Farm Bill Conference Call

Farm Bill Conference Call January 28, 2014 Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) and House Ag Committee Chairman Frank Lucas (R., Okla.) Keith Good FarmPolicy.com, Inc. Champaign, IL www.farmpolicy.com Moderator: We re going to go ahead and get started, and Chairman Lucas will kick things off, followed by remarks from Chairwoman Stabenow. Then we ll open it up to questions. Chairman Lucas. Rep. Lucas: Thank you, sir. Frank Lucas, Third District of Oklahoma, Chairman of the House Agriculture Committee. Pleased to be with you here today, and with my colleague, Senate Chairwoman Stabenow of the Senate Agriculture Committee. I think we re on the verge of doing something that not only is historic in many ways, the magnitude of the reforms across the perspective in the Agricultural Act of 2014, but quite literally, when you consider the environment with which Debbie and I, my partner, have worked with our ranking members and the conference committee members, and our Senate and House Ag Committee members, the environment we have worked in, even though it took us, Senator, two and a half, almost three years, we have a really amazing bill here. If you d indulge me for just a moment. Sen. Stabenow: Please, please. Rep. Lucas: When you look at what s been accomplished, we have a commodity title that quite literally was written for farmers and ranchers, for people who produce the food and fiber that feed this great nation in the country and around the world. We did it by making and don t underestimate the magnitude of the reforms ending the direct payment program, the old safety net, completely; moving to an insurance oriented kind of a program where benefits will only be paid out if you have a weather problem or if you have a market failure, things that farmers and ranchers cannot control, the magnitude of that; and crop insurance taking our cotton friends away from the old programs to the STAX programs as a part of

being compliant with our WTO obligations; putting more money into crop insurance. And I m sure the senator would agree with me, when you look at the numbers, not only did the old direct payment program go away, not only did we maintain the investment in crop insurance, but we plowed some of that direct payment money savings back in to enhance the crop insurance programs. Dairy and I know all of you are familiar with the trials and tribulations, and the House of Representatives know that the three magic words are no supply management. No supply management. Very important to certain people in the United States House, as Senator Stabenow knows. But also a program that creates a new way to help protect our dairy friends from the challenges of the market and things they don t control. Let s be honest. While we ve had, setting drought issues aside, a really good decade, it s been a tough decade on our dairy farmers, and we re trying to address that. The consolidation within the conservation programs. And oh, yes, a topic that the senator and I have worked much on in nutrition, where we have reasonable reforms that, while they try to address loopholes leftover from 1996, nonetheless will assure that our fellow Americans who need help, who demonstrate that they meet the asset and income requirements, will get the help they need, and that safety net is maintained also. Just a variety of things. And I know there will be some discussion and comments in a moment about a lot of other things. But just simply let me say this, and I ll turn it to my good friend and the chairwoman for her observations and comments. If you look at the environment we were dealing in, the budget situation the deficits, the ongoing deficits if you look at the political rancor which we ve had to deal with in both houses and across the country, not only is this a good farm bill, this is almost a miraculous farm bill. And as hard as it s been to get to this point and I want to thank my friend here for all of her efforts, and all of our other colleagues efforts this is almost a miracle. But that s what farmers and ranchers and consumers needed. That s what we re about, as elected officials to the United States House, United States Senate do our work, do it in a way that surprises people positively and almost create some miracles. With that, Senator, would you have some thoughts? Sen. Stabenow: I do. And I want to first thank Chairman Lucas. We ve been working together I think just about three years on all of this, and I think it s very, very important to start by saying this has been a joint effort, it s been bipartisan every step of the way. Tough negotiations, and, depending on regions of the country and different ideas on things, but we all operated in good faith, continued to do that with respect for each other, and friendship. 2

