Mon January 7, 2013
The Consequences Of A Short-Term Farm Bill Fix
ARI SHAPIRO, HOST:
This is TALK OF THE NATION. I'm Ari Shapiro in Washington. Neal Conan is away. Well, Congress averted the milk cliff. A five-year farm bill was set to expire, and it could have doubled the price of milk if that had happened. But instead of passing a new five-year plan, Congress extended parts of the old farm bill. That renews subsidies for grain, cotton and soybeans; it cuts budgets for some organic and environmental initiatives.
Since the extension only lasts nine months, many farmers are left with uncertainty. They're wondering what to do before Congress revisits the issue next September. Well, this hour we have a Cabinet secretary and a senator who are at the heart of the debate, and we want to hear from farmers.
If the farm bill affects your decisions about what to plant, what to buy, how large your herd should be, call us. What choices are you making today because of the choices that Congress made last week? Our number is 1-800-989-8255. Our email address is firstname.lastname@example.org. And you can join the conversation at our website. Go to npr.org, and click on TALK OF THE NATION.
Later in the program, the Opinion Page with President Obama's new choices to run the Pentagon and the CIA, but first the farm bill. Secretary Tom Vilsack is former Democratic governor of Iowa. He is now the secretary of agriculture, and he joins us here in NPR Studio 3A. Welcome.
SECRETARY TOM VILSACK: It's great to be with you.
SHAPIRO: So in the week since Congress passed this nine-month extension, what are you hearing from farmers?
VILSACK: Well, I think farmers are expressing some frustration about the fact that they were close to getting a five-year program that would have been comprehensive, that would have had a series of reforms, that would have assisted in dealing with the fiscal challenges the country is faced with.
They're now faced with uncertainty in terms of what the policies are going to be, and they're faced with uncertainty in terms of how much support there will actually be once a five-year bill is ultimately passed by Congress. A new Congress, a different fiscal challenge because of the sequester discussion, so it's the uncertainty of it all and the frustration.
SHAPIRO: Why does America need a farm bill? Why not just let farmers plant what's profitable and let the chips fall where they may?
VILSACK: Well first of all, this is more than a farm bill. It's an energy bill. It's a jobs bill. It's a food bill. It's an entrepreneurial, research bill.
SHAPIRO: What do you mean when you say all of those components?
VILSACK: Well, the farm bill basically has a number of different titles. So for example there's an export assistance title, which talks about the importance of agricultural trade to other countries. About a million American jobs are dependent upon on our agricultural trade. It's one of the great success stories of American agriculture and one of the great success stories of trade.
There's a rural development title, which basically talks about how much assistance we provide to small towns that were interested in creating small manufacturing facilities that helped create jobs. There is a specialty crop and organic title that basically allows us to do a better job of increasing domestic markets, niche markets in a very fast-growing aspect of agriculture that needs assistance.
There's a research title that is very important to land grand universities and any university that's involved in agricultural research and energy research and climate change research. So this bill is far more than just simply the commodity title that provides assistance to producers.
To your question why do we need it, we need it because rural America is a very important part of America and a very underappreciated part of America. It not only supplies almost all of America's food and most of its water but also is providing an ever-increasing amount of the energy that we consume. Whether it's renewable energy or from traditional sources, most of it is obtained from rural areas.
It is a job-creator; one out of every 12 jobs connected to the agricultural economy in this country. And frankly it's also, in my view, one of the centers of American values. So it's an extraordinarily important place, and the people who live, work and raise their families there provide a tremendous service to this country, and one service is to make us a food-secure nation, a nation which basically can provide its own food needs.
SHAPIRO: And so given that Congress has extended the 2008 farm bill for nine months rather than passing another five-year farm bill, who benefits from that?
VILSACK: Well, I would say producers in the Southern crops, rice and cotton, certainly benefit in terms of the continuation of a support system which they like. Obviously those who are in the organic and specialty crop areas, fruits and vegetables, may not be as well-supported by this extension as they would have been under the new proposal.
The grain, corn, soybeans are pretty much - it's sort of a break-even proposition. Dairy producers I think are very much frustrated by all of this because in place was a new system to provide support for dairy farmers when they had difficulty, when they were in financial trouble. They lost that opportunity, and now they have to work their way back to a different system.
