As farm bill passes, senators vow to revisit family farm issues

Environmental & Energy Publishing


Washington, D.C. -President Bush signed into law a new six-year farm policy on May 13 that he and congressional agriculture leaders are calling the greenest ever. But some say more important than the $17.1 billion boost to USDA's conservation toolbox are other aspects of the bill that could hurt the small, independent farmers environmentalists view as the vanguards of farmland stewardship.

Included in the bill is the new Conservation Security Program, authorized at $2 billion, that gives farmers incentives to embrace conservation practices on land they keep in production -- a departure from older conservation programs that simply pay farmers to idle sensitive lands. Introduced last year to rave reviews from farm and conservation groups alike, the CSP addresses complaints that land-idle programs hurt rural economies and U.S. trade.

The Grasslands Reserve Program, another new program that has created a rare alliance between conservation groups and ranchers, offers ranchers rental payments in return for a promise not to develop their range land for a minimum of ten years. "The GRP will, in this time of uncertainty and change, help continue the ranching tradition by preserving the open spaces for future generations," said Chandler Keys, a Vice President of National Cattleman's Beef Association.

Also included in the bill is $1 billion over 10 years for the Farmland Protection Program -- an effort to stave off sprawl buy helping farmers sell development rights. Conservation groups raised a ruckus when this program ran out of cash for the 2002 fiscal year, result of insufficient funding authority in the last farm bill, and some were happy with the eight-fold increase. "This is a major breakthrough for the future of our nation's farmland," said American Farmland Trust President Ralph Grossi.

But as the bill passed out of conference committee and headed to final passage, however, much of the environmental debate over the $190 billion legislation focused not on the conservation title, but rather on other measures that will determine the viability of family farms in the years to come. Many conservationists argue that farmers who live on land the family has owned for decades are more likely to take care of it than a corporation managing a factory farm from afar. And by spreading out production, a large number of family farms will have a smaller impact than one large operation that might replace them, they say.

Thus, as the bill broke into the home stretch of final congressional passage, some conservation groups found themselves allied with small farm organizations in opposition to a bill they felt was disfigured by the conferees. Helping argue their positions in Congress were fiscal conservatives who said the law would be a boon for large corporate farms at the expense of the national treasury.

Subsidy limits

As the bill emerged from conference more than two weeks ago, one of the most divisive issues was that of the limit on subsidy payments. Current law allows a farmer to get $460,000 per year, and the new limit agreed to by conferees is $100,000 less. Moreover, the new $360,000 limit is nearly $200,000 less than the cap House agriculture leaders wanted.

Still, many felt the conferees usurped the will of Congress. Not only did the conferees drop the Senate-approved cap of $275,000, but it also pushed aside a non-binding motion, approved by the House during the conference, telling the conferees to adopt that Senate limit.

And the final bill coming out of conference also allows large producers unlimited access to government money through generic certificates, critics say. The Environmental Working Group recently posted data on its Web site showing the top recipients of the certificates. The data, compiled from USDA records, shows that 13 farms received $1 million or more from those payments in 2000 and 2001. The top recipient, Riceland Foods Inc., received $221 million during those two years, according to list.

"This is a bill that will destroy family farming and undermine rural communities using taxpayer money," said Chuck Hasterbrook of the Center for Rural Affairs. "The $360,000 payment caps is misleading. On some payments, like loan deficiency payments using generic certificates, there are no limits. You'll still see large operations getting $5 or $10 million."

"There's no effective payment limitation," agreed Sen. Charles Grassley (R-Iowa) who tried in vain to defeat the final bill on the Senate floor. "You're still going to have 10 percent of the farmers getting 60 percent of the farm benefits, particularly the corporate farms of the south."

Senate Agriculture Committee Chairman Tom Harkin (Iowa) conceded the conference compromise on payment limits was not exactly what he would have liked, but he said there were good reasons for some of the decisions. "To take away the use of certificates would have an effect on major commodities' competitiveness overseas," he said.

And Sen. Blanche Lincoln (D-Ark.) said the lower subsidy cap would simply discriminate against crops that cost more to produce. "$360,000 was a compromise and it is a good compromise," she said. "If you want to put all the capital-intensive crops, like cotton and rice, out of business, you could have a one-size-fits-all bill. But I don't think the American people want that."

Others said having strict payment limits creates undue government meddling in the structure of the industry. "If we're only going to pay small, disadvantaged farmers, we might as well just make it welfare program," said Rep. Richard Pombo (R-Calif.).

