OLIVIA -- U.S. Rep. Collin Peterson is optimistic that Congress will pass a new farm bill before its August recess, but a debate with important consequences for his district looms in the weeks ahead.
The House and Senate are in agreement on most aspects of the farm bill, but differ in how they would support production of corn, soybean and other commodities, Peterson told an audience of more than 40 Friday afternoon in Olivia. It was one of a series of meetings the Democratic congressman has conducted throughout the 7th District in recent days to gather input on the bill.
As elsewhere in the district, he heard support for the approach that he and most House members favor. It would allow farmers to opt for either target price or revenue protection.
The House bill would raise target prices to $3.64 for corn and $8.31 for soybeans. It would provide payments if prices fell below the target levels. Peterson believes it is important to provide a "floor" to protect farmers in the event that commodity prices should fall below production cost levels.
In contrast, the Senate prefers only to provide revenue protection. Farmers would have different options to obtain the revenue protection, but either would basically cover "shallow losses." It would provide payments to farmers if their yields fell to 79 to 89 percent of the previous year. Essentially, it would cover the losses that crop insurance does not.
Limitations built into the program would effectively limit the shallow loss payments to about 6 or 7 percent of a farm's gross revenues, Peterson explained.
The Senate version is appealing to those who believe commodity prices will remain high. "I've been around long enough to know better than that," said Peterson. He believes a floor is important to protect against the financial crisis that farmers would face were commodity prices to stay below production costs for two or more years in a row.
He told his audience that the Freedom to Farm bill of 1996 was built on expectations of strong commodity prices. Congress spent three times as much bailing out agriculture as it saved with Freedom to Farm when commodity prices took a multi-year tumble.
It won't work that way this time around, he warned. "If we screw this up, there is no money to bail anybody out. We are broke. We don't dare screw this up," he said of the farm bill.
Both the House and Senate versions of the bill eliminate direct payments to farmers. Both protect conservation by keeping funding for 25 million acres of Conservation Reserve Program lands, as compared to the current 32 million acres. Both also continue rural development funding and programs as currently offered.
The existing sugar program remains intact in both bills. Both the House and Senate versions also include the new dairy program that Peterson favors. It provides a "margin" insurance that would cover the difference between the cost of feed and price of milk.
The congressman cautioned that while the agricultural committees in the Senate and House are in agreement on most of the major issues, all bets are off when the debate reaches the floor in each chamber. Peterson said there are certain to be a range of amendments brought forward, including some to place conservation program requirements on crop insurance.
Overall, the farm bill will represent about a 20 percent reduction in government support for agriculture. The nutrition program will also likely see a spending cut, possibly about 1 percent, he said.
The Senate bill will likely reach the floor for debate in early June, and the House version at the end of June or early July. If the bill is approved as he expects, Peterson said it will be the only major bill that this partisan divided Congress will pass.
He warned his audience that partisanship and the inability to compromise is preventing the country from solving critical financial challenges. He said office holders are unwilling to compromise for fear they will be attacked from within their party. "I am worried about the future of the country, and we all should be," he said.