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May 2024 Outlook by BGR Group

The 2024 elections are just six months away. In the May 2024 Quarterly Outlook, BGR’s policy experts examine the state of the political and policy landscape ahead of the national conventions later this summer. The Quarterly Outlook also includes procedural primers on the Congressional Review Act and Budget Reconciliation, as well as commentary from each of BGR’s practice groups on what’s to come in the next few months.

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Analysis: The Farm Bill’s Progress

The Farm Bill is Moving. Buckle Up.

By Jennifer Lukawski
Co-Lead of BGR’s Sustainability, Nutrition, and Commodities Working Group

After more than a year of hearings and listening sessions, House Agriculture Committee Chairman Glenn T. Thompson (R-PA) has released a title-by-title overview of his draft farm bill and scheduled a markup of the legislation for May 23rd. The announcement marks a major milestone; however, the road to a new farm bill is going to be a bumpy one.

While draft text is not yet available, according to a high-level summary of Chairman Thompson’s proposal, the committee seeks to increase farm safety net programs, enhance crop insurance, and expand conservation programs. Nutrition funding would not be cut, but changes to how the benefits are calculated will be included.

In response to the overview’s release, Ranking Member David Scott (D-VA) quickly rejected the proposal, arguing it contains “poison pill policies” that will doom its chances of becoming law. The farm bill has traditionally been a bipartisan effort, and while Chairman Thompson expects to pick up some Democratic support in committee, a fully bipartisan product is currently elusive, and the level and nature of concessions necessary to garner significant Democratic support is unclear for the moment.

Not to be outdone, Senate Agriculture Chairwoman Debbie Stabenow (D-MI) soon thereafter released her own vision for reauthorizing agriculture and nutrition policies, vowing to reject the House GOP’s proposed changes to nutrition and climate program funding. Similar to the House bill, the “Rural Prosperity and Food Security Act” similarly aims to expand crop insurance and conservation programs, but also makes greenhouse gas reductions a major focus of the proposal and protects USDA’s recent changes to the Thrifty Food Plan to raise SNAP benefits.

In response to Chairman Stabenow’s proposal, Ranking Member John Boozman (R-AR) issued a statement welcoming the release of the committee’s Democratic priorities and said Republican senators will release their farm bill framework after the House considers its bill. A markup date in the Senate has not yet been scheduled.

The pressure has been on for House and Senate authorizers to show their respective cards on their plans to rewrite this massive law impacting not just farmers but all Americans. The farm bill sets farm, conservation, forestry, and nutrition policy and authorizes various agricultural programs. Last December, Congress approved a one-year extension of current law, setting a new September 30th deadline to allow additional time for committee negotiations to continue. Farmers and ranchers have since grown increasingly concerned about the delay, calling for urgency in passing a modernized farm bill that reflects the changes the agriculture industry has undergone over the last five years. It is one of the few remaining must-pass bills this Congress and is a big ticket one, at that.

A massive undertaking, the renewal of the farm bill has been delayed because of the Speaker battle last fall, the drawn-out FY24 appropriations process, a lack of funding options to expand farmers’ safety net, and long-standing disagreements over competing policy priorities. The latest hangup is the much-

anticipated CBO score which will be necessary to move forward. Despite the delays, House and Senate authorizers seem ready to move this process to the next crucial step in what will continue to be a complicated process that will begin, initially, as a partisan exercise.

Here is a deeper dive on the major policy issues that will require careful navigating for the bill to progress its way through Congress and to the President for his signature:

Nutrition Assistance

The nutrition title is by far the largest and costliest title in the farm bill. The Congressional Budget Office baseline projection from May of 2023 shows that nutrition programs will comprise more than 80 percent of the farm bill’s spending, with a price tag of more than $1.2 trillion over 10 years. Most of this is attributable to the soaring cost of the Supplemental Nutrition Assistance Program (SNAP). Funding for SNAP has nearly doubled since the last farm bill was enacted, from $65 billion annually in 2018 to an estimated $127 billion in 2023 (some of which is attributable to high inflation and pandemic-era spending).

SNAP has always been a partisan battle line, with most Republicans typically seeking to rein in increases in both SNAP’s spending and enrollment, and most Democrats trying to expand them. SNAP benefits are calculated based on the USDA’s Thrifty Food Plan, which serves as the basis for setting benefit levels for SNAP. Each year, these benefit levels are adjusted for inflation.

