AFBF Comparison of Senate and House Committee passed Farm Bills May 16, 2013

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1 CURRENT LAW SENATE AG COMMITTEE (S. 954) HOUSE AG COMMITTEE (HR 1947) Reported out of Committee 15 5 Reported out of Committee Cost $979.7 billion over the 10 years before sequester reductions of $6.4 billion Costs $955 Billion over 10 years Before any Committee amendments costs $940 billion Contains Direct and Counter Cyclical Payments and ACRE as part of as the safety net for program commodities Marketing Loans (ML) are part of the safety net for program commodities at the following levels: Wheat $2.94/bu. Corn $1.95/bu. Cotton $.52/lb. Rice $6.50/cwt Soybeans $5.00/bu. Peanuts $355/ton Counter cyclical (CCP)s are part of the safety net for program commodities. (Target prices) Current target prices: Wheat, $4.17 per bushel. Corn, $2.63 per bushel. Grain sorghum, $2.63 per bushel. Barley, $2.63 per bushel. Saves $23 Billion over 10 years which is $4B in SNAP, $17B in commodities and $4B in conservation. $6.4 billion savings claimed from sequester. Crop insurance increases $5B (but $2.3 billion for SCO and $3.7 billion for cotton STAX) Eliminates Direct and Counter Cyclical Payments (although CCP s are essentially renamed as AMP payments) and ACRE MLs same as current law for all commodities except cotton which is set at a rolling average, but in no case less than $.45/pound or more than $.52/pound. This is due to $.52/lb due to the Brazil cotton case. Establishes the Agricultural Risk Coverage (ARC) program. Payments are made on losses between 78 and 88%. Producer can select coverage at the farm level or the county level. Payments are made on 80% of planted eligible acres for county option, 65% for individual election and 45% of prevented planting acres. Producers make a one time irrevocable election whether to be covered at the individual or county ARC program levels for the life of the bill. CCPs are eliminated but target prices are essentially renamed Adverse Market Program (AMP) payments. Rates are set at 55% of a 5 year Olympic average for all commodities except peanuts and rice. The peanut rate is fixed at $523.77/ton and rice at $13.30/cwt for the life of the bill. 1 Saves $39.7B over 10 years which is $20B in SNAP, $4.8B in conservation, and $18.6B in commodities and crop insurance. $6.4B credit claimed from sequestration. Crop Insurance spends $8.9 billion over baseline (but $3.8 billion for SCO and $3.7 billion for cotton STAX) Eliminates Direct and Counter Cyclical Payments (although CCP s are essentially renamed as RLC payments) and ACRE. See special cotton provisions below. MLs same as current law for all commodities except cotton which is set at a rolling average, but in no case less than $.47/pound or more than $.52/pound. Establishes the Revenue Loss Coverage (RLC) program. Producers can select coverage at the county level, but not the farm level. Payments are made on planted acres up to total base acres on the farm. Payments are made on 85% of total acres planted up to base and 30% of total acres prevented planted up to base. Producers make a one time irrevocable decision whether to participate in RLC or PLC for the life of the bill. CCPs are eliminated but target prices are essentially renamed Price Loss Coverage (PLC) payments. Wheat, $5.50 per bushel. Corn, $3.70 per bushel. Grain sorghum, $3.95 per bushel. Barley, $4.95 per bushel. Oats, $2.40 per bushel.