SHAPIRO: Let's hear from a farmer. We have Clay in Loyal, Oklahoma. Hi, Clay. Tell us your story.
CLAY: Well, I was just going to call and say that, you know, from our perspective, we're in the middle of a, you know, second of, you know, two or three years of a record drought. And just the uncertainty of whether or not the programs in the conservation title, what situation they're going to be in, especially the conservation stewardship program. You know, is there going to be enough acres to do an additional sign-up? You know, what's the life, you know, what's the life expectancy of the program path to sign-up?
Because, you know, making investments to protect the soil and the water and wildlife habitats, that's something that's important to us, but it also affects our bottom line. And so just whether or not those initiatives are going to be there and help us to maintain the protection of the land, especially when we're facing something that, you know, at least in my part of the world is comparable to what we saw in the 1930s with the Dust Bowl.
But we haven't seen the dust storms because of the programs. But what happens if those go away? I mean, that's a real concern in my part of the world.
SHAPIRO: And Clay, had you been expecting or hoping to get some kind of finality in an answer from Congress last week?
CLAY: Oh goodness, gracious, well, I was hoping we were going to have some kind of answer back in the summer when the House acted on the farm bill. The Senate had already passed one. You know, you get a bipartisan bill out of the House Agriculture Committee, and then it just sits there and hangs in limbo.
I was hoping we would have something before Thanksgiving, let alone wait until the end of year. But yeah, I mean, it's just insane, especially when there was - hell, we were saying we would cut our budgets. I mean, we were willing to put money on the table but still have something that worked for us and just got it threw back at our face.
SHAPIRO: So Clay, I've got to ask, you've obviously followed this issue very closely. Is that because you're a political junkie who loves watching Washington, or is it just because your bottom line as a farmer depends so heavily on what lawmakers are doing?
CLAY: If you're farming for a living in the Southern Plains, you almost have to be a political junkie because, like I said, when you're in this part of the world, especially talking about conservation. I mean, I'm from the heart of the Dust Bowl. We've got to have the ability to protect our soil and our water and the rest of our habitats and still provide food and fiber. And it's a big issue.
SHAPIRO: And so what decisions are you making now with only a nine-month bill on the table?
CLAY: Well, I mean, obviously we're concerned about what's going to - I mean, we got a little bit of time just where we're wheat producers, we won't be harvesting, winter wheat producers, until later in the summer. But yeah, I mean, you're looking at what we're going to do whether or not those resources are going to be there to take some additional steps that we need to be looking at, you know, things just like - we're in the middle of a drought, and water for livestock is very critical in my part of the world.
But, you know, are we going to be able to make the investments to go ahead and have programs like EQIP or, you know, continue on what we're doing with CSP to deal with some of the critical problems that we've got to get through this mess that we're in right now, let alone what we're looking at in the first title when it comes to, you know, when it comes to what's going to happen with the wheat program.
SHAPIRO: Agriculture Secretary Tom Vilsack, you're nodding your head as though this is a familiar story.
VILSACK: Clay has done a great job of expressing concerns. The good news is the extension does provide for continuation of EQIP and CSP, the conservation programs that he alluded to.
SHAPIRO: Explain - EQIP and CSP are terms...
VILSACK: Well, these are programs that basically provide financial assistance from the federal government to land owners to install or to develop conservation practices on their land either to meet some regulatory responsibility or to go above and beyond some regulatory responsibility, just simply because it's in the best interest of their particular operation to conserve soil and to protect water resources.
There's also a continuation of the Conservation Reserve Program, which is essentially idling land. It creates good habitat for wildlife, helps to expand outdoor recreational opportunities. Those programs are still intact.
What isn't intact is some of the smaller conservation programs, the grassland reserve program, things of that nature. Those programs were not continued and were not funded in the extension. So they're small conservation programs impacted. But what Clay's concern is is whether or not, in light of the fiscal circumstances and conditions we face, whether or not Congress is going to have to cut even more deeply than they were anticipating last year in order to make things work fiscally.
And one place you go is where the money is, and in the farm bill, there is a great deal of resource in conservation. So there's obviously concern and frustration about not knowing what the long-term implications are for those programs.
SHAPIRO: All right, thanks for the call, Clay, and let's hear from another farmer. This is Norman(ph) in Bowling Green, Kentucky. Hi Norman, you're on the air.