And I think the public expects us to govern in a way that actually solves problems. I think for farmers and ranchers who are out there making tough decisions and battling the weather like nobody else every day, they expect us to step up and do our work, and that s what we ve done, and so I m very proud of that. I m going to take us back almost three years and just say that from the very first moment discussion about deficit reduction started, and there was super committee process set up, every committee was asked to come together, produce spending reductions, deficit reductions, and Chairman Lucas and I reached out to each other and were literally the only committee that got House, Senate, Republican, Democratic agreement to cut our own area of jurisdiction. And if every part of the federal budget did what we did, I would dare say, Mr. Chairman, we might have a balanced budget. And so we started with a framework at that time. That produced about $23 billion in savings through tough negotiations. When the super committee process fell through, the good news was we had a framework that we then carried on and stuck pretty close to in terms of the overall framework and number of areas, which allowed us to go through and to ultimately get to this point. We did what I think taxpayers and citizens would like us to do in every part of the budget. We looked at everything does it work, does it not work, what should be done, what should be changed. There s about a hundred different authorizations and programs we eliminated. In conservation we consolidated 23 programs down to 13 and basically put them in four buckets of flexibility, while strengthening them and saving money. I m very, very proud of the fact that we ve got over 650 groups, from hunters and fishermen to environmentalists and wildlife advocates and others who are supporting what I believe is really a conservation title that recommits the best of America to support land and water preservation and support our farmers in the country. Let me say I think between the commodity title, disaster assistance and crop insurance we have addressed the needs of every part of America s agriculture, and that was something that we started out saying. We wanted this to work for every region, and I believe we have done that. It was tough to do, as the chairman said, because we were ending direct payments, we are ending direct payments, and moving to a risk-based system, and it s been a lot of hard work to get to a point where we can say that this is good for everyone. And disaster assistance, of course I m very pleased that both for our fruit growers who were decimated two years ago with the warming and then the late freezes again; and what s happening to livestock across the country, I m very, very proud that we have, for the first time, a permanent livestock disaster assistance program. When we look at what we ve been able to do for our ranchers, we have about a $7 3

billion commitment, and that s something that we all care about as well. Finally, on food assistance, we have said we need to make the system work better. We re going to tackle waste, fraud and abuse, make the system accountable, and that s what we have done. And then one last thing that we don t talk enough about, I don t think, and that is the fact that 16 million people work in agriculture, and this is a huge job creator, number one in exports. And there are a number of things that we have done to strengthen that, to boost export opportunities, to boost local food opportunities for folks to buy locally and to be able to create new markets for small farmers. Michigan, we are very involved in something called bio based manufacturing, where we have the auto industry using soy oil and corn byproducts and wheat byproducts to replace chemicals in their plastics and so on, creating new opportunities, and we strengthen that as well. We have a commitment on a new foundation on research, a $200 million commitment that can be balanced with $200 million in investment from the private sector on research for the future. We strengthen rural development. And I really will say, finally, our support for beginning farmers, which I know the chairman cares about, and I care about. And we have expanded the one area of actual expansion, of doing something, adding something new to the department is creating a new office to coordinate with veterans, our veterans coming home, many of them from small communities, who want to go back into farming or go into farming, and we are expanding support for veterans who want to start in agriculture, and I think that s pretty important as well. So this bill comes out, right, Mr. Chairman, Wednesday, tomorrow, for a vote? Rep. Lucas: We will have a rules vote today in the House of Representatives that will enable the bill to be considered tomorrow. I would expect it tomorrow morning, with passage there. Then the legislative action will move to your chamber. Sen. Stabenow: And we expect Leader Reid has indicated he will move it as quickly as possible, so as fast as we can get this done. Rep. Lucas: And assuming that, I have only indications that the White House will be supportive of our final product. Sen. Stabenow: That s my understanding as well. And I appreciate very much that we have every indication that the President will sign the bill. Rep. Lucas: But Debbie and I will not sleep well until the parchment, or whatever the final document, is delivered to the national archives. Sen. Stabenow: Absolutely, absolutely. So I think we have shall we open it up to questions? And please identify yourself. Moderator: Hi, everyone. This is [Will] from Senator Stabenow s office. If you could press one on your phone if you have a question, that will let me know and I ll 4

