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Only time will tell what the debt deal means for agriculture

by Chris Hinyub, published

The debt ceiling deal reached late last month might have temporarily reassured foreign debt holders, but the same can't be said of American farmers who anxiously await some decisions on cuts to agricultural spending. Though agricultural leaders are uncertain what these cuts will mean for farmers, they are sure that American food producers will have to do more with less.


The plan to address the nation's massive budget deficit with an immediate $900 billion in government spending cuts and over $1 trillion in future cuts, either decided on by a congressional “Supercommittee” or done automatically if that body can't come to an agreement, deferred an answer to the ag-budget question to a later date. According to Ferd Hoefner of the National Sustainable Agriculture Coalition, lawmakers will announce their ag-spending reforms with a new Farm Bill, expected to pass later this year.


Hoefner points out that Legislators have recently considered significant cuts, including negotiations with ag officials led by Vice President Joe Biden that would have withheld more than $30 billion in agricultural spending over 10 years. In his House Budget plan, representative Paul Ryan (R-WI) suggested $48 billion in cuts. If these considerations are any indication of which way the winds are blowing, it's a safe bet to say the 12-member Supercommittee will call for significant cutbacks to agriculture in the coming months. The particularly worrisome part for Hoefner is that the New, New Deal will likely render House and Senate agriculture committees powerless to dictate which programs will get the axe.


Jon Doggett, head lobbyist for the National Corn Growers Association, told that:


     “one thing all of agriculture will be very interested in and supportive of making sure the ag committees will have input.”


Industry insiders are hoping that ag committees will at least be given spending amounts with which to work. Otherwise, they say the new committee on deficit reduction might as well be writing the farm bill – a scary prospect for members of the commodity and the specialty-crop farming camps who rely heavily on federal aid in the form of either direct subsidy payments and crop insurance protection in the case of the former, or spending through USDA conservation programs in the case of the latter.


     “Something in the good government side of me says the committees of jurisdiction should have the chance to decide how the cuts will be made,” said Hoefner.


Another fear of agricultural leaders is that even if ag committees have input into the process, they might be rushed into passing detrimental legislation. Jon Scholl, president of American Farmland Trust (AFT) anticipates that Congress will take about 10 weeks to finalize the next Farm bill, far too narrow a time-frame to make a fair call.


     “A farm bill that is not deliberate and well-thought out could be a long-term disaster for agricultural policy,” Scholl said in an AFT press release.


He added:


     “In the spring, Chairman Lucas, R-Okla., indicated that he needed time to get his committee up to speed and ready to write a bill. While the House has had many hearings to review how programs work, neither they nor the Senate have spent equal time examining what the future holds for programs. I agree with Chairman Lucas, we need the time and some semblance of normal order to work through what could be a transformational farm bill.”


U.S. Secretary of Agriculture Tom Vilsack has already indicated the shape that federal policymakers would like the Farm Bill to take: one that encourages job growth through a bolstered export trade.  When speaking with the Post-Crescent News, Vilsack remarked:


     "Obviously, we have to have a government that spends less but invests in its resources wisely, so this means we have to develop the economy that makes, creates and innovates and when we do, we will be a nation that exports and that will help us create jobs and increase family incomes."


If boosting agricultural sales around the world is a national priority, then agriculturally diverse states such as California and Wisconsin (whose booming export economies have seen growth throughout the Great Recession) will certainly play critical roles in this new economic model.  The USDA anticipates that 2011 will prove to be the best year in the history of agricultural exports. Government estimates show that 8,400 jobs are created for every $1 billion raised through agricultural exports, says Vilsack.


Among all the uncertainty, one thing is set in stone: the current plan to cut spending by $2.5 trillion over a decade won't come close to eliminating the deficit. It can only work to slow its growth. When lawmakers make their way back to the drawing board, their decisions will be guided by principles that differ from the fiscally-unrestrained ones of the past. In the words of Scholl:


     “Congress is now asking very different questions. Rather than asking how a program works, or how it can be improved, they are asking what is the appropriate societal benefit for the program, what is the role of government, and how can we ensure programs best serve producers and society?”

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