NORMAN: Hi. Mr. Secretary, I have a cow-calf operation and allied parts of the cow-calf business, and I'm very dissatisfied with the participation of the government in this mandatory ethanol program, which has driven up the cost of corn and other feed grains that are used to finish cattle. And the government has interfered in the marketplace and created winners and losers and favored one segment of agriculture over another, but this program that does not need any longer any kind of government involvement.
I don't oppose people taking corn and making ethanol from it, if they can do that in a free market. But to have the government create that market, as it did, and then penalize one segment of agriculture, that's the animal sector, chickens and pigs and cattle, to the advantage of another one is just not something that the government ought to be doing. And I think the government ought to be out of all stimulus and involvement in production agriculture on the marketing side and on the production side.
SHAPIRO: So Norman, if I'm correct, you're saying you raise cows and calves, and you would like to see all the subsidies go away no matter what, just let the free market completely run its course.
NORMAN: It could easily do that. I'm not opposed to the research and all the protection of the environment and those issues that the government does. But let the markets set the price and let supply and demand work as they have for centuries.
SHAPIRO: Thanks for the call, Norman, and Secretary Vilsack, is that feasible? Is that plausible?
VILSACK: Well, there are a couple things. First of all, the country benefits from a strong, renewable fuel portfolio in industry. There are jobs created by that industry. There is consumer choice, resulting in a lower cost at the pump. Depending upon what study you look at, it's somewhere between 25 cents a gallon, maybe as much as a $1 gallon savings to consumers.
There is a benefit to the livestock industry from ethanol production because about a third of the crop that's placed in ethanol production comes back out as a feed supplement that allows that farmer and other farmers to actually use less grain in order to make reasonable gain.
And frankly, it is about an environmental opportunity, as well. Renewable fuel is certainly benefitting the environment. So when you take a look at what we have, you also look at the fact that many of the cash subsidies, the cash support for this industry, have gone away. There was an extension of one of the tax credits, but most of the tax credits are gone.
The only thing that's in place now is the renewable fuel standard that requires a certain level of ethanol to be blended into our supply. We're really focusing on trying to move away from corn-based ethanol and basically complement it with nonfood feed stock, advanced biofuels, and that's going to take place.
SHAPIRO: Stay with us. We're talking about the farm bill extension with Secretary of Agriculture Tom Vilsack. And in a moment, we'll bring in Senator Chuck Grassley, Republican of Iowa. Farmers, we want to hear from you. If the bill affects how you decide what to plant, what to buy or how to grow your herd, call us. The number is 1-800-989-8255. Or email us at email@example.com. We'll have more in a minute. I'm Ari Shapiro. This is TALK OF THE NATION from NPR News.
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SHAPIRO: This is TALK OF THE NATION. I'm Ari Shapiro. And today we're talking about the farm bill extension, how it's affecting farmers as they make decisions about how to run their businesses. The farm bill has been around since 1933, when President Franklin D. Roosevelt was in the White House. It was originally created to subsidize farmers enduring the Great Depression.
Since then, it's expanded to include provisions on food stamps, livestock and disaster assistance, among other things. Today we want to hear from the farmers in our audience. If the bill affects your decisions that you're making today, about what to plant, what to buy, what to build or how you manage your livestock, call and tell us: What choices are you making because of the extension?
The number is 1-800-989-8255. The email address is firstname.lastname@example.org. And we're joined now by Iowa Senator Chuck Grassley, who is a family farmer himself, joining us by phone from his home state of Iowa. Thanks for being with us.
SENATOR CHUCK GRASSLEY: I'm glad to be with you, and to be fair to my family, I should say that my son Robin and grandson Patrick do most of the work, and I'm kind of a hired man lately.
SHAPIRO: Well, has the failure to get a new five-year bill affected your family's farm?
GRASSLEY: The answer is the extent to which the federal government is going to be involved in agriculture, and you know what that program is for certainty over a five-year period of time, it would be better to have a five-year farm program.
GRASSLEY: The one-year extension is obviously better than nothing. With prices the way they are now, the safety net that's there for farmers isn't as much of a concern whether or not you have a farm bill otherwise, but...
SHAPIRO: Although the government ends up subsidizing crops that are making record profits.
GRASSLEY: ....seven-dollar corn or $13 beans for a long period of time. So what the farm program is is very important for long-term planning.
