Nutrition Title Remains a Sticking Point for Ag Bill
Published: Friday, January 12, 2024
With all the optimism being expressed about Congress possibly getting its act together to pass a farm bill this year, there is at least one voice saying it might not happen. That person, Brad Lubben, policy specialist at the University of Nebraska, spoke last week at Purdue University's Top Farmer Conference in West Lafayette.
The 2018 Farm Bill expired at the end of last September, but Congress extended that legislation by one year. That means Congress needs to pass the farm bill this year or risk falling back to the permanent legislation adopted in 1949. That pushes the debate into a presidential election year, which decreases the likelihood of action.
Prior to 2014, most previous farm bills were passed in a bipartisan manner, but Lubben said that hasn't happened lately. The Republicans want to cut spending while the Democrats are firmly against any spending reductions. There is very little middle ground, he said.
Most of the disagreement centers on the Nutrition Title, which represents over 80% of farm bill.
In 2014, the political parties couldn't agree on cuts to food assistance programs, so the House of Representatives split the farm bill into two versions: farming and food. Congress eventually married the two versions, along with the Senate bill, and passed a final bill.
In 2018, partisanship in the House once again prevented a smooth approval process. Congress ultimately passed the farm bill without any increases in spending.
"If we're talking politics, we are again heading toward the same kind of debate this go-around," Lubben said. "I shouldn't say we're heading toward it, we've already met it. We were supposed to have a farm bill done last September and it didn't happen."
Heading into 2024, the battle lines are clearly drawn, with Republicans wanting to tighten eligibility for food assistance programs and Democrats fighting to retain the status quo.
"We are still fighting the same Nutrition battle," Lubben said. "We fought it earlier in 2023 over the debt ceiling deal. Ultimately, we came up with a little bit of a compromise that promised some cuts and tighter eligibility rules. Well, that debt ceiling deal ultimately cost Speaker McCarthy his job, among other things."
Farm bill spending has followed an upward trajectory in recent years, mostly due to increases in the Nutrition Title. The 2018 Farm Bill budget totaled nearly $900 million over a 10-yAear period. The 2023 baseline was around $1.7 billion, with most of the increases coming from an expansion of food assistance programs that were ushered in during the COVID era.
While Republicans want to rein in spending, Democrats are quick to point that the Supplemental Nutrition Program, or SNAP, helps prevent food insecurity and keeps people out of poverty.
With a presidential election looming in November, Lubben doesn't see much hope that Congress will pass a farm bill before then.
"I'm about as pessimistic today about the prospects of getting the farm bill done in 2024 as I was in early 2023 about getting it done on time," he said.
He added that if Congress can't pass a farm bill in the first half of 2024, chances are even less that it can pass one during the second half of the year.
If Lubben is wrong and Congress does pass a farm bill this year, it will have to overcome several challenges. In addition to the nutrition fight, the list of challenges includes commodity program revisions, conservation program spending and Commodity Credit Corp. spending. Each of these programs have the biggest "bank accounts" in the farm bill.
To pay for spending increases in one area in a constrained budget environment, Congress will have to look for "big bank accounts to rob," Lubben said.
"Well, the biggest bank account is Nutrition," he said. "Everybody wants to figure out a way to rob nutrition to pay for everything else."
Regarding Commodity programs, no cuts are currently being proposed. However, some interests would like to change how the safety net programs work. Any changes that will strengthen the safety net will cost money. Lubbens said there is a push to raise the support levels for the safety net programs.
Spending on conservation programs has dramatically increased over the past 30 years. Lubbens said the debate will center on how $4 billion from the Inflation Reduction Act—intended for climate-smart farming practices—will be spent. Some groups would like to restructure that authorization.
Finally, the secretary of agriculture has discretion over the Commodity Credit Corp. and how that money is spent. Lubbens said CCC has a balance of $3 billion per year.
"That becomes a bank account of its own," he said.
With the lack of bipartisanship in Washington, Lubbens said the farm bill faces an uncertain future. He said no one wants to see the farm bill revert to the 1949 law, so one possibility would be to extend the 2018 Farm Bill by another year. A more radical choice would be to have a permanent farm bill that wouldn't need congressional action every five years.
In another important topic, Lubbens said crop farmers must decide by March 15 which safety net program they want to participate in. He said the decision is more difficult this year.
Corn and soybean producers must choose between the PLC (Price Loss Coverage) and ARC (Agriculture Risk Coverage). Farmers won't receive payments from either program in the 2023 marketing year and should expect only minimal payments for the 2024 marketing year, he said. That's one reason why many farm groups want to raise the reference prices.
Lubbens said the decision for 2024 is a little more complicated because of an accelerator clause that fixes the payments at 85% of the five-year Olympic average. The 2024 PLC reference prices are $4.01 per bushel for corn, $9.26 per bushel for soybeans and $5.50 per bushel for wheat. For corn, that's nearly a 10% increase over the 2023 price of $3.70 per bushel.
"This is the first year that prices have been high enough, long enough that this reference price accelerator clause actually happens," he said.
The 2024 ARC reference prices are $4.08 per bushel for corn, $9.37 per bushel for soybeans and $5.34 per bushel for wheat.
The two safety net programs work differently, Lubbens said, with PLC providing protection against price declines and ARC providing revenue protection from low prices or low yields.
For PLC payments to kick in, corn prices would have to drop at least 10%. For ARC payments to trigger, revenue would have to decline by at least 9%. The percentages are similar for soybeans and wheat.
"I could make an argument that ARC is a stronger safety net because it is protecting revenue instead of just price," he said. "I could make an argument about which one is expected to pay more. But for corn, it's pretty dang even. For soybeans, it's pretty dang even. It's a more difficult question to resolve this year."
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