 per entity AGI Test at $950,000 per entity

$50,000 payment limit per person per year, plus peanuts

$125,000 limit per person per year, plus peanuts

Changes “Actively Engaged” rules

No change to “Actively Engaged”

Conservation Compliance Applies

Wheat, corn, grain sorghum, barley, oats, long grain rice, medium grain rice, pulse crops, soybeans, other oilseeds, and peanuts.

Note cotton is not a covered commodity

12

Reference Price

Unit 2008 Farm Bill

2012 House Committee

Bill

Percent Change

Wheat $/bu 4.17 5.50 31.9%

Rice $/cwt 10.50 14.00 33.3%

Corn $/bu 2.63 3.70 40.7%

Oats $/bu 1.79 2.40 34.1%

Barley $/bu 2.63 4.95 88.2%

Sorghum $/bu 2.63 3.95 50.2%

Cotton $/lb .7125 n/a n/a

Peanuts $/ton 495 535 8.1%

Soybeans $/bu 6.00 8.40 40.0%

Other Oilseeds

$/cwt 12.68 20.1558.9%

Dry Peas $/cwt 8.32 11.00 32.2%

Lentils $/cwt 12.81 19.97 55.9%

Small Chickpeas

$/cwt 10.36 19.0483.8%

Large Chickpeas

$/cwt 12.81 21.5468.1%

The barley reference price for the 2008 Farm Bill used the USDA Feed Barley Price. The 2012 House Committee bill uses the USDA all-barley price.

13

Senate Bill House Bill

Creates new Supplemental Coverage Option (SCO)

Creates new Stacked Income Protection for Cotton (STAX)

Creates new Peanut Revenue Insurance Coverage

Nationwide Sod-saver provision Prairie-Pothole Sod-saver provision

Plug 70% 2013 and subsequent Plug 70% anytime

Conservation Compliance Attached

No Conservation Compliance

AGI test, 15% point less subsidy if AGI exceeds 750,000

No AGI test

Separate irrigated – non-irrigated coverage at EU

Separate irrigated – non-irrigated coverage at all unit

levels 14

House Senate

SCO $3.998 billion $3.001 billion

Yield Plug at 70% $1.127 billion $.855 billion

STAX $3.851 billion $3.224 billion

Interaction Effect -$.639 billion -$2.469 billion

Coverage Level by Practice

$.672 billion $.506 billion

Specialty Crop A&O $.205 billion $0

Total $9.524 billion $5.036 billion

10 Year Savings, CBO Scoring of Senate Bill and House Chairman’s Mark

15

Area (county) coverage wrapped around individual coverage to cover deductible

Pays based on relationship between county yield guarantee and actual county yield

Underlying individual coverage impacts payment

County must have 10% loss If enrolled in ARC, 21% deductible; not

available if enrolled in STAX or RLC16

Cotton onlyAdditional area coverage either as

stand-alone or on top of individual coverage

Up to 30% coverage or amount of deductible of individual policy, whichever is less

17

Senate Bill House Bill

Reduce CRP to 25 million acres by 2017 from 32 million current level

Wildlife Habitat program with Environmental Quality Incentives Program

Creates one Easement Program with two legs – Agricultural Land Easements and Wetland Reserve Program Easements

Create new Regional Partnership Program

Limit CSP enrollment to 10.4 million acres annually

Limit CSP enrollment to 9 million acres annually

Fund EQIP at $1.455 B in FY13, $1.645 B in FY14 and $1.65 B in FY15

Fund EQIP at $1.75 billion annually

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Democrats Republicans

Stabenow (MI) Cochran (MS)

Leahy (VT)) Roberts (KS)

Harkin (IA) Chambliss (GA)

Baucus (MT) McConnell (KY)

Brown (OH) Johanns (NE)

Casey (PA) Boozman (AR)

Klobuchar (MN) Grassley (IA)

Bennet (CO) Thune (SD)

Gillibrand (NY) Hoeven (ND)

Donnelly (IN)

Heitkamp (ND)

19

Frank Lucas (OK)

Bob Goodlatte (VA) Scott DesJarlais (TN)

Steve King (IA) Chris Gibson (NY)

Randy Neugebauer (TX) Vicky Hartzler (MO)

Mike Rogers (AL) Reid Ribble (WI)

Mike Conaway (TX) Christy Noem (SD)

Glenn Thompson (PA) Dan Benishek (MI)

Bob Gibbs (OH) Chris Collins (NY)

Austin Scott (GA) Rodney Davis (IL)

Scott Tipton (CO) Jeff Denham (CA)

Steve Southerland (FL) Richard Hudson (NC)

Rick Crawford (AR) Doug LaMalfa (CA)

Martha Roby (AL) Ted Yoho (FL)20

Collin Peterson (MN)

Mike McIntyre (NC) Filemon Vela (TX)

David Scott (GA) Michelle Lujan Grisham (NM)

Jim Costa (CA) Ann Kuster (NH)

Tim Walz (MN) Richard Nolan (MN)

Kurt Schrader (OR) Pete Gallego (TX)

Marcia Fudge (OH) William Enyart (IL)

Jim McGovern (MA) Juan Vargas (CA)

Suzan DelBene (WA) Cheri Bustos (IL)

Gloria McLeod (CA) Sean Patrick Maloney (NY)

Joe Courtney (CT21