Farm Bill delay adds to farmers' worries

BURLINGTON, Okla. — Earlier this fall, Keith Kisling was part of a large, broad and ultimately unsuccessful coalition of farm interests pushing Congress to pass a new Farm Bill before the old one expired. He was also among the many farmers who sent a clear message to leaders in Washington that crop insurance should be the highest priority in any future bill.

There's a connection between the two. As Congress nears what is colorfully termed a federal "fiscal cliff," pressure is expected to mount on all federal outlays, and that could bring deeper cuts to the Farm Bill's increasingly valuable crop insurance program.

The implication of continuing to delay a new Farm Bill is "it's almost certain the cuts will be more," Kisling said recently from his farm near Burlington, Okla.

"Right now, the government is paying almost 60 percent of the crop insurance premium," he continued. "If that partially goes away, buying crop insurance becomes so cost prohibitive that a lot of farmers won't take it. But that's how farmers borrow money. So the banks are going to buck up, and farmers will have trouble loaning money."

That lingering uncertainty is why so many farmers pushed hard to see the lawmaking process completed before the old Farm Bill expired on Sept. 30. But while the Senate and the ag committees in both chambers completed their task, the legislation hit a wall in the Republican-led House of Representatives.

With a national election looming, it's not clear what the political fallout will be. In the traditionally conservative rural Plains, the logjam doesn't seem to have created much of a political backlash for Republicans. That could change, however.

"I think there may be more of one when farmers find out how big of a cut there will be now," noted Kisling, a former chairman of U.S. Wheat Associates and active member of Oklahoma Farm Bureau's farm policy committee.

Kansas State University agricultural economist Art Barnaby says legislators will have a second chance to pass what remains of the work-in-progress Farm Bill in the lame duck session, and he hopes they take it, despite a potentially heavy workload.

"If it goes into the next Congress, pressure will accumulate for more cuts in farm programs and all that's left now is crop insurance," he said from his office in Manhattan, Kan., echoing the view of other policy observers.

In addition, he said some minor tweaks to improve the insurance program could be lost if the process begins again from square one.

An extension or a new bill?

Troy Dumler, Southwest Kansas area ag economist in Garden City, is also watching the progression of the Farm Bill while his area heads into what could be the third year of exceptional drought.

He thinks Congress is most likely to pass a short-term extension of the 2008 Farm Bill after the election.

"There's still a lot of work to be done to get a new bill passed," he said. "In the lame duck session, you're looking at a month to six weeks, and they'll have a lot of issues to deal with that are high priority items."

With direct payments already eliminated from the bill going forward, he says crop insurance is at risk as the new "low-hanging fruit" in future budget negotiations.

In Enid, Okla., Rodney Jones, Northwest Oklahoma area extension economist, says if the Farm Bill debate continues into the next year, it might lead to greater awareness of the dramatic imbalance between farm and nutrition spending.

"It might end up being a good thing," he mused. "The same political factions that want to push for deeper cuts might also take a firm stand on deeper cuts to food programs and other components of USDA spending. If they continue to come after the Farm Bill, they are prone to take a look at where the big money is."

Only about 30 percent of the multi-billion dollar Farm Bill goes to support farming, conservation and rural development; the rest is allocated to food and nutrition benefits.

K-State's Barnaby said one of the most sobering things he's seen while in Washington was a chart showing participation in food stamps historically and how it has exploded in the last 10 years. Roughly 32 million people have been added to food stamp rolls since President Obama took office four years ago.

While the entire Farm Bill represents less than 2 percent of the federal budget and doesn't offer much room for more cuts, Barnaby says it's still a difficult argument to suggest taking money away from hungry families instead, especially when unemployment rates are high and the economy remains stagnant.

But he also believes the implications of withholding agricultural support ripples out wider and deeper than most people realize.

"If we eliminate the farm program, Iowa will still be planted to corn. And the first time there is a big drought loss in Iowa, the government will come along with a bailout package," he reasoned. Problem is, politically important swing states are the ones that will get the attention of elected officials. States like Oklahoma and Kansas that reliably vote Republican and don't contribute big vote counts are more likely to be written off.

"That's why I have no faith in a truly free market," Barnaby said.

That is what worries farmers like Kisling, who has seen crop prices become more volatile over the last 10 years while mostly languishing at bargain basement levels prior to that. Not only are prices uncertain longterm, but drought is still plaguing his area, with much of next year's wheat crop yet to emerge.

He fears the U.S. will wind up like countries such as France, which let its farmers go broke before it realized how important they were.

"The start-up farmer especially would be in a lot of trouble right now without a guarantee from crop insurance," he concluded.