2 Oats, $1.79 per bushel. Upland cotton, $ per pound. Long grain rice, $10.50 per Medium grain rice, $10.50 per Soybeans, $6.00 per bushel. Other oilseeds, $12.68 per Dry peas, $8.32 per Lentils, $12.81 per Small chickpeas, $10.36 per Large chickpeas, $12.81 per hundredweight Long grain rice, $14.00 per Medium grain rice, $14.00 per Soybeans, $8.40 per bushel. Other oilseeds, $20.15 per Peanuts $ per ton. Dry peas, $11.00 per Lentils, $19.97 per Small chickpeas, $19.04 per Large chickpeas, $21.54 per No updating of bases or yields Rice producers may update their yields and peanut producers may update their bases and yields. Eligibility for DPs, ACRE or CCPs requires producers to comply with conservation compliance requirements (sodbuster, swampbuster) As DPs and ACRE is eliminated, conservation compliance requirements are added for ML s and ARC $65,000 payment limit for CCPs ARC payment limit for all commodities except peanuts is $50,000/person and ARC payments for peanuts is $50,000/person Cotton and peanut storage payments are available. If 3 year non farm AGI exceeds $500,000, program benefits are not allowed If 3 year on farm AGI exceeds $750,000, program benefits are not allowed If 3 year AGI exceeds $1 million, the individual is not eligible for conservation programs. An exception is made for those having more than 66% of their AGI from onfarm income. Cotton and peanut storage payments are available, but cotton storage payments are reduced by 20% from current law levels. If 3 year AGI for either on farm or offfarm income exceeds $750,000, program benefits are not allowed. No Change 2 As DPs and ACRE is eliminated, conservation compliance requirements are added for ML s and ARC Payment cap of $125,000/person for all commodity program payments except peanuts has a separate $125,000 limit and the direct payments for cotton in 2014 and 2015 are subject to a $40,000 limit. Cotton and peanut storage payments are available. If 3 year AGI for either on farm or offfarm income exceeds $950,000, program benefits are not allowed No Change No payment limits or means testing No Change No Change

3 on crop insurance No payment limit on MLs Livestock Indemnity Program (LIP) expired in 2011 but did compensate ranchers at a rate of 75% of market value for livestock mortality caused by a disaster Livestock Forage Program (LFP) expired in 2011 but did provide funding for grazing losses due to droughts or fires Emergency Livestock Assistance Program (ELAP) expired in 2011 but did provide up to $50 million annually to compensate producers for disaster losses not covered under other disaster programs. Tree Assistance Program (TAP) expired in 2011 but did provide payments to cover 70% of the cost of replanting trees or nursery stock and 50% of the cost of pruning/removal following a natural disaster. Combined $100,000 per person payment limit for LIP, LFP and ELAP. $100,000 separate payment limit for TAP. Dairy producers are supported via a price support program, the Milk Income Loss Contract Program and the Dairy Export Incentive Program. The sugar program is no net cost program. The acreage eligible to be enrolled in the Conservation Reserve Program is capped at 32 million acres. AFBF Comparison of Senate and House Committee passed Farm Bills for the life of the bill. LIP payment rate reduced from 75 to 65% of the market value of livestock. Payments also made for 2012 and for the life of the bill. Payments also made for 2012 and for the life of the bill, but maximum funding is $10 million annually. Payments also made for 2012 and for the life of the bill, but the payment rate for replanting is reduced from 70 to 65%. Payments also made for 2012 and No Change to current law. The three current programs are eliminated and replaced by a gross margin insurance program to protect producers between the price of milk and the cost of feed. There is a supply management provision requirement if producers choose to participate in this program. No change to current law except a date change for USDA to make decisions on imports. The acreage eligible to be enrolled in the Conservation Reserve Program is capped at 25 million acres. The Conservation Stewardship Program (CSP) is capped at an acreage enrollment of 10.3 million acres per year and a national average rate of $18/acre. 3 for the life of the bill. LIP payment rate reduced at 75% of the market value of livestock. Payments also made for 2012 and for the life of the bill. Payments also made for 2012 and for the life of the bill, but maximum funding is $20 million annually. Payments also made for 2012 and for the life of the bill, but the payment rate for replanting is reduced from 70 to 65%. Payments also made for 2012 and Combined $125,000 per person payment limit for LIP, LFP and ELAP. TAP payment cap increased to $125,000 per person. House concepts identical to Senate provisions on the margin program and supply management provisions. No changes to current law except a date change for USDA to make decisions on imports. The acreage eligible to be enrolled in the Conservation Reserve Program is capped at 24 million acres. The Conservation Stewardship Program (CSP) is capped at an acreage enrollment of 8.7 million acres per year and a national average rate of $18/acre. No sodsaver provision On land which has never been tilled, On land which has never been tilled, the

