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2007 Farm Bill Goes to Senate

posted on October 26, 2007

Hello, I'm Mark Pearson. Reports this week from both the public and private sectors revealed more problems in the beleaguered housing market.

According to the National Association of Realtors **sales of existing homes fell 8 percent in September. The seasonally adjusted annual sales rate of just over 5 million units, if realized, would be the slowest pace on record.

**A subsequent Commerce Department report, however, showed new home sales rose 4.8 percent in September from August's levels. That news should have been friendly to the stock market, as economists had predicted a decline. **But the Dow trended lower since the gain was due to a downward revision of August sales to the lowest level in more than a decade.

**Investor uncertainty was exacerbated by an unexpected decline in orders for durable goods, which left **Wall Street pondering whether the Federal Reserve will be compelled to lower interest rates again next week to boost spending.

In rural America, where hardly anything seems certain these days, farm policy reforms got one step closer to becoming a reality, as the Senate Agriculture Committee unanimously approved the $288 billion dollar Food and Energy Security Act -- commonly known as "The Farm Bill."

2007 Farm Bill Goes to Senate

lHighlights of the measure include:

-increased spending for nutrition programs

-more funds for conservation programs

-money for energy crops

-a ban on packer ownership of cattle

-a permanent disaster aid program

-And reinstatement of the Country of Origin Labeling program.

Even with the unanimous vote, some committee members were still concerned about the amount and manner of subsidy payments to farmers.

Sen. Pat Roberts, R-Kansas: "Now I defy anybody to stand up in front of any farm organization, any commodity group, and explain this ACR program and how it works and not reach the conclusion that down the road you are denying crop insurance to where it is needed the most."

Long before leaving his position as Secretary of Agriculture, Mike Johanns appealed to members of both House and Senate Agriculture committees to reform the so-called "safety-net" for farmers. In what appears to be a nod to the request, the Senate Agriculture Committee did cap payment limits but only for non-farmers. Those farmers earning an adjusted gross income, or AGI, above $750,000 would no longer receive any subsidy payments. The House version of the bill caps AGI at $1 million for fulltime farmers and the current law sets the mark at $2.5 million.

This part of the measure met with considerable criticism from Republican Senator Charles Grassley of Iowa who favors much lower limits on farm payments.

Sen. Charles Grassley, R-Iowa: "These reforms are window dressing; they don't accomplish much at all."

The American Farm Bureau took the opposite tack, asking for the current subsidy programs to remain in place.

Farm state Senator Byron Dorgan, a North Dakota Democrat, will join Grassley to introduce an amendment capping government payments at $250,000.

Tara Smith, American Farm Bureau Federation: "We actually support maintaining the safety-net structure that is in place. We think its worked really well for farmers over the last few years."

Not wishing to slow down the committee process, several Senators elected to hold their amendments until the legislation reaches the Senate floor.

Overall, Acting Secretary of Agriculture Chuck Conner was displeased with the bill. His objections were centered on what he felt was the lack of meaningful reform to farmer payment programs and an apparent unwillingness by the committee to institute payment limits.

The other sticking point was over the type of payment programs. The current farm safety-net will remain in place until 2010 when a new program called Average Crop Revenue or ACR, will be offered. Similar to elements in the House bill, ACR will pay farmers only when prices are down. The National Corn Growers Association, among many commodity groups, has been a proponent of ACR and the Congressional Budget office figures indicate the program will save $3.7 billion over the 5 year life of the bill.

Farm advocacy groups like the National Farmers Union have objections to ACR because the payments come in the form of a loan. Farmers would be required to pay back the difference between what they received in ACR payments and the amount they were paid for their crops.

And the program didn't fair well with Republican Senator Pat Roberts of Kansas either.

Sen, Pat Roberts, R-KansasL: "In the nine hardest years for Kansas wheat producers the program would have paid out only twice. Seven out of those nine years we would not have been, or we would have been in the same boat under this ACR program. That got my attention."

Several senators also were concerned ACR would encourage farmers growing major crops like corn to drop out of the crop insurance program.

The bill now goes to the Senate floor for debate.


Tags: agriculture Congress government housing news policy