Differences, Contentiousness Color Conference

February 25, 2002

J. B. Penn, USDA's under secretary for farm and foreign agricultural services told the 78th Agricultural Outlook Forum last week that the House-Senate conference committee that must draw up a final version of a new farm bill is going to focus on "highly contentious" issues, some of which reflect major differences in what the House and the Senate approved. One of those will be how to spend the added $73.5 billion in 10-year spending. Penn said the administration is hoping for a final bill from the conference in about a month.

"That's (the $73.5 billion) a 78% increase from where we stand now," he said. "And basically this farm bill is going to build in the ad hoc assistance payments that the Congress has provided in each of the last four years since 1998." Another "notable aspect of this farm bill is that it's the first bill to be developed when international trade considerations are extremely important. There's been a much-increased emphasis on the specific means by which we provide domestic support, green box, amber box, and again, this is especially important because of the additional funding." Other controversial sections of the bills involve how to spend money: the outlays for the House bill are $33 billion over five years, while the Senate bill is some $10 billion more than that.

"It brings to mind that old challenge about stuffing 10 pounds of something in a five-pound bag," Penn observed. "Next are the loan rate levels. The Senate bill levels are well above the House, 10 to 20% above, except for soybeans, which are only about 5% above. And then there are payment limits, and this has proved to be highly controversial. It brings the big farm-small farm issue, selected commodity and regional issues all wrapped together into one big highly contentious issue.

Packer ownership of livestock brings regional differences and very strongly held views on both sides. "And dairy provisions, again regional differences, strongly held views. So these issues alone, not to mention a whole host of less controversial and less visible issues, illustrate why the length of the conference, how long it's going to take to get all this resolved is just simply impossible to predict."

Penn also commented on China's biotechnology rules. "China's behavior with respect to these regulations is a disappointing development after such a long process of accession to the WTO; some 15 years were involved," he said. "This is extremely important to our soybean producers; this is a billion dollar market; and it's extremely important to the prospects for our corn producers." Also on the trade front is the long-standing issue of Mexico and sweeteners, what Penn called "a lingering NAFTA (North American Free Trade Agreement) irritant that needs to be resolved. Other issues before us that are going to be taken up in the year ahead include Russia's accession to the WTO. This has a lot of old Cold War baggage, but I think it has become a priority now, but it's not without some considerable controversy, especially as to the approach involving the Jackson-Vanik Amendment and other things."