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Deep Cuts in Food Stamps Said Averted in Farm-Bill Deal

By Alan Bjerga
January 27, 2014 6:40 PM EST 137 Comments
Free groceries at the Food Bank For New York City on Dec. 11, 2013. Need increased in November when 47 million low-income people nationwide saw their food stamps cut as the federal SNAP program expired.
Photographer: John Moore/Getty Images
Free groceries at the Food Bank For New York City on Dec. 11, 2013. Need increased in November when 47 million low-income people nationwide saw their food stamps cut as the federal SNAP program expired.

House and Senate negotiators agreed today on a much-delayed agriculture bill that averts deeper cuts to U.S. food-stamp spending sought by House Republicans.

The proposed farm legislation, billed as saving $24 billion through food-stamp cuts and the end of a direct-payment program for farmers, will get a vote in the House by Jan. 29, a leadership aide said, before Republicans leave town for strategy meetings. Senate Agriculture Committee Chairwoman Debbie Stabenow said the chamber may vote next week.

“This bill proves that by working across party lines we can reform programs to save taxpayer money while strengthening efforts to grow our economy,” Stabenow said in a statement today on the agreement. “It’s time for Congress to finish this farm bill.”

By approving a plan that largely keeps food stamps intact and preserves most farm subsidies, an urban-rural coalition has been maintained amid a tough political environment that saw an earlier plan rejected in the House. If it passes, the agreement would be another bipartisan achievement by a Congress faulted for a lack of legislative success.

The House will vote on the measure this week, said Douglas Heye, a spokesman for House Majority Leader Eric Cantor.

Bunge, Ace

The bill to reauthorize U.S. Department of Agriculture programs governs farm subsidies, which encourages planting of soybeans, cotton and other crops that lower materials costs for commodity processors including Bunge Ltd. (BG) The bill subsidizes crop-insurers such as Ace Ltd. (ACE) and funds purchases at Kroger Co. (KR) and other grocers through food stamps, its biggest expense.

While most farm groups are expected to line up behind the legislation, the bill presents a missed opportunity for sanity in agricultural policy, said Andy Roth, vice president of government affairs for Club for Growth in Washington, which supported treating food stamps and farm policy in separate bill to costs in both.

“In the end this will be a same-old, same-old farm bill with a few ticky-tack reforms on it,” said Roth in an interview before the final deal was announced.

The farm-bill accord would be a third bipartisan deal by the current Congress, which passed a budget last month and cleared a $1.1 trillion spending bill on Jan. 16. The five-year farm legislation would end an aid program that makes direct payments to farmers and cost about $50 billion over 10 years, and reduces food stamps. Much of the subsidy spending was restored in other programs.

Nutrition Aid

The agreement reached on food stamps would cut spending by $8 billion over 10 years, or about one-fifth of the $40 billion sought by House Republicans. Negotiators agreed to tighten a provision that let states give residents as little as $1 a year in heating assistance to qualify them for an average of $1,080 in additional nutrition aid.

Republicans successfully sought to lift the “heat and eat” threshold to $20, while Democrats proposed $10. The higher level creates about $8.5 billion in savings, with about $500 million plowed into other food-stamp-related initiatives, Stabenow said.

Food stamps used at retailers such as Target Corp. (TGT) and Supervalu Inc. (SVU) cost a record $76.1 billion in fiscal 2013, or about 12 percent of the $650 billion a year Americans spend on groceries. About 47.4 million Americans used the program in October, the most recent month available, the U.S. Department of Agriculture said Jan. 10.

Wal-Mart, Safeway

Almost half of all food-stamp redemptions are in big-box supercenters such as Wal-Mart Stores Inc., while most of the rest are in chains such as Safeway Inc., according to data collected by Bloomberg.

The farm bill would also forbid food stamps for lottery winners, an idea supported in both chambers, and restrict aid for college students. Not included was a Republican plan to tighten state eligibility requirements, a projected savings of $11.6 billion, or a $19 billion reduction by reducing waivers states can give childless adults who would otherwise face work requirements or time limits under the Supplemental Nutrition Assistance Program, the technical name for food stamps.

Contested proposals over meat labeling and state laws governing farming practices are still being negotiated, while a plan to involve the government in managing dairy supplies will be modified to gain support from House Speaker John Boehner.

Meat Labels

Companies including Tyson Foods Inc. have called for country-of-origin labeling, a part of farm bills since 2002, to be weakened after complaints about the labeling from Mexico and Canada before the World Trade Organization the U.S. has lost. Last year the USDA tightened the rules, eliminating the ability for companies to merely say the beef was from North America and requiring separate disclosures to say where beef, lamb, pork, chicken and goat were born, raised and slaughtered.

Opponents had sought to have legislators ease the label rules as part of the every-five-year rewrite of farm-policy legislation. Those efforts were unsuccessful, according to a letter today to farm-bill negotiators by groups including the National Cattlemen’s Beef Association and National Chicken Council.

On commodity subsidies, the bill combines a House push to raise so-called target prices under which the government will subsidize farmers with the Senate approach that emphasizes more insurance aid.

Trade Retaliation

As the cost to farm has increased and crop acreage has shifted from wheat and cotton to soybeans and corn in the past 20 years, price and acreage calculations for aid have been seen as archaic, though tying subsidies too closely to market conditions increases the chance of trade retaliation through the World Trade Organization.

Payment limits under commodity programs would be capped at $125,000 per individual or $250,000 per couple, with the definition of a “family farmer” left up to the USDA for definition purposes.

Crop insurance, which paid out a record $17 billion after the 2012 drought, would include requirements that farmers follow conservation plans on their land to qualify for federal subsidies. So-called conservation compliance is included, while limits on subsidies for wealthier farmers receiving assistance on paying premiums, supported by the Senate, isn’t in the bill.

Congressional passage would put in place a new law to succeed the previous bill passed in 2008. An extension of that law expired Sept. 30, potentially forcing the USDA to re-implement farm programs governed by language the from 1949 law that underlies policy and potentially doubling dairy prices.

Agriculture Secretary Tom Vilsack has said the department is focusing on implementing a new law rather than re-creating an old one because he’s confident Congress will pass the legislation. The department won’t change paths unless he’s convinced otherwise, the secretary said earlier this month.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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