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Senate Votes to Scale Back Farmers’ Safety Net

By Derek Wallbank and Alan Bjerga
June 11, 2013 1:21 PM EDT 13 Comments

The U.S. Senate passed a $955 billion rewrite of agriculture law by an even larger margin than last year, sending it to the House of Representatives, where disagreements over food stamps and farm subsidies may complicate passage.

Monday’s vote was 66-27, compared with last year’s 64-35 vote on similar legislation in the Senate. Increased support came from Republicans who successfully pushed for more subsidies for rice and peanuts -- crops grown in southern states.

The most expensive non-appropriations legislation to pass the Senate this year would end a program that makes direct payments to farmers regardless of crop prices while expanding an insurance-based safety net.

The measure would reduce government spending by about $2.4 billion annually, though its $4 billion in cuts to food stamps over a decade are only about one-fifth as deep as proposed in the House version, which would cost $939 billion over 10 years.

Senators said members of the Republican-led House, which didn’t consider the five-year measure last year, now have to show they’re serious about reforming U.S. agriculture subsidies.

“If they don’t do a bill, direct payments continue,” North Dakota Senator John Hoeven, a Republican, told reporters as the votes were tallied.

Companies Benefiting

Subsidies benefiting buyers such as Archer-Daniels-Midland Co. (ADM) and food stamps subsidizing purchases at Supervalu Inc. (SVU) are targets for lawmakers seeking deficit cuts, while humanitarian groups oppose cuts in programs that serve the poor. Crop insurers including Wells Fargo & Co., Ace Ltd (ACE) and Deere & Co. (DE) will benefit from the legislation’s boost to insurance programs, Mark McMinimy, an analyst with Guggenheim Washington Research Group in Washington, said in a note to investors yesterday.

While Senate Agriculture Committee Chairwoman Debbie Stabenow, a Michigan Democrat, and the panel’s top Republican, Thad Cochran of Mississippi, have said they would resist further cuts to food stamps, House Republicans are saying spending may need to be lower.

“Unless there are some significant changes and some significant effort, I don’t think this’ll get across the floor,” Representative Tim Huelskamp, a Kansas Republican, said in an interview.

“People in Kansas get it -- just because it’s the farm bill doesn’t mean you have to vote for it,” said Huelskamp, whose district was the second-biggest recipient of agricultural subsidies last year, according to data compiled by conservation advocate Environmental Working Group.

Food Stamps

“It’s not just the farm bill, it’s also the food stamp bill,” Huelskamp said.

Representative Collin Peterson of Minnesota, the top Democrat on the Agriculture Committee, said last week that no more than 150 Republicans will vote for the bill, meaning roughly 70 Democrats will also have to support it for passage.

Democratic sympathy for food stamps means Peterson needs to reassure his caucus that the final measure to emerge from Congress will resemble the Senate plan more than the House version.

“I don’t see the Senate agreeing to much more than it already has,” Peterson told reporters.

In the version that probably will go to the full House next week, food-stamp funding would drop $20.5 billion over 10 years.

More than a dozen smaller-government groups are pressing House lawmakers to split the subsidy from the farm bill, and then make deeper cuts to the program.

‘Unholy’ Alliance

“The urban and rural logrolling deemed necessary to pass this bill has created an unholy bipartisan alliance that has long served to thwart fiscally responsible efforts to restrain spending and limit the growth of government,” the groups, including Heritage Action, Club for Growth, Americans for Prosperity and the American Conservative Union, said in a June 10 letter.

One House fight may focus on Peterson’s plan to support dairy incomes through supply management, under which farmers who voluntarily enter the system would cut milk production if prices fall below a set value. Speaker John Boehner, an Ohio Republican, is backing an alternative that moves producers to an insurance program without output controls, which Peterson says are needed to prevent a plunge in milk prices.

When Congress tried last year to pass a five-year farm bill, disagreements over dairy policy helped prevent the legislation from reaching the House floor. Instead, Congress settled for a one-year extension of existing law that begins to expire Sept. 30.

Curdling Chances

Without changes in the proposed measure, “It could potentially cause problems for the farm bill passing, because you’ll have Republican leadership and a good deal of Republicans you’ll need to have to pass the farm bill angry at a provision that’s going to be in there,” Jerry Slominski, International Dairy Foods Association senior vice president for legislative and economic affairs, said in an interview.

Lobbying expenses by agriculture interests increased to $138 million last year from $112 million in 2007, the year before the last farm bill passed, according to the Center for Responsive Politics, a Washington-based research group that tracks spending on lobbying. Agriculture-industry employees spent $91 million on the 2012 elections, up from $70 million in 2008.

The Senate bill is S. 954. The House bill is H.R. 1947.

To contact the reporters on this story: {Derek Wallbank} in Washington at dwallbank@bloomberg.net; {Alan Bjerga} in Washington at abjerga@bloomberg.net.

To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net

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