In 2021, the Biden administration made sweeping changes to the TFP by permanently updating the program’s cost levels and market baskets. The reevaluated plan, however, did not apply previous, longstanding administration policy that imposed cost-neutrality. The result was a 25 percent increase in SNAP benefits, the largest expansion of supplemental nutrition assistance in the program’s 45-year history. The USDA cites language in the Agricultural Improvement Act of 2018 (“the 2018 Farm Bill”) and President Biden’s Executive Order 14002 as authority to disregard the cost-neutral framework. However, Republicans have taken strong issue with this interpretation, arguing the update ignores past precedent, was done without the input of Congress, and without regard to its budgetary impact. Chairman Thompson has insisted that the next arm bill restore past precedent by placing new guardrails on the way SNAP payments are determined to ensure budget neutrality.  Such a proposal would reduce future outlays by $30 billion. While current beneficiaries would not be impacted, Democratic members are calling this a cut and making it clear that any reductions in SNAP spending would cross a red line for them. Given fighting over SNAP benefits delayed passage in the House for two years during the last farm bill re-write, this will be the largest hurdle for Congress to clear and likely increases the odds of a short-term extension into a lame duck session or potentially 2025.

Climate Funding

A major part of President Biden’s environmental agenda was enacted in the partisan 2022 Inflation Reduction Act, which provided $19.5 billion to the Department of Agriculture for “climate-smart” agriculture and forestry initiatives that prioritize greenhouse gas-reducing and carbon sequestering activities. The Biden administration hailed this as a historic win to address his climate change priorities and saw it as a pathway for a more climate-focused farm bill.

House and Senate Agriculture Committee Republicans have been pushing back, saying the new program excludes farmers and ranchers who need money to help fund conservation, natural resource, and wildlife habitat solutions that are not prescribed by the USDA but that offer flexibility to best meet their needs at the local level. Democrats have made it clear, however, that any attempt by Republicans to redirect IRA money earmarked for conservation and environmental programs would be a non-starter. In fact, Chairwoman Stabenow (D-MI) said she would prefer punting on the farm bill rather than strike a deal with Republicans that would limit climate-smart agriculture funding, or the SNAP program for that matter.

Both Chairman Thompson and Chairwoman Stabenow seek to bring the Inflation Reduction Act conservation funding into the Farm Bill to permanently expand the baseline and increase conservation programs by 25 percent. But the House summary stops short of pledging not to remove climate guardrails from the IRA funding. Instead, committee Republicans aim to protect voluntary, locally-led incentives that previously guided farm conservation programs.

Farm Income Safety Net

Set by Congress, reference prices are the trigger for crop subsidy payments covered by the Agriculture Risk Coverage and Price Loss Coverage programs. Through this reference price support, farmers can receive payments to make up the difference when market prices fall below the determined threshold. Arguing that the current reference price formula does not adequately cover their needs, many farmers have been advocating for higher reference prices to make up for increased production expenses that cut into their bottom line. Deficit hawks in Congress and conservative organizations are expressing opposition to such an effort, arguing that increasing reference prices is far too costly, interferes with a free market, and turns what is supposed to be a safety program into an entitlement. They also argue that since payments are linked to production, that the largest producers get the bulk of funding at the expense of small- and medium-sized producers.

The reality is that raising reference prices will not be cheap or easy, particularly since the Congressional Budget Office is having a hard time projecting future crop prices, making it difficult to estimate the cost of any increase. Then there is the question or how to pay for it. There are limits on expanding the farm bill’s baseline or increasing funding for certain programs.

Authorizers will have to get creative with how to find new funding beyond the current farm bill baseline, and both Republicans and Democrats will have to agree on where those funds are pulled from. An increase in reference prices would be an expensive step that could potentially add billions of dollars to the cost of crop support. Yet Chairman Thompson thinks an agreement can be had, saying he has found a way to fully fund farm safety net programs without touching the IRA or SNAP programs.

What to Expect

History tells us that drafting, debating, and voting on such a massive bill – not to mention producing an eventual bipartisan agreement — will take a significant amount of time and intense negotiations. There are as many as 60-80 House Republicans who are expected to oppose any farm bill, making Chairman Thompson’s job all the more challenging as he launches the renewal process in the House. The markup process is expected to be contentious, and floor consideration could be especially messy. Regardless, the law’s reauthorization will by necessity require bipartisan support. Should Congress not reauthorize the bill by the September deadline, another extension will be necessary – pushing the bill’s consideration into the lame duck session or more likely into the next Congress, where the political dynamics could shift significantly after the November elections and where high profile, high-cost fights over the debt limit and expiring tax cuts will take center stage.