Lucas says he’s becoming pessimistic about a deal. | AP Photo
Politico – House and Senate farm bill leaders are to meet again Wednesday in what’s become a political roller coaster that risks tossing Congress into a flood of overpriced milk come Jan. 1.
Just last week, the agriculture committees were predicting agreement soon on how to rewrite the commodity title and replace the current system of direct cash payments to producers. But Tuesday’s tone was much more skeptical, and House Ag Chairman Frank Lucas (R-Okla.) warned his party it had to be prepared “for how consumers will react at the grocery store when a gallon of milk doubles.”
“I was a very hopeful fellow a few days ago. I’m becoming pessimistic,” Lucas told POLITICO after a meeting of House committee chairmen in the Capitol. “I’m trying to explain to everybody what the consequences are. I’m going to push to the last moment, but I would acknowledge to you that if we can’t make progress, something has to happen.”
Indeed, absent some agreement, dairy policy will revert next month to a 1949 law that prescribes a post-World War II vision of a more muscular government buying up dairy products directly to boost prices. The Agriculture Department would pay producers $38.54 per hundredweight compared to a market now running near $16.22. The result would be havoc — and many estimate a doubling in consumer prices for milk.
At this stage, few expect a farm bill can be written and enacted before Jan. 1, but the hope has been to reach enough of a consensus that the committees can be confident of producing a five-year plan as part of a budget deal between the White House and Speaker John Boehner (R-Ohio).
Within hours of one another, Lucas and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) gave speeches Thursday saying a deal was within reach. So it seems too early — just based on Tuesday’s changed mood — to predict total doom.
But having crunched more numbers in the interim, Stabenow and Lucas each acknowledged the need for more work. And there remains a real regional and philosophical divide over what approach to take.
The Senate bill, adopted in late June, would do away with cash payments and instead offer new crop insurance options, including a shallow loss program popular with corn and soybean farmers in the Midwest.
The cost of this proposal — called Agricultural Risk Coverage — is almost $29 billion over 10 years. That produces a real net savings when compared with direct payments but leaves no room for more traditional target price options — or “price loss coverage” as Lucas calls it — favored by Southern wheat, rice and peanut growers.
“If not every region can participate in the program — and that requires choice — then you don’t have anything,” Lucas told POLITICO. “If you come back with a proposal that fuzzes around the edges and pretends to be part of a comprehensive plan and it still doesn’t work for everybody, then you haven’t accomplished anything.”
To try to break the ice, a proposal was made in talks last week to effectively split the $29 billion and allow the House and Senate to each write up the program they want with half the money.
The Lucas camp was described as pleased with the results after getting its score back from the Congressional Budget Office this week. But Stabenow said it became an “academic exercise” since there was no way to preserve the ARC option given the interaction with other forms of crop insurance.
“We went to CBO and got numbers as well,” she told POLITICO. “Because of the interaction with crop insurance, I’ve seen nothing where you could have a viable ARC program doing that.”
