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Senate Votes to Scale Back Farm Subsidies

The U.S. Senate passed a $955 billion update of U.S. agriculture policy, sending it to the House of Representatives, where disagreements over food stamps and farmer subsidies may complicate passage.

The most expensive non-appropriations legislation to pass the Senate this year would reduce government spending by about $2.4 billion annually while preserving most farm and nutrition programs, said Senate Agriculture Committee Chairwoman Debbie Stabenow.

“We transition toward market-based risk management tools for our farmers,” Stabenow said on the Senate floor before the Senate voted 66-27 for the bill.

Crop subsidies benefiting buyers such as Archer-Daniels-Midland Co. (ADM) and food stamps subsidizing purchases at Supervalu Inc. (SVU) are targets for lawmakers seeking deficit cuts, while environmental and humanitarian groups are opposing cuts in programs that serve the poor and encourage clean land and water. Still, food aid and farm payments remain popular with lawmakers who can show constituents an ability to work across the aisle.

The Senate plan would end a program that makes direct payments to farmers regardless of crop prices while expanding an insurance-based safety net. Its $4 billion in cuts to food stamps over a decade are about one-fifth as much as the House version, which costs $939 billion over 10 years.

Enough Reductions?

While Stabenow and the top Republican on the Senate Agriculture Committee , Thad Cochran of Mississippi, have said they would resist further cuts to the program, House Republicans are saying their approach may not lower spending enough.

“Unless there are some significant changes and some significant effort, I don’t think this’ll get across the floor,” Kansas Republican Tim Huelskamp said in an interview. “People in Kansas get it -- just because it’s the farm bill doesn’t mean you have to vote for it,” said Huelskamp, whose district last year was the second-biggest recipient of agricultural subsidies, according to data compiled by conservation advocate Environmental Working Group. “It’s not just the farm bill, it’s also the food stamp bill.”

Representative Collin Peterson of Minnesota, the top Democrat on the House Agriculture Committee, said last week he believes not more than 150 Republicans will support the bill, meaning roughly 70 Democrats will also have to vote for it.

Nutrition Politics

Democratic sympathy for food stamps means he needs to reassure his caucus that a final congressional bill will more resemble the Senate plan than the House’s.

“I don’t see the Senate agreeing to much more than it already has,” Peterson told reporters.

In the version that probably will be considered by the full House next week, food-stamp spending would be reduced by $20.5 billion over 10 years.

More than a dozen smaller-government groups are pressing House lawmakers to split food stamps from the farm bill, and then make additional cuts to food-stamp funding.

“The urban and rural logrolling deemed necessary to pass this bill has created an unholy bipartisan alliance that has long served to thwart fiscally responsible efforts to restrain spending and limit the growth of government,” the groups, including Heritage Action, Club for Growth, Americans for Prosperity and the American Conservative Union wrote in a June 10 letter.

Dairy Policy

One of the big fights on the House floor may be over Peterson’s proposal to support dairy incomes through supply management, under which farmers who voluntarily enter the program would agree to cut milk production once prices fall below a set level. Speaker John Boehner, an Ohio Republican, is backing an alternative plan that moves milk producers to an insurance program without production controls, which Peterson says are necessary to prevent a plunge in milk prices.

When Congress tried last year to pass a five-year farm-policy bill, dairy policy was one of the reasons the legislation never made it to the House floor, with lawmakers instead settling for a one-year extension that begins to expire Sept. 30.

Unless the bill is changed, “It could potentially cause problems for the farm bill passing, because you’ll have Republican leadership and a good deal of Republicans you’ll need to have to pass the farm bill angry at a provision that’s going to be in there,” Jerry Slominski, International Dairy Foods Association senior vice president for legislative and economic affairs, said in an interview.

Sugar Subsidies

Other disputes may arise over sugar policy. Representative Ron Kind, a Wisconsin Democrat, is also expected to again offer an amendment restructuring farm programs to redirect funds to smaller farmers and environmental programs.

Lobbying by agriculture interests increased to $138 million last year from $112 million in 2007, the year before the last farm bill passed, according to the Center for Responsive Politics, a Washington-based research group that tracks spending on lobbying. Agriculture-industry employees spent $91 million on the 2012 elections, up from $70 million in 2008.

The Senate bill is S. 954. The House bill is H.R. 1947.

To contact the reporters on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net

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