Farm bill faces battle as GOP pushes to strip climate, SNAP funding for subsidies

Correction: This article has been updated to accurately reflect Jonathan Coppess’s position.

Congress appears unlikely to pass a new farm bill by the end of this year amid standoffs over Republicans’ push to extend subsidies to three specific Southern crops — at the potential cost of billions in both food aid and popular farm conservation programs.

Funding for farm bill programs is currently set to expire at the end of the year. Senate leaders say they’ll need to extend it — possibly through a separate measure that would keep the government funded — to buy more time for negotiations.

But in the House, Republicans are pressuring newly minted Speaker Mike Johnson (R-La.) to pass a new farm bill this year.

On Friday, House Agriculture Committee ranking member David Scott (D-Ga.) called on the committee to pass a temporary one-year extension to the bill instead. “The extremism and cynicism that has taken hold of the broader House Republican Conference makes a five-year farm bill reauthorization by the year’s end increasingly unlikely,” he said.

That’s a prospect that committee Chairman Glenn Thompson (R-Pa.) on Thursday told The Hill he was open to. “With how the Senate is proceeding, we’re not going to have a [combined] farm bill by January,” he said, adding that the bill would require an “extension” to make sure programs don’t run out.

But he also said that he thinks the Republican-controlled House can finish the full legislation this year — a punishing timeline that would require drafting, debating, and voting on the mammoth $1.4 trillion bill over just a few weeks in December.

Getting the bill across the finish line will also require the GOP-controlled House to reach a compromise with the Democratic-majority Senate, which promises to be a tough battle.

And the consequences of not extending funding through either a stopgap measure or a new bill by the end of the year would be dire, threatening food aid and farm payments for tens of millions of Americans.

Republicans make contentious push for select crop subsidies

Thompson said Johnson had committed December floor time to the farm bill — and gave The Hill a preview of what such a bill might look like.

In brief, the proposal he laid out aims to increase subsidies for a few select crops — peanuts, cotton and rice — which are the only commodities that won’t get automatic price increases under the prior 2018 farm bill.

To pay for this increase, Republican supporters of those programs want to cut food aid and take money from $20 billion previously allocated to conservation payments backed by Democrats, environmental groups and a wide array of farm groups.

Thompson argues this move is necessary because “at least two of those commodities are really upside down right now,” or facing expenses above the market prices of their products — an apparent allusion to cotton and peanuts.

To get more money to farmers growing those crops, Thompson proposed increases to an obscure farm welfare program, the Agricultural Risk Coverage/Price Loss Coverage (ARC/PLC) Program, which is intended to insulate farmers against sudden crashes in market prices for their crops.

To determine how much farmers should be paid, each of the United States Department of Agriculture’s (USDA) 22 covered commodities — from corn to cotton — have a set “reference price.”

Broadly speaking, if market prices in a county fall below that price, farmers get a check for the difference.

But critics say the proposed increases to the ARC/PLC will direct money only to a few thousand of the nation’s biggest farmers at the expense of programs that benefit all of them.

USDA crop insurance programs in general only benefit a minority of American farmers — only about 30 percent grow the commodities they cover, according to the nonprofit Environmental Working Group (EWG).

That disparity is particularly stark for the ARC/PLC — even among farmers who are covered, 10 percent receive 80 percent of the payments, and “only the largest of peanut farmers receive more than a few thousand,” Scott Faber, EWG’s senior vice president for government affairs, told The Hill.

Faber said the risk of Thompson’s proposal is “that we’ll cut funding that serves all farmers, or hungry people, to increase subsidies for some of the richest, most successful farmers in the South.”

David Ditch of the libertarian Heritage Foundation, meanwhile, argued that in an era when interest payments on the national debt are already dragging on the economy, Thompson’s proposal would lock in permanent payments to farmers who — while they may have had a hard year — are already well-subsidized.

In 2020, 40 percent of farm income came from government payments, according to EWG.

“It suggests to me that [Thompson’s] goal is to maximize spending … and to adjust where spending occurs, rather than any thought of reducing spending,” Ditch said.

