Thursday, December 18th, 2014

The Obameter

Limit subsidies for agribusiness


"Obama will implement a $250,000 [farm commodity] payment limitation so that we help family farmers, not large corporate agribusiness. Obama will close the loopholes that allow megafarms to get around the limits by subdividing their operations into multiple paper corporations."


Updates

Limits included in Senate's farm bill, but not House's

During the 2008 presidential campaign, Barack Obama promised to "implement a $250,000 payment limitation” for farm commodities, "so that we help family farmers, not large corporate agribusiness.” He also pledged to "close the loopholes that allow megafarms to get around the limits by subdividing their operations into multiple paper corporations."

Obama's budgets have called for some payment reform, though not a $250,000 limit specifically. Nothing has passed Congress, but the Senate-passed farm bill does include a $250,000 payment limit. Technically, the bill caps "shallow loss payments,” which protect farmers from smaller revenue losses than under existing federal crop insurance programs, at $100 for a married couple, while capping additional types of payments known as marketing loan gains and loan deficiency payments at $150,000 for a married couple, for a total cap of $250,000.

The Senate bill would also close the "loopholes that allow megafarms to get around the limits by subdividing their operations into multiple paper corporations,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition.

The Senate bill is still pending in Congress, with action possible, but not likely, during the lame-duck Congress. If not passed before the end of 2012, it would likely be considered in 2013, but it would have to be re-filed, with no guarantee that these provisions would remain.

More importantly, though, the House version does not include these limits -- and any bill that advances needs to be reconciled between the two chambers. The opposition of one chamber makes their inclusion far from guaranteed.

On the loophole-closing portion of the promise, Hoefner added that the 2008 farm bill directed the executive branch to rewrite these provisions. President George W. Bush's administration made an attempt and did "minimal reform,” Hoefner said, and the Obama administration did not carry the ball further.

It's possible that the pending farm bill could make this pledge a reality, but that seems like a long shot. If it does, we'll change our rating. Until then, we'll call this a Promise Broken.

Sources:

Text of S. 3240, "An act to reauthorize agricultural programs through 2017, and for other purposes

Heritage Foundation, "Shallow Loss: The 2012 farm bill"s New Subsidy Program,” July 10, 2012

National Sustainable Agriculture Coalition, "Commodity Payment Limit Reform: Senate 2012 farm bill Floor Debate,” accessed Nov. 29, 2012

Email interview with Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition, Nov. 28, 2012

Congress stalls limits on farm subsidies

President Barack Obama wants a limit on agricultural payments, but Congress doesn't want to go along.

Obama campaigned on a pledge to limit individual farm payments to $250,000. Obama said that would ensure family farms and not "corporate agribusiness" got the money.

But measures to do just that recently died in committee in both the House and the Senate.

In his budget outline, Obama also proposed a different way to limit farm payments. If a farm had more than $500,000 in gross sales, it wouldn't get payments under Obama's plan.

That didn't get anywhere either. Neither the House nor the Senate included it in the budget outlines passed April 3, 2009.

It is possible that farm payments may come up again this year during the appropriations process. But people who follow agriculture policy said the chances for that are remote.

"I think it may be done for the year," said Otto Doering, a public policy specialist on agriculture at Purdue University. Congress passed a major farm bill last year, and revisiting the question of farm payments would be both complicated and controversial, he said.

"The farm bill was passed last year, and no one wants to touch it again," said Liz Friedlander, a spokeswoman with the National Farmers Union, which opposed the limits for farms with more than $500,000 in gross sales. Some farms of that size still struggle to turn a profit and should not be excluded from payments, she said.

As it stands now, the farm bill covers a five-year period and will expire in 2013. Is it possible we haven't heard the last from the Obama administration on farm subsidies? Sure. But given that Congress has rejected Obama's plans for the 2010 budget, we're moving the meter on this one to Stalled.

Sources:

Thomas, Senate Resolution on the budget , April 3, 2009

Thomas, House Resolution on the budget , April 3, 2009

CQ, House Panel Approves Fiscal 2010 Budget Resolution (committee vote on $250,000 limit), March 25, 2009 

Sen. Chuck Grassley, Transcription of Senator Grassley Conference Call with Agriculture Reporters , April 7, 2009

Interview with Otto Doering of Purdue University

Interview with Liz Friedlander of the National Farmers Union

CQ Politics, Hard road ahead for plan to cut big farm subsidies , April 5, 2009

Farm subsidies get trimmed in Obama budget proposal

President Barack Obama wants to direct federal agriculture subsidies away from "megafarms" and toward small farmers and sustainable agriculture. His 2010 budget proposal includes several ways to do this.

As he stated in the campaign promise above, he wants to limit farm commodity payments so that no one producer would get more than $250,000. But he also wants to stop larger farms from getting any payments. If a farm has more than $500,000 in sales revenue, it wouldn't get payments under Obama's plan. (He phases out the subsidies over three years.)

Obama's plan says these larger farms should replace the lost subsidies by expanding into new green initiatives.

"Large farmers are well positioned to replace those payments with alternate sources of income from emerging markets for environmental services, such as carbon sequestration, renewable energy production, and providing clean air, clean water, and wildlife habitat," his proposal states. "USDA will increase its research and analytical capabilities and conduct government-wide coordination activities to encourage the establishment of markets for these ecosystem services."

Several farming organizations, such as the National Cotton Council, are opposing these changes.

"The president's proposed limit penalizes the farms that are responsible for the majority of food, feed, and fiber production in the United States," Cotton Council chairman Jay Hardwick said in a statement. "According to the 2007 Census of Agriculture, farms with sales of $500,000 or more accounted for almost three-fourths of all agricultural products sold."

A reporter asked Agriculture Secretary Tom Vilsack about the administration's commitment to a $250,000 cap during a news conference on March 31.

"Obviously, this is a process in which Congress has a lot to say about precisely what the priorities ultimately will be and how they're funded," Vilsack said. "We should be open, as we are, to ideas and suggestions that Congress may suggest."

That doesn't sound like a rousing defense of a cap to us, so we will be watching to see what happens to this proposal. For now, since Obama has included it in his budget outline, we rate this promise In the Works.

Sources:

White House Office of Management and Budget, 2010 budget outline: Department of Agriculture

National Cotton Council, President"s Budget Undermines Confidence in Farm Policy , Feb. 8, 2009

Chicago Tribune, Farm subsidies are targeted for cut , Feb. 27, 2009

Delta Farm Press, Obama's budget brings strong ag reaction , Feb. 27, 2009

CQ.com, Secretary of Agriculture Vilsack Holds News Teleconference on the President's Budget and Rural America, March 31, 2009