Johanns Stirs the... Soup; Headed for a Veto-Heartbreak?

I can't exactly remember when, but at some point a few months back the United States Department of Agriculture released formal farm bill proposals. It certainly feels like a long time ago, and since then those proposals have pretty much fallen off the face of the earth. (Note- we did review the administration's proposal in our March newsletter). And perhaps a bit more attention should have been paid to Agriculture Secretary Johanns and his proposals in the past few months, because he is now beginning to make a little noise- and probably make some people more than a little nervous.

One of the primary thrusts of the administration's proposal was ensuring a WTO-friendly commodity title. Along those lines, they proposed increasing direct payments (paid regardless of production or price, thus classified as "non-market distorting" by WTO), substantially changing countercylcical payments, and reducing marketing loan benefits (both of which are paid only when prices are low- not WTO-friendly). The adminstration also proposed doing away with the ban on planting fruits and vegetables on land receiving farm program payments, another item the WTO frowns upon. That ban is strongly supported by the fruit and vegetable industry, which does not want subsidized farmers competing with their producers, very few of whom receive farm program checks.

Unfortunately for the administration, the two gentlemen running the House and Senate Agriculture Committees have other ideas. They don't particularly like direct payments (a legacy of the 1996 Republican-written farm bill), so there is a great deal of chatter about taking money out of the direct payment program and putting it into countercyclicals and marketing loans- the exact opposite of what the administration proposed. The House approved a peanut support program that followed the reducing-direct payments model a week ago, and it is expected that the same general thrust will be included in the commodity title approved later today.

Not only that, but the ban on planting fruit and vegetables remains intact in the most recent version of the House farm bill. Essentially, to keep the fruit and vegetable people happy, you would have to give them a bunch of money (in the form of new programs) if you really wanted to do away with that ban. And as has been noted here before, money is very very tight. So the ban remains, another slap in the administration's face.

But now Johanns is fighting back. It has become ever more clear that the 2007 farm bill is shaping up to be something the adminstration really won't like, and Johanns is not sitting still. His fired his first salvo June 7th, according to DTN's Chris Clayton:

Secretary of Agriculture Mike Johanns expressed some specific worries to farm and commodity groups this week about the focus on proposals to move funds from direct payment programs to other commodity program uses -- changes he believes could increase the likelihood of World Trade Organization challenges...

Obviously, the administration hopes that it can jawbone farm group representatives and the Congress away from programs they believe could make U.S. policies both less equitable and more subject to litigation by trading partners. At the same time, feedback from the meeting suggests substantial skepticism on the part of participants that the administration would actually veto a farm bill, especially one passed by a healthy margin. [Read More Here]

Is that the V word I just heard?

Continue reading the full post below.

I think so. A week or so later, Chris Clayton again gets the inside scoop on Johanns' second salvo, this time in regards to support for fruits and vegetables in the farm bill:

Fruit and vegetable growers should not accept plans to provide only "maybe dollars" for specialty crops in the next farm bill, according to Secretary of Agriculture Mike Johanns...

The Bush administration proposal offered $5 billion in mandatory spending for specialty crops over 10 years. The initial markup for the House Agriculture Committee's specialty crop provisions establishes discretionary spending. Johanns noted there was little discretionary spending from the 2002 farm bill that actually was committed...

Fruit, vegetable and nut growers in states such as California, Florida or Michigan should not be satisfied with "maybe dollars" for specialty crops because "that money will never arrive," Johanns said. [Read More Here]

Now Johanns strikes a sympathetic chord with us when he talks about "maybe dollars"; he's referring to the "reserve funds" established by the Agriculture Committees that are really just a pot of imaginary money the committees can use to supposedly fund new programs. That money does not exist (yet).

But I suspect that the good Secretary is perhaps motivated more by a desire to sow a little discord among the various constituencies on the agriculture committees than a deep-seated concern for fruit and vegetable programs. Of course, I have no proof of that.

And he doesn't let up. In yet another broadside, this time in specialty crop-heavy California, he lets loose in an interview with the Modesto Bee:

"I'm very worried about a very weak, watered-down, much-less-than-we proposed specialty crop initiative," Johanns said...

The administration's proposed version would trim the subsidies that have long gone to growers of a few major crops, mainly in the Midwest and South, and boost programs that benefit growers of fruits, vegetables and other specialty crops in California and several other states.

Johanns, a former Nebraska governor, said the resistance to firm language by some lawmakers reflects concerns about losing some of the traditional subsidies, which have been mainly for corn, wheat, soybeans, rice and cotton. [Read More Here]

The man is unstoppable. Not only does he slam the Agriculture Committee for not providing enough guaranteed dollars for fruits and vegetables, he actually goes after traditional farm subsidies as well, a sure way to lose friends on the committee. I should note that Johanns conveniently overlooks the fact that while California has a lot of fruit and vegetables, it also has some of the largest cotton farms in the world and has plenty of rice production as well.

Think this doesn't have any effect on the committee? Think again. Produce guru Tom Karst of Fresh Talk interviewed Rep. Cardoza, California Democrat and chair of the subcommittee that deals with fruit and vegetable programs. Part of Mr. Karst's report:

A couple of notable things. He has told House Agriculture Committee chairman Peterson that the specialty crop industry needs more than what it has received so far, particularly in the area of specialty crop block grants. However, Cardoza believes if the farm bill denigrates to one sector raiding another sector for funds, no farm bill at all may be passed.

Right-o. Rep. Cardoza is a senior Democrat on the Agriculture Committee, and clearly he wants more money for his subcommittee, but he is also definitely worried about the potential for a big kerfuffle within the committee over funding. And he probably doesn't appreciate Secretary Johanns running around telling everyone the House Agriculture Commttee is screwing over fruit and vegetable producers.

But I digress. The broad point is that the administration still retains the power cause some real difficulties for both the House and Senate Agriculture Committees, if only by highlighting some issues in the media the committees would like to sweep under the proverbial rug. Not only that, but we shouldn't forget that the President will have to sign the new farm bill- or issue a veto.

And you know what? Conservative commentator Robert Novak wrote a column just yesterday, reporting the President is prepared to shoot down just about anything that comes out of a Democratic Congress that isn't to the administration's liking. Chairmen Peterson and Harkin may have to start paying a little more attention to Mr. Johanns if they want a farm bill before the current President leaves office. Draw your own conclusions on that one.

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