CBO updates farm bill budget projections

If they are approved this year, Senate and House Ag Committee versions of farm bill proposals approved in 2012 won’t save as much as previously anticipated, according to updated analysis from the Congressional Budget Office (CBO).

CBO prepared updated cost estimates using more recent baseline projections for agriculture, conservation and nutrition spending included in:

• the Senate proposal, (approved last year as S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012, and reintroduced as S. 10, the Agriculture Reform, Food, and Jobs Act of 2013, in the 113th Congress)

• H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012, as reported by the House Committee on Agriculture on Sept. 13, 2012; it has not been introduced during the 113th Congress.)

Overall, CBO estimates either version would reduce spending relative to a continuation of programs included under the 2008 farm bill. However, the spending reductions would be significantly smaller than CBO’s estimates last year.

 

Senate proposal

CBO now estimates that enacting S. 3240 (as modified to account for a later enactment) would bring total direct spending for the affected USDA programs to $963 billion over the 2014-2023 period, or $13.1 billion less than what CBO project will be spent over that period if those programs continue to operate as under current law. Last year, CBO estimated that enacting S. 3240 would have reduced spending relative to continuing current policies by $23.1 billion over the 2013-2022 period.

Significant differences between the cost estimate CBO prepared on July 6, 2012, for S. 3240, and the latest estimate include:

• CBO now estimates that spending on commodity programs under would cost $3.8 billion more over the next 10 years than we estimated in 2012 because: recent higher commodity prices increase the expected cost of the income guarantees in the Agriculture Risk Coverage Program offered under the legislation; lower milk prices increase the cost of the Margin Protection Program for dairy producers; and, it is now clear that the recent drought conditions will increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.

• CBO now estimates that spending on conservation programs would cost $1.4 billion more over the next 10 years than it estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings previously expected from the proposal to cap enrollment in the program.

• CBO now estimates that spending on nutrition programs would be $4.4 billion more over the next 10 years than it estimated in 2012, primarily because of a change regarding utility allowances in the Supplemental Nutrition Assistance Program.

 

House Ag Committee proposal

CBO now estimates that enacting H.R. 6083 (as modified to account for a later enactment) would bring total direct spending for the affected USDA programs to $950 billion over the 2014-2023 period, or $26.6 billion less than what CBO projects will be spent over that period if those programs continue to operate as under current law. Last year, CBO estimated that enacting H.R. 6083 would have reduced spending relative to continuing current policies by $35.1 billion over the 2013-2022 period.

Significant differences between the cost estimate CBO prepared on July 26, 2012, for H.R. 6083, and the modified estimate include:

• CBO now estimates that spending on commodity programs would cost $1.1 billion more over the next 10 years than it estimated in 2012 because: lower milk prices decrease feed cost margins for dairy producers; and, it is now clear that the recent drought conditions would increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.

• CBO now estimates that spending on conservation programs would cost $1.7 billion more over the next 10 years that it estimated in 2012 because recent lower enrollment in the Conservation Reserve Program.

• CBO now estimates that spending on nutrition programs would be $4.3 billion more over the next 10 years than it estimated in 2012.

• CBO now estimates that spending on crop insurance would cost $1.4 billion more over the next 10 years than it estimated in 2012, because increased participation in the Price Loss Coverage Option.

 

Goodlatte/Scott respond

Following release of the CBO report, U.S. Reps. Bob Goodlatte (R-Va.) and David Scott (D-Ga.) released a statement regarding the CBO’s updated estimates of the costs of the Goodlatte/Scott amendment to the Dairy Security Act. 

“Last year, we offered an alternative dairy policy that would provide dairy producers with voluntary margin insurance protection that did not include administrative fees and was not tied to a new supply management program that manipulates dairy prices and penalizes consumers,” said Goodlatte and Scott.  “This amendment provided for a viable safety net for producers without putting the government in the middle of market decisions.”

Goodlatte and Scott continued, “CBO’s updated score of the farm bill finds that our amendment would save $100 million over the Dairy Security Act as included in the dairy title of last year’s proposed House Farm Bill.  We believe that the CBO score further proves that supply management does not work and our amendment will provide producers with a viable safety net without supply management and added producer fees.  We look forward to continuing to work with Chairman Lucas and Ranking Member Peterson on common sense reforms for our nation’s dairy farmers.”