move you to the front of the line. The first question comes from Ron Hays with the Oklahoma Farm [Report]. Ron, go ahead. Mr. Ron Hays: Good morning, Madame Chairman and Mr. Chairman. This is for Senator Stabenow. There are some livestock groups that are very unhappy, and they ve named you as one of the reasons why they feel they got no relief on the COOL rule and on GIPSA. Could you talk about your position on that? Sen. Stabenow: Absolutely. Well, first of all, I m very, very proud of what we have done for livestock. And I have to say surprised, after the same groups supported the Senate bill in 2012 that did not address the issues of COOL and GIPSA. Those are not in the farm bill [jurisdiction]. They supported our bill, didn t raise it at the time, supported our bill the next year in 2013, and it wasn t in the House bill, either. But we did support the House language, which was to study this issue, and that s what we were able to do. Now, I will go on to say, again, that we have, for the first time, a permanent livestock disaster assistance program, which was the number one priority for all of these groups up until a couple of weeks ago, and we have a commitment between environmental quality for livestock, a livestock forage program, a livestock indemnity program, export assistance. We have an unprecedented investment of $7 billion in this bill for ranchers. And I would say that all of us worked together with what we knew we could achieve. And they came in wanting to repeal COOL. There was no way. The chairman and I assessed this. The votes were not there in either body to do that. And so we moved forward to achieve what we could together. And I m very disappointed that they are not choosing to understand what a huge win this bill is for livestock. Rep. Lucas: Chairman, could I add a thought? Sen. Stabenow: Please. Rep. Lucas: Frank Lucas. Ron, I think the thing we need to bear in mind is this has been a hugely controversial set of subjects for years and years and years. The kind of thing that good people of good opinion have intense differences from perspective. The language, as the chairwoman quite clearly stated, that was in the bill dealt with a study, not with repeal. The Senate didn t have any language, basically, to start with. To be asked to go and advance past that towards a total repeal, when there wasn t repeal language on either side, that just was extremely difficult. This is one of those things where this fight has to be fought starting at the very lowest levels subcommittee, full committee, all the way through, and the groundwork had not necessarily been laid for that. Ultimately the chairwoman and myself and the ranking members had to make a decision, do we want a farm bill or do we want to take an issue that could 5

potentially blow the whole process sky high. Ultimately, at least from my perspective, I thought there were enough good things in this farm bill, it was a good enough farm bill, a reform farm bill, strong enough commitment, that we had to move forward. But I understand the disappointment of our friends out there. They said upfront they wanted repeal. And I wasn t totally surprised, after the final draft came out, of the decision they made and the position they took. But this is not over with. It s just on this day this couldn t prevail. And doing the farm bill, the Agricultural Act of 2014, seemed to me and a majority of my colleagues to be of the highest priority at that moment. I think we made the right decision, Debbie. Sen. Stabenow: And I think that Frank is absolutely right in saying it certainly isn t over, because there s a WTO case. If their position prevails, the U.S. loses the case, then COOL will be suspended, changed or repealed, and so it s just a matter of months, I assume, before that determination, and then we will move forward at that point. Rep. Lucas: I have subcommittee chairmen who are [chomping] at the bit ready to go. Sen. Stabenow: In the mean time, we have a very, very important bill that I know to Michigan ranchers and livestock producers, they are thrilled about what we have been able to achieve. Moderator: Great, thank you. Our next question will come from Chris Clayton with [DTN]. Chris, go ahead. Rep. Lucas: He s obviously balancing too many pieces of electronics at once. Sen. Stabenow: That s right. Moderator: All right, for now, until Chris gets his line all set, we ll go with Amanda Peterka. Amanda, go ahead. Ms. Amanda Peterka: Hi. Thanks for taking my question. Chairman Lucas, this is mostly for you. Can you address conservation compliance? I know you were pretty opposed to including it in the farm bill. What led to its inclusion in the final conference report? Rep. Lucas: Well, ultimately the language that was agreed to I think is very workable language. It was a very high priority not only in the Senate, but of a number of members in the United States House. While I may have my own very definite views on a lot of things, like whether the bill should have been permanent or not, nonetheless this is a process where you have to bring all the perspectives together and come up with a common bill, a common document that s workable to move forward with. The will of the conference, I think, was reflected in the language that was adopted. Fair statement, Senator? 6