4 the crop insurance premium subsidy is reduced by 50% for the first four years of planting. Producers wishing to purchase crop insurance with the Federal government subsidies must comply with new conservation compliance provisions (sodbuster/swampbuster). If a producer does not comply, he is still able to purchase crop insurance, but without subsidies. In return, no payment limit, means testing or reductions in crop insurance premium subsidies were included in the bill. crop insurance premium subsidy is reduced by 50% for the first four years of planting. No Change to current law. Makes $72.5 million in mandatory funding for the Specialty Crop Block Grant program for FY14 FY17 and $85 million for FY18. Higher subsidies for enterprise crop insurance coverage is done, but only on a pilot basis. No ability to insure separately irrigated and non irrigated land under an enterprise policy. If there are missing yields, the transitional yield (T yield) is set at 60% of the T yield. The authority to subsidize enterprise units is made permanent. Requires enterprise units to be made available by practice (irrigated or nonirrigated). The authority to subsidize enterprise units is made permanent. Requires enterprise units to be made available by practice (irrigated or nonirrigated). T yields are increased from 60 to 65%. T yields are increased from 60 to 70%. The Supplemental Coverage Option (SCO) program is established for all program crops except cotton. The program allows producers to purchase a area triggered revenue or yield insurance product to cover the deductible associated with the underlying individual/area insurance policy. An indemnity covers up to 100% of the deductible under a producer s underlying policy. Coverage cannot exceed 85% of individual yield or 90% of county yield. The premium is subsidized at 65%. The Stacked Income Protection Program (STAX) is established for cotton. The concepts of the program are very much like SCO. Exceptions are (a) the policy is available only on The Supplemental Coverage Option (SCO) program is established for all program crops except cotton. The program allows producers to purchase an area triggered revenue or yield insurance product to cover the deductible associated with the underlying individual/area insurance policy. An indemnity covers up to 90% of the producers expected revenue. Coverage cannot exceed 85% of individual yield or 90% of county yield. The premium is subsidized at 65%. The Stacked Income Protection Program (STAX) is established for cotton. The concepts of the program are very much like SCO. Exceptions are (a) the policy is available only on county revenue; (b) a 4

5 Special Cotton Direct Payment Provision. AFBF Comparison of Senate and House Committee passed Farm Bills county revenue; (b) a producer may insure 120% of his county revenue rather than 100% under SCO; (c) 80 percent of the premium is subsidized; (d) a harvest price revenue option is available; and (e) the program operates at 70 90% of expected county revenue. No reference price is included. producer may insure 120% of his county revenue rather than 100% under SCO; (c) 80 percent of the premium is subsidized; (d) a harvest price revenue option is available; and (e) the program operates at 70 90% of expected county revenue. No reference price is included. The Committee believes USDA cannot implement the STAX program in a timely manner and therefore continues to provide direct payments to cotton producers at 70% of cotton base acres in 2014 and 60% of cotton base acres in No provision is made to eliminate the direct payments if USDA can indeed implement the STAX program earlier. Prohibits unscientific state barriers to interstate commerce when those barriers are based solely on production practices. This would not impact a state s right to set its own production standards. It simply says a state can t force those standards on imports from other states. USDA and the Food and Drug Adminstration are both required to inspect catfish. Authorizes USDA to establish an industry funded checkoff for organic products. USDA s authority to inspect catfish is repealed. Authorizes USDA to establish an industryfunded checkoff for organic products. Makes it a federal offense to attend an animal fighting venue. 5

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