SHAPIRO: Well, how do you get the parties to come together to accomplish something like this? President Obama has been pushing for it, as has Agriculture Secretary Vilsack, who is here in the studio with us. You clearly would have liked to get something done, and yet it didn't happen.
GRASSLEY: Well, when you say get the parties together, if that's a division between Republicans and Democrats, we did a very good job of that in the United States Senate because we had very large bipartisan support for the farm bill. And by the way, the farm bill that we passed in the Senate would have saved $23 billion. It would have done away with the direct payments, which farmers don't need anymore, and it would have been a whole new direction of farm program and less dependency of the farmer on the government.
SHAPIRO: You know, we're hearing from some farmers today who are frustrated at their financial uncertainty as a result of this extension. But there are also farmers who are flush with cash and getting more of it from the government through this short-term extension, correct?
GRASSLEY: Yeah, that would be - for most crops, that would probably what we call the direct payment. And the farm bill that passed the Senate last year, the five-year farm program that obviously didn't get through the House of Representatives, would have done away with the direct payment.
SHAPIRO: And so as a result, you know, part of the objection to this bill was wasteful use of government money, but it sounds as though the fix has created more waste of government money.
GRASSLEY: Well, if your point is should there be any support for agriculture at all, it's a legitimate question. I heard the previous farmer talk. He thinks the government ought to be out of it entirely. I come from a generation where it was considered to be patriotic to join other farmers in being part of the farm program and working together. I accept his judgment.
But the point is why do we have a farm program at all? Number one, it's pretty essential to our national defense. All you've got to do is ask Germany and Japan why they support farmers? Because they didn't want to starve to death during World War II, and they want to be ready for their national defense for the future. So having a ready-made food supply is very important to our national security.
The second one is having a certainty of food supply, which we're used to in America, but a lot of places, they have riots, you're only nine meals away from a revolution. So if you want social cohesion, you've got to have certainty of food supply. So there's a very good reason for supporting the family farmer.
SHAPIRO: Senator Grassley, I want to put to you a specific question that we just got via email from Joe in Kansas, who writes: I have land in southwestern Kansas that has been under a Conservation Reserve Program, CRP, contract until the end of this year. He writes: I'm needing to know whether it will be renewed or if I need to find another tenant to farm it. The CRP is a powerful conservation program, but it also stabilizes the crop revenues for crop producers. It seems very important. And he ends: Will the CRP program continue, and when will I know if my contract will be renewed? What can you tell Joe in Kansas?
GRASSLEY: Well as of right now, the farm program for the 2013 crop year will be the same as it has been for the last five years. So his eligibility under the 2008 farm program would carry over until 2013. In the new five-year farm bill that we wrote in the Senate that passed the Senate that didn't get through the House, in regard to that we would have cut back the CRP program to I think about 22 to 24 million acres, as I recall, but there would still be a program around, and he would have - he would still have an opportunity to offer his land for - to be put in the conservation program.
SHAPIRO: That was if the Senate bill had passed, you're saying.
SHAPIRO: Well, Senator Grassley, thank you for your time. I appreciate your being with us on the program.
GRASSLEY: OK, goodbye.
SHAPIRO: Iowa Senator Chuck Grassley, joining us by phone from his home in Iowa. And let's go to caller number - this is a caller named Nick(ph) in St. Augustine, Florida. Hi Nick, thanks for being on the show.
NICK: Hi, thank you for taking my call, first of all, and I'll take my comments off the air. I'm a first-generation farmer. I'm just starting. I'm trying to start my own farm. And farming being as difficult as it is, I want to know. I've got a degree in business. Is this a losing battle? Should I just go ahead and...
SHAPIRO: Nick, not to put too fine a point on it, but why start a farm in a situation like this with governmental uncertainty, drought? I mean, what makes you want to start a farm right now?
NICK: Because people need quality food. Everybody needs food to live, and we need quality food. And right now, America is not producing quality food.
SHAPIRO: What kind of farm are you talking about?
NICK: I'm actually working - this is one of the things I'm talking about is I was able to find an organic farmer in the area that has offered to let me use some of his land, let me use some of his knowledge and kind of help me get going. If it weren't for farm owner Francisco at KYV Farms, it would be a pipe dream.