Sen. Stabenow: Absolutely. And I would just add that Chairman Lucas raised concerns about flexibility in how things should be done and that we modified and addressed a number of concerns about not going backwards, but forwards and so on. We worked together to find something that is reasonable and workable. Rep. Lucas: Yes. Moderator: Our next question will come from Bill Thompson of Politico. Bill, go ahead. Mr. Bill Thompson: Yeah, hi. Thank you very much. Can you explain the reasoning why the subsidy caps that were in both bills were lifted, raised, and why the actively engaged was, I supposed you d say, punted to USDA? Rep. Lucas: Can I take a shot at this, Debbie? Sen. Stabenow: Yes. Rep. Lucas: Ultimately, when we put the final conference committee report together, we had to have language that would work for all regions, [for all] commodities, all size farmers. That s part of what bedeviled us in the dairy language, was trying to address the small and the large simultaneously. Ultimately, the conferees decided, the principals, especially when you consider that there was a knowledge base, especially coming from our friend, the Ranking Member of the Senate, Mr. Cochran from Mississippi, about how we had to craft language that would work for all operations, this language most assuredly was a compromise. If you note the 125 encompasses all payment limitations and the marketing loan issue under one limitation. That s different. That s tighter than previous language was. But the bottom line was just simply this: the language in the House and Senate bills, while they were slightly different, nonetheless very similar in nature, was not appropriate for the whole country, and ultimately we had to put a bill together that would work everywhere, not just, as I like to say, on the farm where my grandfather was born in Indiana, or the other grandfather was born in Texas, but everywhere. And I think we did that in a reasonable, fair fashion. Sen. Stabenow: And I would just add that because the issue of size of farms and size of operations is different, we did ask the USDA, we gave them the authority for the first time this is very important, the authority to set caps on numbers of managers and determine how to do that. We have given them authority they have not had before and we expect them to move forward in a thoughtful way to do that, looking at all sizes of operations. And it is major reform that we have adopted. The overall cap from the Grassley amendment, as you ve I ve heard Senator Grassley many times talk about the $125,000 cap we kept that. We have kept that. It s the first time ever we have kept marketing loans or had a comprehensive 7

cap. What we ve done underneath the cap is given flexibility to farmers, depending on which programs they use. So it s the overall cap, but instead of a $75,000 cap on a marketing loan, if somebody has 85,000, then their cap on the payment side will only be 40 instead of 50, or the other way around. If it s 75,000 that they choose on the commodity cap, then they get less of a marketing loan. So we ve set, for the first time, parameters and an overall limit, and I think that s significant reform. Rep. Lucas: The language has real teeth, is the bottom line. Sen. Stabenow: Yes, bottom line. Rep. Lucas: But I would also say this, too. This is one of those issues where none of the conferees, especially the principals, were entirely happy. Sen. Stabenow: Right, right. Rep. Lucas: This is a consensus. No one got their way on this. This is a consensus. Sen. Stabenow: Right. Moderator: All right, let s try again with Chris Clayton. Chris, go ahead. Chris, are you there? Sen. Stabenow: Chris is having some technical difficulties. Rep. Lucas: Send us a postcard, Chris. We ll respond. Sen. Stabenow: [Laughs.] Moderator: All right, our next question is from [Carolyn Lochhead]. Carolyn, go ahead. Ms. Carolyn Lochhead: For both of you, there s two things. A last minute rider on the California drought. I m wondering what happened with that. And then secondly, how did you reach the decision on the Steve King egg amendment? Sen. Stabenow: Well, let me take the first one and say that we never, at the member level, discussed the first issue. I think there were a lot of things coming at the end that various people were trying to move forward at various levels, and this one was never something that was discussed at the member level. On the second amendment and I ll let the chairman respond to that as well there was just overwhelming opposition from many, many corners. On the Senate side there was strong bipartisan opposition to this. Rep. Lucas: I think the Senate chairlady sums it up quite well. Both important issues. Both stirring strong passions from members of the conference. But ultimately the 8

