Home Farm Policy Menu Inside The Beltway -- December '99

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Inside The Beltway -- December '99

Ag policy update from the Midwest Sustainable Agriculture Working Group.

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red ballEmergency Approps - One for the Road
red ballCrop Insurance Pilot
red ballWellstone Merger Amendment
red ballState Meat Inspection on the Table
red ballKucinich GMO Labeling Bill

red ballPrevious editions of Inside the Beltway

Inside the Beltway is Sustainable Farming Connection's online version of the Midwest Sustainable Agriculture Working Group's Washington Report. We reproduce it with MSAWG's permission. Do not reproduce or post to any electronic network without specific permission. Contact Brad DeVries bdevries@cais.com for more information.

Without a doubt, the most fervent prayer around the Thanksgiving tables of Senators and Members of Congress this year will be one of boundless gratitude that they will not have to return to Washington until the next Millennium. That result hung a bit in doubt right up to the end, with key spending bills far from completion just a couple of weeks ago, and a fight over dairy policy, that hardy old perennial, threatening to keep the Senate in session well past bedtime. These dying gasps of this session of the 106th Congress produced enough important exhaust that we felt a Special Edition of this Washington Report
would be warranted.

As for us, we have plenty to be thankful for as well. MSAWG just wrapped up a very constructive meeting in Columbia, Missouri earlier this month, with great attendance from both new and old faces. There was a strong showing by a variety of Missouri groups, and it does appear that we'll be able to fill one long-gaping hole in the MSAWG map, as it appears that two and possibly three organizations from that state intend to join the Working Group. Welcome!

red ballWrapping up Emergency Appropriations

As Congress left town for the year on November 19, the Senate gave final approval to a $385 billion omnibus appropriations bill that included the third emergency supplemental appropriation for agriculture this year and the fourth since last October. And Freedom to Farm was supposed to do what, again? An additional $576 million was appropriated in this final agriculture installment.

In a major piece of good news, the bill includes $94 million to fund a total of $1.99 billion in farm ownership and operating loans, plus $85 million for $547 million in emergency loans. Until the waning days it appeared that a campaign would be needed to prod action on a supplemental for credit early next year. By acting now, Congress has wisely avoided the likelihood of long delays in credit availability as spring planting season arrives. The Sustainable Agriculture Coalition was the leading voice calling for action this year. Our position prevailed despite some complacency on the part of the USDA and a preference by congressional committee leadership for waiting.

While the amount of credit funding brings total loan availability up to and slightly above FY 99 levels, the distribution of the funding is skewed. The largest sum is available to the most costly loan program - subsidized guaranteed lending, in which FSA buys down the interest rate of private commercial loans. Some $62 million -- 69% of the total - is in the appropriation for this account which will subsidize $703 million worth of loans. Direct loans, on the other hand, were limited to $0.8 million for $22 million worth of farm ownership loans and $23
million for $400 million in operating loans, despite being significantly more cost effective. Despite this unfortunate skewing toward private bank interests, however, the bill nonetheless helps ensure loan availability for the coming year.

In another piece of good news, the emergency bill also authorizes USDA to spend $4.7 million to implement the new mandatory livestock price reporting rules. The Department had complained in October that without at least that amount of funding, the new price reporting authority would stall out.

As promised back in October when the regular agricultural funding bill was being considered, the new omnibus bill also includes funds for natural disasters in North Carolina, the mid-Atlantic states and elsewhere. In an unfortunate, precedent-setting action, the new bill includes $10 million for emergency livestock assistance to contract livestock producers who have suffered natural disasters. We presume that much of this money will flow to North Carolina operations producing for Smithfield and other corporate hog and poultry giants.

The bill also includes an additional $50 million in Emergency Conservation Program assistance. ECP assistance is controversial in North Carolina and perhaps elsewhere because of program rules allowing farmers to replace structures - in this case hog waste lagoons - to their pre-disaster specifications. This apparently ignores state policy in North Carolina that intended to phase out these lagoons over time, and the hand of Providence that seemed to argue for their termination on a rather more immediate timetable.

Other provisions include $186 million in crop loss assistance, $3 million in specialty crop assistance, an additional $80 million for flood prevention operations, $20 million for the noninsured crop assistance program, new authority for cotton step-2 program payments for extra long staple cotton, and a directive to USDA to purchase cranberries if surpluses continue.

The bill includes legislative language authorizing the continuation of revenue insurance pilot projects through the year 2001 and providing authority to USDA to make revenue insurance pilots offered in 1999 and earlier years available on a regional, whole state, or even national basis. This language may ultimately help expand whole farm revenue insurance coverage for diversified operations to more sections of the country. The bill provides for an additional $5 million in farm labor housing loans and $4.5 million in farm labor housing grants among several other rural housing funding provisions.

