Bridges Weekly Trade News DigestVolume 15Number 37 • 2nd November 2011

US Lawmakers Miss Farm Bill Deadline


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Members of US congressional farm committees missed a self-imposed deadline yesterday on a proposal for cuts to farm spending. US Senate and House Committees on Agriculture were due to outline spending for a farm bill to the US “Super Committee,” a congressional body set up to reach a compromise on federal spending cuts.

The Super Committee, formally known as the US Congress Joint Select Committee on Deficit Reduction, is made up of twelve members equally split between House and Senate members, and Democrats and Republicans. The results of the negotiations will lead to an “up or down” vote on 23 December by both chambers (see Bridges Weekly 26 October 2011).

Farm bill legislators had proposed US$23 billion in cuts over a ten-year period in response to mounting pressure to rein in federal spending. The bulk of the cuts - US$15 billion - were expected to affect commodity programmes and direct payments in particular. The US notified the WTO of a total US$114 billion in farm subsidies for 2009 alone (see Bridges Weekly, 7 September 2011)

In recent weeks, farm lobby groups have failed to reach a compromise with their Congressional representatives on the precise makeup of these budget cuts. US agricultural payments slated for cuts support some crops better than others: rice farmers, for example, receive a greater subsidy per hectare than those growing corn. This disparity has pitted some agriculture groups against others in the budget process.

Some farm bill watchers in Washington are “not very optimistic” about the Super Committee process. If the Super Committee fails to reach a compromise before the 23 December vote, US$1.5 trillion in “automatic” cuts across the board, split evenly between defence and non-defence spending, could go into effect. Committees with oversight of federal spending, such as agriculture, have therefore been rushing to draft proposals in an attempt to control the direction, if not the scale, of cuts in their areas.

With direct payments politically unpopular and most likely to go, analysts such as Robert Thompson of Johns Hopkins University warn that a shift from minimally trade distorting WTO ‘green’ box spending towards restricted ‘amber’ box would be “one more blow in the credibility of the US in the multilateral process.”

A beefed-up crop insurance programme is expected by many observers of US agriculture policy. The programme would cover “shallow” loses and insure farmers for 90 to 95 percent of their revenue.

Changes in farm spending could hurt areas that need federal support the most. Cornell University’s Chris Barrett told Bridges that, although legislators may preserve spending on commodities, they will likely gut the research programmes that drive future productivity growth.

The task of preparing a farm bill remains difficult. To date nearly 20 proposals from legislators and major farm lobbies have been circulated in Washington.

ICTSD reporting; “Farm bill talks drag amid regional differences,” ARGUS LEADER, 1 November 2011.

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