Still, the issue is likely to come up again. Sens. Byron Dorgan (D-N.D.) and Grassley, who authored the limits that became part of the Senate bill, have said they will introduce the caps as an amendment to the agriculture appropriations bill this year.

And Harkin said he will consider tightening the caps again after a bipartisan commission, consisting of senators, House members and administration officials, reviews the issue. More immediately, he said, the bill prevents any subsidies from going to entities with more than a $2.5 million yearly adjusted gross income. "Under this bill people like Scotty Pippen and Ted Turner wont get a dime," he said.

Packer ban

Another hotly debated issue in the post-conference debate likely to reemerge in future Senate Agriculture Committee hearings is that of meat packers owning livestock. The Senate bill would have prevented packers from owning livestock up to two weeks before slaughter, a measure meant to preserve competition in the livestock sector and protect small- mid-sized farms from companies like Cargill that are gaining an increasing share of the market. The conferees did not adopt the packer ban in the final bill.

Rhonda Perry of the Missouri Rural Crisis Center says market consolidation as a result of packer ownership of livestock threatens to eliminate the most efficient producers. "The largest meat packer is also the largest livestock owner. It givest them the ability to control the marketplace," she said.

"Clearly we prefer more competition to less competition," said Billy Dierlam of the NCBA. "But we don't think we would be better off with a government regulation that determines the structure of the industry. We've got some problems in the beef industry because of low prices, but we don't necessarily think the packer ban solves those problems."

Like the subsidy limits, Senate agriculture leaders vowed to revive the packer ban issue in the future. "I intend to continue to have hearings and look into the packer ban," Harkin said, indicating that the issue might be taken up in separate legislation.

Environmental Quality Incentives Program

When the authors of the new farm bill talk about its environmental provisions, they frequently boast of a $9 billion boost to the Environmental Quality Incentives Program, which provides producers with federal matching funds to tackle environmental problems on their land.

Under the new law, 60 percent of those funds go to livestock producers, which often use the money to contain animal waste that threatens to pollute groundwater. Unlike previous policy, the new law allows confined animal feedlot operations (CAFOs) of 1,000 animals or more to use EQIP money to build waste lagoons. The change, according to Harkin and others, was made to help producers meet new federal regulations governing CAFOs and farmland runoff.

But conservation groups and some family farm advocates say the policy changes made to the program will cause environmental damage and further add to the consolidation in the livestock industry. "We think the changes to EQIP will encourage new CAFOs and cause older ones to expand, and we don't think that's healthy for the environment," said Ed Hopkins of the Sierra Club. "We feel there is a definite correlation between the concentration of the volume of manure and environmental damage. There have been spectacular incidences of lagoons overflowing and causing fish kills. In smaller operations you don't have the concentration, so there is not the same possibility of environmental catastrophes and chronic environmental damage."

But Kirk Ferrell of the National Pork Producers Council takes issue with Hopkin's statements. "This is all about enhancing the environment," he said. "The livestock industry will face a brand new CAFO regulation in December of this year that will force producers to take expensive measures to protect water quality. If the largest row-crop producer in America can have unlimited payments, why can't livestock producers get federal cost-share dollars to enhance the environment? Why wouldn't an environmental group, if it is their mission, not be supportive of cost-share dollars going to clean up pollution?"

In place of a limit on the size of animal operations that can apply for EQIP funding, the farm bill authors instead instituted a $450,000 limit on the total funds farmers can apply for over the six-year life of the bill. "Instead of a size limit, we now have a dollar limit," Harkin said.

Farrell said the payment cap will prevent the lion's share of the money from going to large corporations. "Smithfield foods will be eligible for one payment limitation of 460,000," he said. "We will see that the rank-and-file family farm livestock operations are going to be the ones who capture these dollars. The implication that livestock producers are polluting the ground makes for a great press release, but factually, at the end of the day, we are now going to see the average rank-and-file producers capturing these dollars."

But Perry argues the payment limit is a poor substitute. "The limitations are just sheer craziness," she said. "Big companies like Smithfield and Cargill can own all the livestock they want as well as slaughter them. And now we are subsidizing their operations through EQIP ... by basically paying them to meet environmental regulations they would have to meet anyway."

Although Harkin and others have not said whether they will revisit the EQIP spending cap, conservationists and some family farm groups are likely to lobby for future changes to the program. They are likely to meet resistance from some in Congress, especially on the House Agriculture Committee, who say targeting payments to the smaller farms is poor policy.