Last but not least, the bill renews the New England Dairy Compact and language forcing USDA to essentially retain the status quo on the overall dairy program rather than moving ahead with its reform plan designed to create a more level playing field between regions. Before the House leadership put the dairy provisions in the final budget bill, they deleted earlier plans to extend the compact to the Mid-Atlantic States and to authorize a new southern compact.

In the Senate, Midwestern Senators led by Herb Kohl (D-WI) threatened to hold up the whole bill - and along with it the Senate's hopes for a before-Thanksgiving Day adjournment - until the dairy provisions were removed. In Kohl's case, this effort even earned him a feature story in the New York Times, essentially asking "why are his colleagues so cheesed-off at this nice man?" 

In the end, the Midwesterners settled for assurances from Majority Leader Trent Lott (R-MS) that the issue would be voted on again next year. Despite the end-of-session theatrics over dairy, the sense in the Senate at least is that the tide is turning against compacts and toward at least some minimal reform.  

Interestingly enough, New York Times stories on the issue over the past couple of months have begun referring to a Northeast dairy "cartel" rather than a "compact."

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red ballAGR Revenue Insurance Pilot Project Update

In its very first year of operation, the so-called Adjusted Gross Revenue (AGR) pilot project -- which allows farmers with diversified operations to insure based on whole farm gross revenue -- sold 70 policies, nearly all in a 5-county area of Michigan. The program was available only in those counties, plus 6 counties in Florida and much of New England. Information about claims will not be known until next summer.

The Risk Management Agency reports that feedback on the program's whole farm design has been positive. RMA has announced an expansion of the program for the 2000 crop year to include 3 counties in Idaho and one county in eastern Oregon, plus all of Connecticut, Rhode Island, and Vermont, and additional counties in New Hampshire and Maine, thus making New England in its entirety an eligible pilot area. Unfortunately, RMA has not yet expanded within the Midwest, and continues to mistakenly target the program solely to regions without conventional revenue insurance options.

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red ballWellstone Merger Moratorium

For proof of the old adage "money speaks for money," you wouldn't have to go much further than the quote in the Associated Press story on the defeat of Sen. Paul Wellstone's Merger Moratorium amendment last week. Just after the lead, the story reads: " If you want to help farmers, this is not the way to do it,' said Sen. Gordon Smith, an Oregon Republican who made millions in the frozen foods business."

The Wellstone amendment would have blocked mergers and acquisitions of agribusiness firms above a certain size (one party with revenues over $100 million and the other over $10 million) for 18 months. The moratorium would terminate before 18 months if Congress enacted legislation to address concentration in agriculture, or if Hades acquired a National Hockey League franchise (Note: the NHL's expansion Carolina Hurricanes come awfully close to meeting that latter test).

The amendment failed by a vote of 27-71, with Iowa Senator Charles Grassley the only Republican voting Aye. In spite of the lopsided vote, many Senators described the debate as the opening salvo in a closer legislative look at the merger mania that has gripped U.S. agriculture, further tightening the stranglehold of a few firms on the processing sector. It's quite clear that this debate will continue; on the last day the Senate was in session, Senators Harkin and Lugar introduced a bill (S. 1984) to establish an Agricultural Antitrust Division at the Department of Justice. The bill was referred to the Judiciary Committee (Sen. Hatch chairs) where it will be one of a variety of new ag antitrust bills under review during hearings early next year.

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red ballState Meat Inspection Introduced

As we reported in the not-so-special November 1999 edition of Inside the Beltway, USDA had proposed legislation to allow interstate shipment of meat from state-inspected packing plants. As the session wound down, Senators Daschle and Hatch officially introduced the bill, with Sens. Harkin, Conrad, Baucus, Johnson, Dorgan, Bingaman, Burns, Brownback, and Voinovich as original cosponsors.

As with the USDA proposal, the bill will require state inspection agencies to enforce the federal Hazard Analysis and Critical Control Point (HACCP) standard, with one year to adjust to any changes. Meat from state-inspected plants would then be available to ship interstate.

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red ballGMO Labeling Bill

Also in the hopper and under the wire before the end of the Session was Rep. Kucinich's "Genetically Engineered Food Right To Know Act." HR 3377 would require food products that contain or are produced with a genetically engineered material be labeled as such. Kucinich has 18 original cosponsors on his bill, including only two other Midwesterners: Rep. Bonior (Michigan) and Rep. Brown (Ohio). The bill went to the Committees on Agriculture (no current cosponsors on the bill) and Commerce (Rep. Brown is the only Commerce member currently on HR 3377).

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