Safeguarding The Safety Net

This year’s farm bill, now being hammered out in Congress, will determine the profitability of Georgia agriculture. Tariffs, price supports, food assistance programs and funds for conservation and research are all being deliberated. And there&#

Last June, as most of the state’s farmers tended the young crops rising from their fields, several South Georgia churches held prayer meetings to ask for rain in the face of a prolonged drought.

It’s likely that farmers in this rich and diverse agricultural region joined in the prayers, and perhaps asked that some divine guidance be provided to the men and women a thousand miles north in Washington, DC, who were shaping the 2007 farm bill.

The legislation will determine federal programs and their payments, which, in turn, control the profitability of Georgia agriculture, the state’s single largest industry. Farmers may look to the heavens for crop-sustaining rain, but they look to Congress for programs that have nurtured agriculture since the Great Depression.

For Georgia’s Sen. Saxby Chambliss, the ranking Republican on the Senate Agriculture Committee, crafting the farm bill involves building alliances and getting a message across. “We have been spoiled but blessed in this country to have the highest quality of food products produced by anybody in the world,” Chambliss says. “And at the same time, to have the safest food products of anybody in the world and the cheapest. A lot of that has to do with the safety net that our farmers have. I don’t think we can ever afford to get put in the position of depending on foreign imports of food the way we depend on imports of oil today.”

Work on the 2007 farm bill began immediately following passage of the 2002 farm bill – the legislation has a five-year operating period – and must be completed by a Sept. 30 deadline. For the past five years, House and Senate agriculture committees have held a great many hearings to solicit input from farmers, agribusiness owners and lobbyists.

The committees must take a mix of opinion, research, public need, politics and ideas from the White House and blend all that into a piece of legislation that will be as palatable in the boroughs of New York as it is on the farms of South Georgia. The task of writing the bill this year is made more daunting by the fact that there is $25 billion less in available funding than in 2002.

By June the House and Senate agricultural committees had begun separate processes moving into markup time, when an editing effort puts each version of the farm bill into a first draft. The two separate bills will be voted on by their respective chambers and then combined, with differences ironed out for a single bill to be passed by the House and Senate.

As September approaches, the heat and the headlines on farm bill issues begin to grow. The process is as certain – or uncertain – as the crop cycle, and nowhere is interest in the final product more intense than in Georgia. It has everything to do with the jobs and money that grow from the farm fields and twine like kudzu across the Georgia landscape.

“Food processing is the single largest part of manufacturing in the state of Georgia,” says John McKissick, director of the University of Georgia Center for Agribusiness and Economic Development. “About $55 billion annually is generated by agriculture directly or indirectly from food and fiber production in manufacturing. Agriculture and related businesses are the single largest part of Georgia’s economy.”

The farm bill, McKissick says, impacts people no matter where they live in the state of Georgia and is as important to a Gwinnett County insurance agent as it is to a Grady County cotton farmer.

Aside from the usual haggling over farm price support programs, this year’s deliberations are likely to produce debates on conservation spending and asked-for increases in food assistance programs such as food stamps. Proposed boosts in spending for research grants and startup assistance in the burgeoning ethanol industry have excited Georgia economic developers.

Tariffs, Commodities

But other considerations for farm bill drafters have consequences for the future export of Georgia agricultural products.

Beyond the vagaries of Mother Nature and the machinations of Congress, troubling threats to Georgia’s agriculture economy are emerging from foreign shores. Negotiations between the United States and its World Trade Organization (WTO) agriculture trade partners have continued for several years, but agreements could not be reached on several key points.

“Frankly, the European Union has tariffs that are well above two times the amount of tariffs on ag products in the United States,” Chambliss says.

For example, while the average import tariff into the United States is 12 percent, the European Union protects its farmers at twice that rate – 24 percent. “We need for them to equalize those tariffs, and thus far they’ve not been willing to do so,” Chambliss says.

Another WTO threat to Georgia agriculture relates to subsidies, or payments made to European and American farmers alike by their respective governments.

“They want us to reduce our payments to farmers from the government, but at the same time they’re not willing to reduce their payments,” Chambliss says of European WTO negotiators. “We’ve got that hanging out there.”

That point leaves congressional leaders from farm states, including Chambliss, with conflicting emotions regarding the 2007 farm bill. “[The WTO] is not going to dictate how we write this farm bill,” Chambliss says. “But it would be foolish to write a farm bill that flies in the face of what we know to be [WTO trade] principles.”

Keeping the trades lanes open for U.S. agricultural exports is key to a healthy homeland economy, Chambliss says. Agriculture remains one of the few sectors of the U.S. economy with a net positive balance of trade, and there are many opportunities to sell high-quality goods around the globe.

Closer to home, the Bush administration has proposed less spending in the commodities section of the farm bill and more spending on conservation, a move seen by Georgia farmers as a threat to farm payments, the federal “safety net” provided certain growers – in Georgia, mostly those who produce cotton and peanuts – to insure minimal profits in times of low yields, low prices or natural disasters. Such safety nets have been attacked more and more by laissez faire economists and others who see the payments as a form of welfare for farmers, a charge that naturally rankles farmers and their friends.

“We’re looking at, I’m sure, shots being fired at us on both peanuts and cotton,” says Chambliss of the two crops that, combined, generate more than $1.2 billion in annual sales for Georgia farmers. “We’re going to have to look at peanuts along with cotton to make them both more market oriented and put some incentives in there to farmers to sell their crop on the open market.”

