SAN ANTONIO, Texas – Jim Wiesemeyer’s presentation to delegates attending the North American Grain Congress was titled What do You Get When You Mix Budget Deficits, Trade Policy and a New Farm Bill?
His answer: “You get change.”
Hearings on the new U.S. farm bill got under way last week and Wiesemeyer, an agriculture trade policy expert who has reported on the subject since 1978, told his audience of American wheat growers that they should brace for a trimmed down package of subsidies.
In an interview following his presentation, he provided his best guess of how much ground producers might be losing in the 2007 farm bill.
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“What they have now will probably be reduced anywhere from $10 to $20 billion (US),” said the vice-president of policy and trade issues for Informa Economics Inc.
That cut is not as exorbitant as it sounds when considered in relation to the total baseline funding for the current farm bill, which is about $270 billion.
So even if the budget cuts come in at the high end of Wiesemeyer’s estimate, it would be only a 7.4 percent decline in current spending.
Subtracting $10 to $20 billion from farm incomes would still be a dramatic adjustment no matter how you look at it, said Sherman Reese, president of the National Association of Wheat Growers.
“Any cut is unacceptable because we’re hanging on by our fingernails right now,” he said.
Reese isn’t as convinced as Wiesemeyer that change is inevitable. The farm sector has two years before the current farm bill expires, giving it time to fight to maintain baseline funding.
If most battles take place before the 2006 congressional election in November, Reese feels there is a good chance agriculture can retain its current support levels.
The powerful cotton lobby has the ear of the power block from the southern states that holds the reins of federal agriculture and appropriations committees.
“If we ally with cotton and get them to be the primary push here to keep the baseline in place, we’ll be much better off,” said Reese.
The wildcard is that the congressional election could see a reshuffling of power in Washington so if the groundwork for a new farm bill isn’t laid until 2007, when many analysts think the discussions will heat up, farm lobbyists could be facing an uphill battle.
Others say it doesn’t matter what happens with the election because economics will override politics in this debate.
Given the climate of deficit cutting and general public animosity toward farm programs, there is an expectation among commodity groups that baseline funding will shrink, said Mark Gaede, director of government affairs environmental policy with the National Association of Wheat Growers.
“We’re looking at a real fight to maintain our baseline funding,” he told growers attending the North American Grain Congress.
Regardless of what happens on that front, there are likely other modifications in store for producers in the new farm bill.
“The commodity groups generally acknowledge there will have to be some changes made to the program based on World Trade Organization rules,” said Gaede.
Other countries are pressuring the U.S. to shift spending from amber box to less trade-distorting blue and green box programs. That could entail a shift from what are now price-based support programs to target revenue or income support programs.
Wiesemeyer said the good news for American growers is there are “relatively high odds” for some sort of short-term disaster assistance in this election year due to the drought in the southern wheat-growing states.