first issue came very, very late in the process. And on the second issue, just very controversial, even within the House conferees themselves. And as I said, I appreciate both points, but we had to get a bill put together. Sen. Stabenow: I would just say, in general, on all of this, that we haven t had many real conference committees where you ve had folks working with all their members and sitting down and working through these complicated issues for a long time. The reality is that in governing, particularly on a bill with 12 different titles, each of which is a big piece of legislation by itself, we put that all together and we look at everything. And the fact that others who are trying to pass other bills that aren t done yet, and they see the farm bill moving, so everybody decides at the last minute they want to try to attach everything in the world I had people asking me about tax reform, and got people Everybody decided, gosh, the farm bill, we re all working together, we re actually going to get something done, why don t we just pass everything else in the [center of] government in the farm bill. Well, unfortunately, as much as we want to help our colleagues, our responsibility was to farmers and ranchers and families, and to make sure that we could get this thing done. And in the end it s called governing, and I m proud that we re able to do it. Rep. Lucas: The senator makes a very good point. Once both bills had passed from the House and the Senate, I brought my House Republican conferees, as soon as they were appointed, together and I said how many of you have been a member of a conference. I don t think a formal conference I don t think I don t remember anybody raising their hand. And we went through a discussion about the procedures. Now the chairwoman and I have been around a little longer than some of our colleagues and have been a part of this process before. But explaining that a conference committee is about taking the issues brought forth by each body, addressing the issues where there are differences, trying to achieve a consensus. Just because a topic is brought up in conference, just because one side forwards an agreement, language to the other side, doesn t necessarily mean that the other side by that I mean House or Senate has to accept those things, and when there s a difference, you have an impasse. It s not a process by which you have one big vote on any issue and the majority win. It s the opinions of the two bodies as a unit. That s a little different process, and a little more complicated, but created, I think, in a way to make sure that the final product is acceptable to an overwhelming majority of both bodies. So we worked within the rules, within the system we had, within the environment. It s just unfortunate that on more committees more work is not done in the way we ve done ours so that people would understand and have a full appreciation for the wonders of a conference committee. 9

Moderator: The next question comes from Erik Wasson with The Hill. Erik, go ahead. Mr. Erik Wasson: Hi, guys. Thanks so much for taking this call. The question is to both of you. What s your outlook for the coming vote? Mr. Lucas, Club for Growth and Heritage Action are whipping against this. How much of a threat is that? And Chairman Stabenow, Senator Gillibrand and some other liberals are against the bill over the cuts. Do you expect a large defection in your [party]? Rep. Lucas: Well, remember the challenge has always been in the House of Representatives. But my friends on the very conservative wing would not support anything because they don t want to spend any money on anybody for any reason on any occasion. My friends on the left are very sensitive. They don t really want to spend a lot of money on rural America, on that kind of infrastructure issues. They re more social policy oriented people. Can we create, in the House, a majority that is a coalition of the middle? My gut feeling is, my reading of my colleagues is yes. We ll have a Rules Committee vote a little later today. Now, the Ag Act of 2014 is tied into another bill. But the rule has to pass. At that point in time the effort to count heads, to verify numbers will be underway and we ll continue that until it s time to vote. But I just simply say this. I ve always known that the folks at both ends of the spectrum would not support us. But like farm bills in almost my entire tenure in Congress, it s the coalition of the folks in the middle who want to get things done, who believe in safety nets, who believe in having enough to eat, who care about the future, who will pass this bill. I think that will be there. And I m going to do everything I can to make sure it happens, just as my colleague the chairwoman is going to do everything within the Senate she can possibly do to do that. And there are a few cases where we have friends in each other s bodies where we ll visit with our friends to help make that happen. I think we re going to get there. But if it was easy, it wouldn t be the farm bill, would it? So we re going to get there. Sen. Stabenow: Yeah, or anything these days. Rep. Lucas: Or anything these days, exactly. Sen. Stabenow: Yeah, exactly. You know, I do think it s always a coalition of the middle and a coalition that wants to govern that gets things done, and I m very hopeful, and the chairman and I are working together very closely to make that happen with the leadership in the House and the Senate. I m confident we will have the votes in the Senate, and I will say that we have had a very strong bipartisan coalition in the Senate that understands that there s an area of misuse in SNAP that needed to be addressed. We ve done it in a fair and equitable way, while making sure we support families in need. And I think people overwhelmingly understand what that is and that we ll have a strong vote. 10