Georgia farmers were concerned by a shift in the political winds that swept through Congress in the last election when Democrats took control of both houses of Congress, causing Chambliss to lose his chairmanship of the Senate Agriculture Committee. The shift in power gave the chairmanship of house and senate agricultural committees to men from Midwestern states where cotton and peanuts are not grown.

“It is the responsibility of Congress to write the farm bill, and we all represent different commodities, and there are regional differences,” Chambliss says. “But we’re going to try and make sure that every commodity has the safety net that commodity needs to provide some assurances for our farmers.”

The previous farm bill passed “in budget surplus times,” Chambliss says. “Now, we’re looking at the largest budget deficit we’ve ever seen and we’re simply going to have less money on the farm bill itself than in 2002.”

Food Assistance, Conservation

There is one section of the farm bill that historically has weathered political storms, regional differences, fluctuating markets, falling budgets and even foreign pressures – the food assistance programs that will make up about 54 percent of this year’s farm bill budget.

Comprising some $53 billion in 2006 payments alone, food assistance includes funding for low-income families for food stamps, school lunches and nutrition supplements to women, infants, children and the elderly. Begun more than 50 years ago with school lunch legislation sponsored by Georgia’s legendary U.S. Senator, Richard Russell, food assistance helps food-growing farmers sell their crops.

In 2005, the farm bill’s school lunch program sent $311 million to Georgia schools to feed kids. Beyond the value of feeding children, the food assistance section also helps the farm bill attract votes from urban members of Congress.

“When I first came to the Georgia Legislature over 50 years ago, I was the author of the constitutional amendment that authorized the funding of the school lunch program in Georgia,” says Georgia Commissioner of Agriculture Tommy Irvin, the nation’s longest serving agriculture commissioner, who has held that office for 38 years.

“It is one of the things I’m proudest of. You’ve got a lot of kids that if it wasn’t for these programs wouldn’t have the nutritious food to eat at all.”

The food assistance portion of the farm bill makes the legislation palatable to representatives and senators from across a broad spectrum of political ideology, Irvin says. “It brings the more liberal members of Congress into the fold. The nutrition part of the bill ends up being nonpartisan.”

The food assistance provision sent food to the victims of Hurricane Katrina, and supplies food to foreign countries in times of disaster.

“The Katrina emergency exhausted disaster funds available to farmers,” Irvin says. “So we are wanting to see that some new money gets into the farm bill to take care of our own disasters.”

Another part of the farm bill attracting interest from Georgia economic developers concerns stemming the tide of farmlands turned to subdivisions and shopping centers. “Another reason agriculture has importance to the state can be found in the conservation section of the farm bill,” says UGA agriculture economist McKissick. “When you look at the maps, you realize that 70 to 80 percent of [Georgia’s] undeveloped land is in farms, cropland and forestland. If you want to preserve that greenspace in private ownership, then you’ve got to preserve farms and farmlands.”

The Bush Administration is proposing to increase conservation funding by $7.8 million over 10 years, an idea that Chambliss finds troubling.

“If you put more money into conservation, it’s got to come out of research or nutrition or commodities,” he says. “Nutrition and research are bare-bones now, and it’s going to be very, very difficult to get additional money out of commodities.”

In The Field

In early summer, Chuck Ellis was traveling the back roads of rural Dooly County checking on crops and talking to farmers. Ellis is the county agent and usually the first to notice farming trends.

Dooly County is the largest cotton-producing county in Georgia with some 82,000 acres planted in that crop.

“The price of cotton is not as wonderful as we want it to be,” Ellis says. “But we do have a lot of demand for corn.” That is a familiar refrain heard by county agents and anyone else who talks with the state’s farmers.

Georgia is expected to follow a national and regional trend that sees farmers planting less of a once lucrative crop, cotton, and more of a promising one, corn. The trend is a response to growing demands for corn as a fuel source in the production of ethanol.

Tracking this trend are proposals in the energy section of the farm bill. With national ethanol production expected to require an additional 1 billion bushels of corn by 2009, according to projections from the United States Department of Agriculture, corn has become golden to farmers.

The farm bill’s energy section writers are looking at funding $500 million for bioenergy and bioproducts research, with another $500 million for rural grants directly to farmers and small businesses for the production of alternative fuels.

“We have some guys who decided to jump into corn in a small way; a lot of the interest there has to do with rising ethanol production,” Ellis says. “We see some profit in those areas.”

But it’s another proposal in the farm bill’s energy section that’s particularly exciting to Georgia farming champions – one seeking $1.5 billion in loan guarantees to support cellulosic ethanol projects in rural areas. “We’re going to try to incentivize cellulosic production of ethanol,” Chambliss says. “And that’s where Georgia is really going to be a huge player. We have the capability of growing a lot of cellulosic products like pine trees and switchgrass, even though we don’t have the infrastructure to grow a lot of corn right now. I think Georgia has the potential to be a huge winner from an alternative energy standpoint.”

With half a dozen ethanol plants in the works, and more expected, the production of feedstock for alternative fuels is the promise of agriculture’s future. And perhaps the most futuristic thinking could be on the farms of Dooly County.

“There is some interest here on the farm in biodiesel production, putting a small plant in,” Ellis says. “The idea is to extrude oil from soy beans and corn and mix it with diesel to operate farm machinery.”

A farmer with his own refinery producing fuel made from his own crops? “We haven’t had anybody do it yet,” Ellis says. But we’re thinking about it.”