Dairy Emerges As Another Hurdle To Finalizing Farm Bill

Tue. Apr. 29, 2008


Even in the wake of a tentative deal on the farm bill, dairy farming, direct payments, rural development, and payment limits are expected to be outstanding issues conferees assemble today.

Small group meetings have been scheduled for this morning and a formal conference is scheduled later today, while Senate Agriculture Chairman Tom Harkin said Monday he expects to present the conferees with an agreement among principal negotiators.

In their agreement Friday, negotiators included a provision in the House bill that would force dairy importers to pay the promotion assessment that domestic producers pay — leading to a diplomatic battle.

On Sunday, John Bruton, the European Union’s ambassador to the United States, wrote to Senate Finance Chairman Max Baucus to protest the decision to include the dairy provision, an EU official confirmed.

Burton and European Union Agriculture Minister Marianne Fischer Boel have said that the assessment on imports would not be fair because some of the money is used to promote fluid milk, which is not imported into the United States, and would not be compatible with World Trade Organization rules. Irish and New Zealand dairy lobbyists made their opposition known.

Jaime Castaneda of the National Milk Producers Federation, which has long campaigned to charge the assessment on imports, confirmed that Senate Finance Committee aides had begun questioning whether the assessment on imports would violate WTO rules.

The Bush administration included the dairy assessment in its 2007 farm bill proposal.

Castaneda said that he did not understand why Senate Finance aides would “second guess” the administration on its view that the assessment would be WTO-compatible.

Harkin acknowledged Monday the issue had been reopened and said some of the opposition to extending the assessment to Alaska, Hawaii, Puerto Rico and Washington, D.C., a bigger issue than foreign complaints. The current law covers only the 48 contiguous states, but USDA has said that to be WTO-compliant, the assessment must cover all U.S. territory.

Negotiators also disagree over how payments under the Milk Income Loss Contract program should be triggered. Dairy groups have suggested tying the trigger to feed prices, but members whose farmers raise other livestock have said it would be unfair to tie a dairy subsidy to feed prices when poultry, beef, and pork producers do not get relief for high feed prices. Under the current law, low prices trigger MILC payments.

Defenders of direct payments oppose the negotiators’ plan to cut the direct payments that farmers get whether prices are high or low to pay for other programs within the farm bill.

The negotiators agreed Friday to cut the $5.2 billion in annual payments by $400 million over four years. According to a lobbyist, CBO said that only a $250 million cut was needed. But rather than reduce the cut Harkin wanted to keep it to increase the rural development budget by $150 million.

Harkin said Monday he plans to increase rural development funding but declined to give an amount. He also said negotiators had settled on annual payment limits on specific programs but not on the level of adjusted gross income at which payments would be banned.

A White House spokesman said late Monday, “The proposal before Congress would dramatically increase spending, in part by masking additional spending in budgetary gimmicks and accounting tricks. Now is the time to modernize our agricultural policies for the future, but Members of Congress have not risen to this challenge.”

by Jerry Hagstrom

Tue. Apr. 29, 2008