FARGO -- How do you write a farm program that ensures an economic safety net when agriculture's financial results seem to be good and getting better?
How do you make future payments that can be passed with support from farmers in the South, who prefer direct payments, even during good times?
Those were some of the issues facing the region's agricultural organization and political leaders, gathered for the first day of a giant ag policy huddle at the Holiday Inn in Fargo, as part of the conference called "2012 Farm Bill: Issues and Challenges." The event was organized by U.S. Sen. Kent Conrad, D-N.D., and Won Koo, director of the Center for agricultural Policy and Trade Studies at North Dakota State University.
The event opened with a cast of political figures, led by Conrad, who has worked on conference committees negotiating the past two farm bills in 2002 and 2008, the first time that the Upper Midwest had political power that helped lean provisions its way. Conrad was joined by Senate Agriculture Committee members Sen. Amy Klobuchar, D-Minn., Sen. John Hoeven, R-N.D., and Rep. Rick Berg, R-N.D., a member of the House Ways and Means Committee.
The immediate issue facing the congressional ag members is a looming deadline for House and Senate agricultural leadership to propose a farm bill to the Joint Select Committee on the Budget, the so-called "Super Committee," that is trying to cut $1.2 trillion from federal spending.
Senate and House Agriculture Committee chairs and ranking members had said they'd offer the Super Committee a compromise ag bill by Nov. 1, but haven't yet done it.
Typically, farm bill discussions run over two years. This is happening over two months.
2011 or 2013?
Conrad and Hoeven were among those wanting to settle the farm bill through the Super Committee, but others, including Mark Lange, president and chief executive officer of the National Cotton Council, noted that other committees of jurisdiction haven't made the progress the agriculture committees have in their area.
Roger Johnson, president of the National Farmers Union, and a former North Dakota agriculture commissioner, said he thinks it's iffy for the Super Committee to complete its work by the end of the year. The process would then have to wait until 2013 because of the presidential political year, he said.
Conrad was focused on the immediate work of the ag leadership and hinted that Southerners are flexing their muscle for advantage.
"Everybody's got to be subject to payment limitations," Conrad said, without mentioning the Southern farmers who tend to prefer direct payments rather than crop insurance supports that are more popular in the north.
"I'm very concerned about having a farm program that really is defensible. We've got to reserve payments to people who have actually had losses. Conversely, people who have got losses deserve to get some assistance."
"And then, everybody has to be subject to payment limitations," Conrad said. "I've heard things around the edges that some of our friends have arranged a circumstance so that their commodity doesn't have payment limits. No, no, no. That's not going to work. You can't have a circumstance where some of us are playing by a certain set of rules, but some aren't."
Conrad said Congress also mustn't write a program that immediately invites World Trade Organization complaints that would be hard to defend against.
A defensible bill
Both Democratic and Republican leaders were meeting in Washington to talk about progress on their proposal that would cut $23 billion out of farm program spending over a 10-year period (even though the bill itself only runs for five years).
"Once you get beyond $23 billion in savings, it is going to be really hard to write good farm legislation," Conrad said.
Klobuchar said that level of cuts is "something we can work with as we go forward."
She said she and Rep. Collin Peterson, D-Minn., want it to be the "ag senators, those that sit on the ag committees, who come up with how we want to do these cuts instead of having them done to us by a bunch of representatives that don't have farms in their state."
Congress must act on the Super Committee's proposal by Dec. 23. If a bill isn't finished by then, the Office of Management and Budget will just cut the $1.2 trillion.
Those cuts would be $15 billion from agriculture programs over 10 years, but would allow for a "second bite from the apple" at later dates, Klobuchar said. "The last thing we want is to be nickel-and-dimed, again and again and again."
Hoeven said crop insurance needs to be "not only sustained but enhanced" in a new farm bill, and must work with the so-called safety net. He noted crop insurance took a $6 billion hit last year.
High prices forever?
North Dakota receives about $1 billion in farm payments and disaster aid.
"Anybody who believes that farm prices are going to be forever strong hasn't lived through the agricultural history I've lived through in the last 25 years," Conrad said. "Repeatedly, we've heard farm prices are going to be permanently high. How many times have we heard that? One thing I've learned is nothing is permanent when it comes to agriculture, and we have to make certain there is a safety net if we see a dramatic price decline, or if we see natural disasters, or if we see quality losses from any number of factors."
Conrad, chairman of the Senate Budget Committee, has been in the middle of efforts to cut deficits, but at the moment the process is being dominated by the so-called Super Committee. They must report by Nov. 23 to lay out a plan to get deficits and debt under control.
The country needs to get $4 trillion in cuts over the next 10 years to bring down debt, Conrad said. The economy will be hampered if gross debt is more than 90 percent of gross domestic product, he said.
Federal spending is at or near a 60-year high as a share of the economy, while revenue is at or near a 60-year low, he said. "I believe you've got to work on both sides of the equation -- the revenue and the spending side," he said. Revenue increases can be found by changing the tax form to cut deductions and reducing exclusions, credits and preferences, he said.
Conrad has been working for a policy that covers "shallow losses" for farmers.
Other speakers at the conference representing corn and soybeans are making proposals that would be based on multi-county areas, while Conrad would base this support on a farm level.
Meanwhile, issues of regional importance were on display.
Congressional leaders present said it was important to solve the American Crystal Sugar labor disputes for the sake of defending the sugar program, but none, including Conrad, would say which side they think is right. None would say how significant the impasse is nationally in garnering union support for the bill.
Regardless, Klobuchar said she'll have to support the sugar program.
Hoeven said it's very important to keep the no-cost sugar program in place.