SHAPIRO: That's the name of the farmer who's helping you.
NICK: And it would never be able to happen.
SHAPIRO: Yeah, well...
NICK: And I just want to know if I'm facing a losing battle or not.
SHAPIRO: Thanks for the call, Nick, and Agriculture Secretary Tom Vilsack, you're the man to ask. Is Nick facing a losing battle?
VILSACK: Absolutely not. I think Nick is the face of a new type of agriculture, certainly not exclusively, but the new entrepreneurial, innovative markets that are opening up in local and regional food systems. This is basically Nick being connected to a farmer's market, to community-supported agricultural activity, to a school or an institutional purchaser that's looking for a product that's being produced locally.
There are an enormous number of markets that have opened up recently in the last three years. We've made a major effort to expand farmer's markets, a 67 percent increase in farmer's markets. We now have food hubs, which is aggregating all of this produced food locally and being able to sell it to a school or to an institutional purchaser.
So there is enormous opportunity here. He's an organic producer. There's also a new equivalency agreement with Canada and the E.U. So we have trade opportunities, as well.
SHAPIRO: But my understanding is that the farm bill the Senate passed and the House did not pass would have increased funding for organic farms, farmer's markets and the like, and that the renewal does not. Is that correct?
VILSACK: The extension does not, but with a five-year program, I'm fairly confident with Chairwoman Stabenow in the Senate that you're not going to see a five-year program without continued support for specialty crops, for organic production, for local and regional food systems, because she realizes that this is one of the four cornerstones to rebuilding the rural economy.
You know, candidly, the biggest problem we have in rural America is the loss of population and poverty. And one way we can address both of those issues is by having more entrepreneurial opportunities. That means local and regional food systems, it means production agriculture and export opportunities. It means conservation and outdoor recreational opportunities that are attached to it, and it also it means this bio-based economy that we've talked a little bit about.
SHAPIRO: Let's go to another caller. This is Jay in Rifle, Colorado. Hi, Jay.
SHAPIRO: Tell us about your experience.
JAY: Yeah. Well, you know, I'm out of business now. I've got no drought - I have not gotten any drought relief.
SHAPIRO: You're out of business as a farmer. What kind of farm did you run?
JAY: I was - I had cattle. I had hay, had a drought this - have had an ongoing drought for many years now. No assistance from the government. Had to sell all the cows this year because I couldn't afford to feed them. Everything is gone.
SHAPIRO: Wow. Who did you sell them to? Is there another farmer operating on your land now?
JAY: No. Well, I was leasing the land. I took - and I took them to market and got rid of them, paid off my debts as best I could.
SHAPIRO: And how many years had you been in the cattle business?
JAY: I've been doing cows off and on for about 30 years.
SHAPIRO: And now that you've sold your herd?
JAY: I don't know.
SHAPIRO: That must be incredibly difficult.
JAY: It's terrible, and I don't see anything - see, the passage of this farm bill, this passage of this extension, they didn't do any work. They could have passed it last year. They could have taken care of some of us last year, but no, they're too lazy to actually go in and do the work in Washington, is all I can see.
SHAPIRO: Do you blame one party or another, one person or another? Do you - where do you point the finger?
JAY: If you take all of the entire circumference of the Washington, D.C., area and all the people that work there, I throw it directly into their lap, along with the people who are the middlemen who are raking all the profit right off the top of grains, of hay, selling grains and hay to other countries when we need it here.
SHAPIRO: Jay, hang on if you will. And Secretary Vilsack, how do you feel hearing from these farmers who have had to abandon, you know, a decades-long career, selling their herds because Washington wasn't able to get it together?
VILSACK: Well, I certainly feel for him. It's one of the reasons why we express the need for a five-year program, because we knew that with the five-year program, particularly that which passed the Senate, there would have been disaster assistance, financial assistance for those livestock producers, for those dairy producers that were faced high feed costs that just couldn't make ends meet. The disaster assistance programs under the 2008 farm bill expired last year, in 2011.
They actually expired in 2011. We articulated the need for a continuation of those disaster programs and a retroactive continuation so that we would have been able to provide help and assistance. That could still come if Congress acts quickly to get a five-year bill. They could resurrect, if you will, those disaster assistance programs. In the meantime what we did do at USDA to try to provide some help and assistance to folks impacted by drought was to open up CRP land, provide additional hay and grazing opportunities.
