The House Ag Committee's passed farm bill was to be considered by the full House at the end of this week. The budget has been a driving force during the farm bill debate. The committee was able to move forward after the House Democratic leadership tapped into the reserve fund to provide an additional $2.6 billion for the energy title, and $4 billion for the nutrition programs.

This farm bill also provides substantial support -- for the first time -- for specialty crops, allocating $1.6 billion for research, market development and block grants. The bill also includes payment limitations reforms, and provides producers with a choice to either use the existing counter-cyclical program or a new counter-cyclical revenue program. The bill contains the strongest energy title of any farm bill considered.

The major fight during the House debate will be the amendment offered by Rep. Ron Kind (D-WI) seeking to shift $12 billion from the commodities title to nutrition and conservation. It also limits program payments to producers with an average annual adjusted gross income less than $250,000. (Look for a report in next week's issue on the outcome of the floor debate.)

The key provisions of the House Ag Committee-passed farm bill include:

Direct payments: remain the same as the 2002 farm bill.

Target prices: (committee passed bill vs. 2002 Farm Bill)

  • Corn -- $2.63/bu., unchanged

  • Wheat -- $4.15/bu., +23¢

  • Upland cotton -- 70¢/lb., -2.4¢

  • Rice -- $4.95/cwt., unchanged

  • Soybeans -- $6.10/bu., +30¢
Loan rates: (committee-passed bill vs. 2002 Farm Bill)
  • Corn -- $1.95/bu., unchanged

  • Wheat -- $2.94/bu., +19¢

  • Upland cotton -- 52¢/lb., unchanged

  • Rice -- $6.50/cwt., unchanged

  • Soybeans -- $5/bu., unchanged
Revenue-based CCP: For the first time, farm program participants will have a one-time option to receive a "revenue counter-cyclical program (RCCP)" payment. A producer will decide between the RCCP and the traditional price-based, counter-cyclical payment. National target revenue per acre and national payment yields per acre for each commodity are established.

National target revenue per acre would be set at:
  • Wheat -- $149.92

  • Corn -- $344.12
  • Upland cotton -- $496.93

  • Rice -- $548.06

  • Soybeans -- $231.87
National payment yields for the RCCP would be set at:
  • Wheat -- 36.1 bu./acre

  • Corn -- 114.4 bu./acre

  • Upland cotton -- 634 lbs./acre

  • Rice -- 51.28 cwt./acre

  • Soybeans -- 34.1 bu./acre
Payment limitations: The committee made reforms to payment limitations. They include:
  • Adjusted gross income (AGI): Under current law, individuals with a three-year average adjusted gross income greater than $2.5 million are ineligible for farm program payments (commodity and conservation) unless 75% of income is ag-related, in which case the $2.5 million limit doesn't apply. The committee will forbid the payment of subsidies to anyone with an AGI of more than $1 million, with no exceptions.

  • Percent of income from ag: Individuals with $500,000 to $1 million in income would have to have 66.66% of that income from ag to get payments.

  • Direct attribution: Would remove the current three-entity rule and move to direct attribution for farm program and conservation payments.

  • Direct payments: Would increase the current cap on direct payments to $60,000 (currently $40,000).

  • Counter-cyclical payment (CCP): Would maintain the current CCP limit at $65,000.

  • Generic certificates: Would remove the use of generic certificates but there would be no cap on marketing loan gains/loan deficiency payments.

  • Married couples: Would allow payments to be doubled for a married couple.

  • Conservation payments: Direct attribution would apply to conservation payments as well as crop subsidies, while increasing conservation program payment limitation to $60,000/year for participants in one program, and $125,000/year for participants in more than one program. This increases the existing payment limitation for both the Conservation Reserve Program (CRP) and the Conservation Security Program (CSP), and lowers the current limitation for the Environmental Quality Incentives Program (EQIP) if participating only in EQIP and raises it by $50,000/year if participating in more than one program.
Payment limitations will be a major issue in the Senate.

Conservation: The committee provided an additional 35% increase in conservation programs. Key conservation provisions include:
  • CRP -- Reauthorized at the current level of 39.2 million acres.

  • Wetlands Reserve Program -- Funded at $1.6 billion with the maximum enrollment at 3,605,000 acres.

  • CSP -- Collapses the three-tiered system and replaces the structure with an annual stewardship enhancement payment to compensate producers for new and ongoing implementation and maintenance of conservation practices and activities.

  • EQIP -- Funding increased by $2 billion by 2012.

  • Sod Saver -- Provides that native grassland and pasture determined by the USDA Secretary to have never been used for crop production shall be ineligible for crop insurance for the first four years of planting.
-- P. Scott Shearer, Washington, D.C. correspondent