These critics note that for virtually all U.S. commodities — such as corn, soybeans or barley — ARC/PLC payments will increase no matter what Congress does with this Farm Bill.

And the reason they won’t automatically increase for the three crops Republicans are targeting is because reference prices for those commodities are already so high, said Jonathan Coppess, an attorney in the University of Illinois Champaign-Urbana’s agricultural economics department.

Cotton, rice and peanuts “aren’t being left out,” Coppess said. “They just had such a good deal before that there’s no way of making it any better.”

That’s not how things look from those industries’ perspective, however.

Rising inflation and a string of extreme weather events linked to climate change cut farm profits last year across a wide range of commodities — though agricultural economists note that the prior two years had brought profits to record levels.

The three commodities in question have felt those impacts. According to USDA figures, market prices for cotton in 2022 weren’t high enough to cover the sector’s total expenses.

In particular, the crop was hammered by rising “input costs” — like fuel and fertilizer — as well a wave of erratic and extreme weather made worse by the heating climate.

Robbie Minnich of the National Cotton Council argued that increasing reference prices would help insulate cotton farmers from sudden disaster on the front end — and by putting more money in their pockets, it would also protect Congress from having to pay for such disasters through ad hoc spending bills on the back end.

But, however bad this year’s picture is for cotton, rice and peanuts, Coppess said, agriculture as a whole is coming off of two record years — and most farms that will qualify for ARC/PLC payments are very large, highly diversified operations that grow many crops, rather than just a few.

“It’s as though farmers themselves can’t manage through ups and downs, crop by crop,” he said. “Yes, the prices are momentarily down — but over multiple years and crops, there are ways to manage through this.”

And even the idea that crops such as cotton are underwater this year relies on counting — as the USDA does — costs that include opportunity or capital recovery costs, or the “expense” of using land, labor or equipment for farming as opposed to using it for something else.

This strains the very notion of “expense,” said Anne Schechinger, Midwest director of the EWG.

“Those aren’t costs that a farmer pays out. No one would go out of business if these opportunity costs were high.”

Other industries, she said, don’t “include opportunity costs like this in their profit calculations, they just look at what they bring in and what they pay out.”

She added that “if farmers actually had negative returns in many years, like the USDA data claims when including [those opportunity costs] for cotton and peanuts, farmers would not continue to farm.”

Compromise promises to be an uphill battle

Whatever form it takes, passage of this measure — or any House iteration of the farm bill — will be punishing, and the consequences for failing to do so would be dire.

Congress failed to pass a new farm bill before the previous one expired in late September. If the two chambers can’t pass either a bill or a stopgap funding measure by year’s end, then funds for the crucial bill — the underpinning of food aid for 40 million people, crop insurance for millions and a staggering array of programs collectively known as the farm safety net — will run out.

That leaves Johnson in a difficult position.

The new Speaker has committed to passing the House’s farm bill by the end of the year. But doing so will require a stark choice.

On the one hand, Republican leaders can compromise with House Democrats to pass a bipartisan farm bill — a path that risks a far-right uprising like the one that toppled Johnson’s predecessor, former Speaker Kevin McCarthy (R-Calif.), in September.

Then there is the second option: pass a bill with only Republican support, which brings the risk that a small portion of his coalition takes the bill hostage to pursue their own ideological interests — like the way the Freedom Caucus derailed the first vote on the 2018 U.S. Farm Bill over immigration, and the Tea Party crashed the 2013 vote with its attempt to cut food aid.

And both paths ultimately lead to the same place: a compromise with the Democratic-controlled Senate.

Democrats in both bodies have shown little patience for Republican attempts to cut either food aid — the Supplemental Nutritional Assistance Program, or SNAP — or conservation funds, which were included in the Inflation Reduction Act (IRA), the party’s signature climate legislation.

In October, reporting by Politico that House Republican leadership had proposed such cuts as a means to increase reference prices provoked outrage among House Democrats.

But in a Thursday interview with The Hill, Thompson unveiled a plan that once again proposed such cuts, which he presented as part of a grand bargain that seemed intended to persuade Democrats — a win-win-win that would get money to cotton, rice and peanut farmers while avoiding cuts to food aid and securing the long-term future of conservation programs.