Rep. Lucas: And if the senator will indulge me for just a moment, cutting $23 billion in mandatory money not annual discretionary stuff, but the mandatory money reforms in the commodity title, the nutrition title, changes in how we deliver the safety net in all areas, if this is not a prototype bill, then where will you ever have a prototype bill? Sen. Stabenow: Right. Rep. Lucas: If this is not changing the trend about going after the real problem in federal spending, mandatory money, then when will we ever? If this is not the place and the process by which to accomplish this, how do we ever? The senator and I and our ranking members and our colleagues, we ve played by the rules. We ve done everything we can. We ve listened to everybody. We ve made real differences working together on this bill. If this is not good enough, when will it ever be? Sen. Stabenow: Right. And back to what you said about the 23 billion. I mean, we don t take a backseat to anybody here on standing up and making tough decisions to save taxpayer money, reduce the deficit, and set new priorities, because within that 23 billion, roughly we don t have the final thing, you know, but it s going to be roughly the 23 billion that we had started with way back in the super committee, and that the Senate passed and so on but if we, even within that, we have increased some things that we felt were important to do, while cutting other things, and to me that is what the public wants us to do. We ve added livestock disaster assistance, we increased crop insurance, we ve added some dollars on local food [systems and such]. Rep. Lucas: We put as much money in TEFAP for the food banks as we could possibly believe they could accommodate. We ve tried to make the good things work better. Sen. Stabenow: Right. So that s really what this is about saving money, making tough decisions, eliminating things that don t work or don t make sense from a taxpayer standpoint, but then adding things research. Agricultural research has been killed in recent years. From a food safety and agricultural production, innovation standpoint, it s very important to invest in the future. So we eliminate direct payments, we add a new research foundation that s about the future. And so again, I would just say this is what I think the public expects us to do, is to go through and analyze things and make tough decisions, and I m proud of the fact that we have done that. Rep. Lucas: And do our work. Sen. Stabenow: Yeah, exactly. Moderator: I think we have time for one last question. Ellyn Ferguson from Roll Call. Go ahead, Ellyn. 11

Ms. Ellyn Ferguson: Thank you. And I m going to ask a question about your favorite subject, dairy. In reading through the bill, I was trying to figure out what is the there seems to be a bridge or a transition from where we are now until the margin insurance program that stood out. Can either one of you explain that to me? Does that MILC continue for a while and then discontinued? Sen. Stabenow: The MILC levels will continue at a higher level until October 1 st, and then we transition to the new program. Rep. Lucas: We just couldn t turn it on instantly. We ve got to have time to write the rules and regulations and stand it up. Sen. Stabenow: Right. And this is a new insurance program, so it s really as you know, MILC did not have a cost to purchase, it didn t have premiums, and so part of this has been working with the dairy community to be fair for small dairies as well as larger dairies and create this insurance system, and then address what happens to the marketplace when we re not encouraging oversupply, when there s oversupply in the marketplace. So we don t have a supply management program, but we do have mechanisms within the marketplace to send important signals and address this. Rep. Lucas: The telling tale was when our conferees both in the Northeast and in California signed the report. Sen. Stabenow: Exactly. Rep. Lucas: Historically the two absolute ends of the world when it comes to dairy policy. Sen. Stabenow: Yeah, exactly. In wrapping up, thanks again to everybody on the call. I think the chairman and I will both stop holding our breath when we get this all the way through and signed by the President. It s just been it s a real pleasure working with Chairman Lucas, and we re looking forward to getting it done. Rep. Lucas: Thank you, Senator, for all of your efforts. Sen. Stabenow: Thank you. [End of recording.] 12