House Agriculture Committee Chairman Larry Combest (R-Texas) said such a provision might merely encourage farmers to set up multiple operations -- a less-than-optimal way to run a business. "I hate to create a program that discourages efficiency and growth or forces someone to create a new operation because that's the only way he can get help," he said.

Below is a breakdown of the major environment and energy-related provisions of the bill.

Conservation title

Containing several programs intended to help farmers curb air, water and soil pollution, protect wildlife habitat and defend farmland from development, the conservation title is funded at $17.1 billion over 10 years. However, because the farm bill will expire in only six years, not all of this funding will be made available for the program. A total of $9.2 billion will be made available for conservation by the bill's expiration in 2007. Funding levels and policy provisions for the individual programs are listed below.

Conservation Security Program: Senate Agriculture Committee Chairman Tom Harkin's (D-Iowa) brand new program is meant to reward farmers for applying conservation practices to working lands.

The program is funded with $2 billion over 10 years, but only $369 million will be made available by the bill's expiration in 2007.
The program establishes three "tiers" of increasingly stringent conservation practices for which farmers can receive escalating payments.
Environmental Quality Incentives Program: Provides funding to help producers comply with soil, water, air and wildlife habitat regulations and assists growers in implementing environmentally beneficial changes to their operations.

The program is allocated $9 billion scored over 10 years, with $4.6 billion available by 2007.
60 percent of funds go to livestock producers; 40 percent go to crop growers.
Producers are limited to no more than $450,000 over the six-year life of the bill.
$50 million of the money is specially earmarked for Oregon's Klamath River Basin -- where federal agencies shut off an irrigation project to protect endangered fish last year -- to help farmers and ranchers there use water more efficiently and improve water quality.

Conservation Reserve Program: Provides rental payments to farmers to set aside sensitive lands.

Funded at $1.52 billion over the next 10 years, with $806 million available during the life of the bill.
Increases acreage cap to 39.2 million acres, from the current limit of 36.4 million acres.
Grassland Reserve Program: A new initiative aimed at protecting prairie by providing money for the purchase of development rights from ranchers.

The program is funded at $254 million through 2007, with a cap of 2 million acres. $83 million will be made available during the life of the bill.
The program allows 10-year, 15-year, 20-year, 30-year and permanent easements.
Wetlands Reserve Program: Pays farmers to preserve wetlands on their property.

Funded at $1.5 billion, all of which will be made available during the life of the bill.
The bill increases the program's acreage cap to 2.28 million acres from the current limit of 1.1 million acres.
Wildlife Habitat Incentives Program: Provides funding for farmers to create and protect wildlife habitat on their property.

Funded at $700 million, $360 million of which will be made available during the life of the bill.
Farmland Protection Program: Allocates matching funds for states, local governments and organizations to buy farmers' development rights, preventing farmland from being converted to housing and other uses.

Funded at $985 million over 10 years, $597 of which will be available during the life of the bill.
Energy title

The energy title is a first-time subsection of the farm bill that seeks to promote the use of ethanol, biodiesel and other alternative fuels produced on farms and ranches. The title is funded at a total of $405 million, all of which would be made available during the life of the bill.

Bioenergy program: Provides payments to bioenergy producers who purchase agricultural commodities for the purpose of expanding production of biodiesel and fuel-grade ethanol, funded at $204 million.

Renewable energy and energy efficiency: Establishes a loan, loan guarantee and grant program to assist farmers in purchasing renewable energy systems and making energy efficiency improvements, funded at $115 million.

Biomass research and development: Authorizes $75 million through 2007 to continue the Biomass Research and Development Act, which promotes development of renewable energy technology.

Federal procurement: Requires that federal agencies purchase bio-based, rather than petroleum-based products wherever practicable, based on a list of products to be developed by the secretary of Agriculture, funded at $6 million.

Biodiesel fuel education: A grant program to educate government and private fuel consumers about the benefits of biodiesel fuel use, funded at $5 million.

Forestry title

Forest Land Enhancement Program: Program is intended to assist private and state foresters maintain the health of their forests, reforests after harvesting, guard against insect and disease outbreaks and increase carbon sequestration.

Funded with $100 million, all of which will be available during the life of the bill.
The Forestry Incentives Program: A program authorized by the 1996 farm bill that aimed to encourage the protection of non-commercial private forests was discontinued in the current farm bill.

For a breakdown showing how much each program will receive for each of the next six years, click here. -- Damon Franz


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