Purdue News

November 29, 2006

Economist: Democrat-led Congress likely to 'E's' into ag policy

WEST LAFAYETTE, Ind. — A power shift in Congress likely means a new emphasis — with a capital E — in agricultural policy, said Allan Gray, a Purdue University agricultural economist.

With Democrats winning majorities in both the U.S. House of Representatives and Senate in this month's midterm elections, Gray said he believes Democrats will chart a course that follows what he calls the "four E's."

"There are going to be some shifts in agricultural policy issues with the Democrats assuming power in January," Gray said. "I think Democrats will focus on extension, environment, equity and energy."

All four topics are likely to be addressed in the 2007 Farm Bill, which Democrats will play a significant role in writing, Gray said. The 2002 bill, estimated to spend $180 billion over 10 years, expires next September.

"Extension" refers to farm subsidy payment provisions. Gray said he believes Democrats will extend the agricultural support payment programs from the 2002 Farm Bill.

"Some Democrats who are taking over chairmanships in the ag committees have generally been pretty favorable to the commodity title, or the subsidy system, of the 2002 bill," Gray said. "I think it is highly likely that they are going to push for an extension of those programs, meaning that direct payments, counter-cyclical payments and marketing loan payments are likely to stay the same.

"Under current market conditions with commodity prices being so high, it might not be too hard to keep those programs in place because they are not going to be as costly as they would be if we had low commodity prices."

The 2002 Farm Bill added counter-cyclical payments to the traditional direct payments and marketing loans. A farmer can receive counter-cyclical payments on qualified crops if market prices fall below a government-set target price. Target prices vary from crop to crop.

Gray also expects the new Congress to push for greater environmental protections in agriculture.

"If the past holds true, the environment — the second E — is likely to be more of a focus for the Democrats," Gray said. "For example, Sen. Tom Harkin, who is to be the chairman of the Senate ag committee, was the author of the Conservation Security Program in the 2002 Farm Bill. Due to some changes in appropriations, that program never got funded as it was supposed to. I think Sen. Harkin will push to have that program become a bigger part of the next farm bill."

The Conservation Security Program would provide financial incentives for farmers and ranchers who follow good conservation practices on working lands in agricultural production.

Gray predicted Democrats would try leveling the playing field between those agricultural producers who receive large government subsidies and those who receive smaller subsidies, or none at all. "Equity" could be a buzzword word in the 110th Congress, he said.

"There's been a lot of talk on Capitol Hill lately — even from the Republican-appointed secretary of agriculture — about the fact that a few large farms that produce corn, soybeans, wheat, cotton and rice receive the bulk of the subsidies and that we should instead be thinking about making those payments to a broader base of farmers," Gray said.

"Congress could move to get more people involved in the subsidy-based system, including livestock producers and fruit, nut, vegetable and vine producers. The new House speaker, Rep. Nancy Pelosi from California, is going to be interested in programs that help fruits, nuts, vegetables and vines because of the prominent nature of that part of the ag industry in California."

Lawmakers from both sides of the aisle are expected to support legislation promoting biofuels and other initiatives in energy, Gray's fourth E.

"I think both the Republicans and Democrats have an area here where they agree," he said. "That is, that biofuels are part of our overall strategy for energy independence in the United States. I think the Democrats are likely to push that agenda a little bit harder. They are probably going to be a bit more in favor of subsidizing the use of corn ethanol, extending the renewable fuels standard and developing cellulosic ethanol. They'll also likely be more favorable to biodiesel."

Gray foresees congressional Democrats proposing tougher fuel efficiency standards for new cars and trucks, as well as requiring automakers to build more vehicles capable of running on biofuels.

Other agricultural policy changes in the Democrat-led Congress are possible, Gray said, including:

• Disaster assistance. Rep. Collin Peterson, D-Minn., has called for adding provisions within the next farm bill to make it easier for farmers affected by drought, floods or other natural disasters to receive federal assistance.

"Rep. Peterson would like to add wording to the farm bill allowing the secretary of agriculture to make disaster payments to farmers whenever the need arises without needing Congress to pass a new bill every time," Gray said.

• Food safety. Lawmakers could propose legislation expanding country-of-origin labeling laws and strengthening current efforts in livestock identification/traceability, and mad cow disease and food contamination prevention.

"With the Democrats in control, those are going to be issues that will be debated," Gray said. "Even environmental issues, like programs that are in place to ensure we both encourage producers to do a better job of handling manure waste and make sure confined animal feeding operations are properly regulated, should be the topics of some lively discussion."

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Allan Gray, (765) 494-4323, gray@purdue.edu

Related Web site:
Purdue Department of Agricultural Economics

Ag Communications: (765) 494-2722; Beth Forbes, forbes@purdue.edu

Agriculture News Page


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