The plan proposes reversing a 2021 Biden administration reform that raised SNAP payments to keep up with the rising price of healthy foods — something that some farm groups note increases demand for fruits and vegetables, which aren’t eligible for most USDA crop support.

Thompson argued that this new change, which he said would recoup $20 billion that could go to commodities farmers, “wouldn’t change anybody’s benefits,” and that it would be “a prescriptive method, very fair.”

Public health groups, however, are concerned that such a plan would leave lower-income people without the money required to buy healthy food items such as fruits and vegetables, steering them toward the kind of cheaper, heavily processed items typically available in food pantries — which public health officials worry lead to chronic, expensive ailments such as diabetes and heart disease.

Thompson also proposed cuts to the roughly $20 billion in climate funding, which seeks to top off the USDA’s popular conservation programs helping farmers pay for programs that support soil, health, water quality and wildlife habitats.

His proposal: cut the IRA funding by “even half the amount” remaining and give the money to commodities crops.

He also proposed an additional compromise: In exchange for less conservation money up front, commit to an indeterminate long-term rise in the amount of “baseline” spending available for conservation programs going forward.

These programs — such as the Conservation Stewardship Program and the Environmental Quality Incentives Program — are both very popular and oversubscribed.

More than half of applicants whose applications are accepted get told that there isn’t money to fund them, University of Illinois’s Coppess noted.

But new funding has poured in under the IRA.

The bill — which passed on strict party lines — added billions to all of the USDA’s “voluntary conservation programs,” with the criteria that it be spent on one of a broad list of projects deemed “climate smart.”

The first year of funding brought “record interest” from America’s farmers, according to the USDA — bringing in still more applications than the agency could fund, even with the IRA funds increasing their budget by $850 million.

Coppess argued that Thompson’s proposal raised more questions than it answered.

“It’s hard to explain because it makes so little sense. If Congress [makes these cuts], who are they doing this for? Just a handful of small-acreage crops?”

“And if so, how can you justify taking that IRA money from everybody and using it just for those crops?” he asked. “This is pitting farmers against each other.”

Thompson told The Hill that his compromise would end up making conservation programs more secure due to the commitment to long-term funding.

He called the plan a “no-brainer.”

“If we do what I’m, what we’re talking about, those conservation dollars will be there through the 2050s,” he told The Hill.

‘I have never seen the conservation community so united’

Thompson’s plan isn’t likely to win over many environmentalists, however. Such a proposal “isn’t something we’re discussing,” said Aviva Glaser, senior director of agriculture policy at the National Wildlife Federation.

Glaser added that the fight to protect the IRA money has drawn together a coalition of hundreds of environmental groups. “I have never seen the conservation community so united over one issue,” she said.

Coppess pushed back on Thompson’s argument that his plan would make conservation funds more secure, saying the only way that these IRA funds can disappear — other than if Republicans cut them — is if they get spent on farmers, which is their intended purpose.

On the flip side, if Congress spends the money on reference price increases, he said, they’d be “gambling” them — because there is no guarantee that market prices would fall enough to trigger a payment, potentially wasting the money.

But in one way, Thompson noted, the window is closing. The Congressional Budget Office (CBO) just reduced the estimate of how much of the IRA money the federal government can spend from $20 billion to $16 billion.

That number is a projection of future spending — it doesn’t change the fact that Congress is authorized to spend $20 billion, or the amount of money that will go out the door if Congress leaves the funding alone.

However, that estimate does impact the amount of money that Congress can spend elsewhere if lawmakers do, in fact, cut the IRA funds.

And with a future CBO estimate looming if farm bill negotiations drag into next year, Thompson suggested, there is reason for haste: That potential line of credit could continue to decrease, adding an additional complication to standoffs involving what to do with those funds and reducing the amount of other programs that cutting them could pay for.

“I think in the not-too-distant future, CBO will determine there’s only 12 billion that we’ll have,” he said.

“And that’s a shame.”

Mychael Schnell and Aris Folley contributed reporting.

— Updated at 10:49 a.m.

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