Congress Passes Farm Bill to Set US Agri Policy for Five Years

Crop Subsidy Replaced by Insurance

The Senate passed and sent President Barack Obama a measure that sets U.S. agricultural policy for five years, ending the toughest legislative battle on renewal of the farm bill in almost two decades with cuts to crop subsidies and food stamps.

The Democratic-led Senate voted 68-32 on 4 February for the bill, joining the Republican-controlled House that cleared the legislation last week. The measure, which Obama said he will sign, ends a $5 billion annual crop-subsidy program and relies on insurance as the main form of farm aid.

The plan calls for spending $956.4 billion over 10 years - $16.6 billion less than current levels, according to the Congressional Budget Office. Passage reflects the clout of rural and urban allies who kept farm subsidies and nutrition programs together over Republican objections. It is the third significant, bipartisan bill adopted by the current Congress, which passed a budget in December and cleared a $1.1 trillion spending bill last month.

Tortured Path

Obama endorsed the bill in a statement, and said it improved farm and nutrition policy through compromise.

The bill ended up cutting food-stamp spending by $8.6 billion over 10 years, though additions to other programs bring nutrition-aid cuts down to $8 billion. That is one-fifth of the $40 billion in cuts sought by House Republicans. The reduction would equal about 1 percent of the program’s record $79.6 billion in spending for the budget year that ended Sept. 30.

Disclosure Avoided

Opponents criticized the bill’s cost and lack of transparency, saying the plan hurts the poor while wasting spending on wealthy farmers. Negotiators left out a House measure to require members of Congress and the president’s cabinet to report what they receive in crop insurance aid. Also omitted was a Senate-backed provision to limit premium subsidies for the wealthiest farmers.

Groups representing meatpackers such as Tyson Foods Inc. (TSN) failed to persuade legislators to roll back U.S. labeling standards to disclose the country of origin for cattle. Those rules have been challenged at the World Trade Organization.

The bill governs farm subsidies, which lowers costs by encouraging the planting of soybeans, cotton and other crops by commodity processors including Bunge Ltd. (BG)

The legislation subsidizes crop-insurance provided by companies such as Ace Ltd. (ACE) and funds purchases at Kroger Co. (KR) and other grocers with food stamps, its biggest cost.

$23 Billion

Total savings from the bill will be $23 billion over 10 years, higher than the budget-office estimate, after automatic cuts in all federal spending tied to an earlier budget deal are included, according to agriculture committee staff. The bill ends the possibility, for at least five years, of U.S. farm policies reverting to a 1949 law that would potentially double milk prices.

Final passage ends the agriculture community’s toughest legislative fight in almost two decades.

At least 350 companies and organizations, including Monsanto Co. (MON), PepsiCo Inc. (PEP) and Dean Foods Co. (DF), registered as lobbyists in 2013 to work on the Senate bill, spending $150 million, according to the Center for Responsive Politics. Only bills on the federal budget, immigration and defense generated more lobbying interest, according to the center, a Washington-based research group that tracks campaign donations.