We also provided some additional conservation dollars to make it a little bit easier. We also allowed the CRP land that was used. We reduced the rental repayment that you have to make. We gave the ability to barter and exchange, more flexibility. So we tried administratively to do what we could, but what they needed was financial assistance, and that was not forthcoming.
SHAPIRO: Well, Jay, I'm very sorry for what you had to go through, and I appreciate your calling and sharing your story with us.
JAY: Oh, thank you for your time, sir.
SHAPIRO: Let's go to another caller. This is - oh, actually, hang on. You know, before we do that, Secretary Vilsack, I wanted to just sort of play devil's advocate with you. If we are facing the worst drought in decades, that may continue for years if not decades - should the U.S. government really be subsidizing people farming on this drought-stricken land where it may be very, very difficult to farm for many years to come?
VILSACK: Well, one of the reasons that the new bill was so important is because it moved away from the direct payment system which a lot of people had concerns about, including the president, including myself, and put more focus on a crop insurance effort. Basically, producers would purchase insurance coverage. And if for reasons of drought or some other natural disaster they weren't able to produce what they would normally produce, they were able to buy protection, buy coverage.
We would see in the long term that as a critical component to any kind of new farm legislation that we have, a functioning crop insurance system in which people can essentially partner with the government and reduce their risk. It seems to me that's a logical way to approach it. The second thing is to make sure that we continue to support conservation practices, because there may be opportunities for the government and for the private sector to encourage landowners to put land in conservation practices that would benefit the soil, provide income for the farmer and also increase habitat opportunities, which also stimulates more economic opportunity in rural areas.
SHAPIRO: We're talking about the farm bill extension, and you're listening to TALK OF THE NATION from NPR News. This is Devin in Ashview(ph). Hi, Devin. You're on the air.
DEVIN: Hi. I was calling in because I heard one of the previous commentators was talking about how, you know, one of the people was talking about how corn is now being subsidized, particularly by the government, because it's a source of bioethanol fuel. And unfortunately, for like local farmers that are just trying to produce, you know, corn and good vegetables and, you know, and good basic stuff like that for our region, the prices have just skyrocketed, and local people cannot purchase it anymore.
It's just not economic for the people around us. And I kind of feel like the implementation of certain funds with a farm bill like this - I think that there should be disaster relief, but with a farm bill subsidizing certain farms or certain things, I think that we could be putting the money into other resources, other things that would help farmers across the entire nation really establish themselves without hiking up prices of certain things, like grains, so that local people can't buy them, and so that, you know, cattle farmers can't buy them. And I think there's a better way to put our resources into things.
SHAPIRO: Thanks for the call, Devin. Secretary Vilsack, what I'm hearing from so many of these callers is that the farm bill is an opportunity for the country to re-establish its priorities for the next five years, and then everyone can adjust their decisions appropriately. But now there's just nine months of treading water because the House of Representatives never got around to passing the bill the Senate passed that readjusted those priorities.
VILSACK: Well, it's House leadership, basically. I think the House would have passed the bill if they had been given the opportunity, but the speaker, majority leader, made the decision not to put the bill up for a vote and not to give Chairman Lucas, who's on the House Agricultural Committee and ranking member Collin Peterson, an opportunity to negotiate with their Senate colleagues to try to come up with a resolution. Now, you know, I think it's important to note that - that this is an important opportunity for rural America.
It's not just farming. As important as that is, that's a part of this bill. Really what we're talking about is a strategy, a vision, a plan for rural America. And rural America provides and contributes so much to the rest of the country that it's the reason why this should be a priority, and it hasn't been. And I think one of the reasons it's not a priority is because we've seen a shrinking political relevance of rural America because of shrinking populations. It only represents now 16 percent of America's population.
That 16 percent is the lowest figure in the country's history, and when you reapportion and develop legislative districts the way we do every 10 years, it means fewer and fewer members of Congress have an understanding or appreciation for the rural contribution. And it becomes easier to disregard the need for a farm bill, in an election year in particular.
SHAPIRO: That's Agriculture Secretary Tom Vilsack, former Democratic governor of Iowa, joining us here in Studio 3A. Thanks for your time.
VILSACK: Good. Thank you. Transcript provided by NPR, Copyright NPR.