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UNCERTAINTY: Finding a compromise will be difficult, but the House and Senate bills do provide some direction for key components of the legislation.

Farm bill moves forward to conference committee

Policy Report: Challenge is finding compromise between the House and Senate versions.

By Brad Lubben

The 2018 Farm Bill moved two steps closer to completion in late June when both the House and Senate passed their respective versions of the bill, setting the stage for a conference committee to work on differences in the coming weeks.

The disparate bills faced different paths to get to conference. The House bill put forward by Agriculture Committee Chairman Mike Conaway, R-Texas, included continued farm program support, but substantial changes to the nutrition title and the Supplemental Nutrition Assistance Program (SNAP). It attracted only partisan support and failed in its first vote in May, but was reconsidered and passed by a narrow 213-211 margin June 21 with no Democratic support and some Republican opposition.

In contrast, Senate Ag Committee Chairman Pat Roberts, R-Kan., and Ranking Member Debbie Stabenow, D-Mich., worked on a broad bipartisan bill that passed overwhelmingly 86-11 on June 28 with no Democratic opposition and limited Republican opposition.

The challenge now is crafting a compromise between the two bills, given very different objectives and political battles embedded in the proposed language. Finding a compromise that could pass in both chambers will be difficult, creating a still uncertain path forward for the farm bill. However, the two bills do provide some perspectives and direction for major elements of the legislation.

Farm income safety net
Under either version, the farm income safety net, including both commodity programs and crop insurance programs, would remain largely intact. The House and the Senate both propose reforms to the Agricultural Risk Coverage program to rely more on crop insurance yield data, a move with broad ag group support that seems certain to proceed. The Senate version goes further with a trend-adjusted yield history to strengthen the ARC guarantee.

The House language ratchets up the reference price for ARC and Price Loss Coverage programs if market prices return to above-reference-price levels, while the Senate heard, but did not adopt language to cut PLC support and use the savings to strengthen the ARC guarantee even further.

For all the debate on ARC and PLC components, the most important consideration may be that both bills propose a new decision for producers in 2019.

Two other areas of the commodity title also received substantial attention. Both bills propose to add further protection and support to the dairy margin program that was substantially revised in appropriations legislation in February. Both bills also addressed payment limits, but in different directions.

The House bill would loosen rules slightly on entities and family member exemptions, while the Senate bill would tighten the eligibility rules substantially. The Senate bill reflects some of the payment limit language championed by Sen. Charles Grassley, R-Iowa, reducing the adjusted gross income cap from $900,000 to $700,000 and strengthening the management requirements for active engagement to be eligible for payments.

Relative to the changes in commodity programs, the crop insurance programs were left virtually unchanged. While there were proposals to cut crop insurance support in both chambers, none of the proposals proved to be a serious threat to existing crop insurance programs and support.

Conservation acres to increase
The conservation title contains significant differences between the House and Senate bills, particularly in the Conservation Reserve Program and the working lands programs. Both bills propose to increase the acreage cap on CRP, and pay for it, at least in part, with reduced rental rates going forward.

The House version raises the acreage cap from 24 million to 29 million, with an 80% rental rate cap. The Senate version raises the cap to 25 million, with an 88.5% rental rate cap. As an aside, the Senate bill also includes a Soil Health and Income Protection Program for short-term land retirement championed by Sen. John Thune, R-S.D.

The bigger difference is with the working lands programs. The House bill cuts the Conservation Stewardship Program and combines the stewardship component with the cost-share component of the existing Environmental Quality Incentives Program. Total EQIP funding is increased, but to only about two-thirds the level of the current CSP and EQIP programs combined.

In contrast, the Senate bill keeps EQIP and CSP intact, albeit at marginally reduced funding levels. Some of the savings is invested in the conservation easement and partnership programs to restore declining funding levels over the life of the current farm bill.

Biggest divide lies in food assistance
By far, the biggest difference between the House and Senate bills is in the nutrition title with SNAP provisions. The House bill was written to appeal to conservative calls for SNAP reforms and tightens eligibility rules and benefit calculations. The House version also beefs up work requirements, and adds job training and education programs to serve those faced with increased work requirements.

While the House bill spends about as much on the training and education programs and other smaller initiatives as it saves on reduced enrollment and benefits, it drew sharp criticism over the number of current participants that would see cuts in benefits and garnered no support from Democrats and some Republicans when the bill moved through the House.

The Senate bill includes some reforms to SNAP, including increased oversight to reduce fraud and waste in the program. But it didn’t include any of the controversial, partisan proposals for reform and maintained broad appeal in the Senate, where bipartisan support is necessary to get over the 60-vote threshold to overcome any potential filibuster.

Moving forward
The contrasting proposals for SNAP should prove to be the biggest challenge to completing the farm bill. The conference committee will seek compromise on differences and could likely resolve most issues short of SNAP in relatively short order. The question will be how quickly and in what direction a compromise can be achieved on SNAP.

If things move in a timely fashion, a compromise bill could be ready for final passage in late August and be approved before the current farm bill expires at the end of September. Alternatively, any hang-ups in conference or any posturing in the final weeks of the campaign leading up to the general election in November could delay completion of a bill until after the election in a lame-duck session of Congress.

Of course, if negotiations fail or if the election produces a major shift in power or control in Congress, the whole process could be thrown aside and an extension of current legislation quickly moved forward to push the farm bill debate into 2019.

While we may still need to wait a few weeks or months to see the results of the farm bill debate, we can be confident now that there will be a new decision between ARC and PLC for producers in 2019, either in a new farm bill or in an extension of current legislation.

With all the other market uncertainty due to trade conflicts, bioenergy policy conflicts and production issues, it is a reminder to producers of the importance of incorporating farm programs, crop insurance, marketing and production decisions together into a sound, integrated risk management plan for the year and years ahead.

Lubben is an Extension policy specialist at the University of Nebraska-Lincoln.

 

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