AgriTalk. January 27, 2014 Mike Adams with Mary Kay Thatcher, Senior Director, Congressional Relations, American Farm Bureau Federation

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1 AgriTalk January 27, 2014 Mike Adams with Mary Kay Thatcher, Senior Director, Congressional Relations, American Farm Bureau Federation Note: This is an unofficial transcript of an AgriTalk interview. Keith Good FarmPolicy.com, Inc. Champaign, IL Mr. Adams: And welcome back to AgriTalk. All kinds of media reports that this is the week we re going to get the farm bill and that they re so very, very close. We could see votes this week. Just how close are we? We ll find out now from Mary Kay Thatcher, Senior Director of Congressional Relations for the American Farm Bureau Federation. Mary Kay, thanks for joining us again. Is it going to happen this time, this week? Ms. Thatcher: I do think it s going to happen this time, Mike. I m not sure we ll finish this week, but it is possible. They have briefed the conferee staff yesterday. I think there s a couple of, quote, smaller unresolved issues that they re still working on, but they are extremely close, and it sure looks like they are going to ask the conferees to sign the conference report this afternoon. Not going to be a meeting where you have up or down votes, as I understand it, but they would sign the conference report. You could go to the House Rules Committee tonight, and if that s the case, we could have it on the House floor on Wednesday morning before the House goes out for a Republican retreat Wednesday afternoon, Thursday, Friday. So a very close time frame. I guess there is a potential you could see this on a Senate vote late this week, but probably more likely early next week. But we re just about there, Mike. Mr. Adams: Yeah, we wouldn t want to interrupt that retreat or anything like that. Ms. Thatcher: Well, they re already scheduled to be out, so we need to get it done before they go home Wednesday. Now, I don t know exactly about House rules. I think you might have an objection that could be raised because I think they are supposed to have 48 hours to read a bill, and that can t happen. We can t get a

2 bill, text language written by noon today, but we are very, very close. The conferees have made a lot of progress. And I think a real indication, Eric Cantor has scheduled it, or at least reserved time on the House floor for Wednesday morning, so a very good sign. Mr. Adams: Okay, what do we know about the bill that they ll be voting on? Ms. Thatcher: Well, we know quite a bit, at least leaks. Not even the staff of the conferees actually have text of the bill, so nobody s actually read anything other than the four principals. But we know that indeed we are going to have an ARC shallow loss type program. The percentage covered will be a little lower than some have discussed. It would cover 76 to 86% of your production. We know we re going to go with base acres on those programs instead of planted acres. We know that we re going to go with the higher level of target prices between the Senate and the House, so the House levels of target prices. We know we re going to start a new supplemental coverage option under crop insurance. So as the direct payments are going away, we are indeed trending more towards shallow loss and towards a better crop insurance program. Mr. Adams: What about dairy? Ms. Thatcher: Dairy is just about there, and indeed we re going to have that gross margin insurance program we ve talked about for a long time, but there will not be supply management connected with it. So they re actually setting up a base type program for dairy that would you would have a base, the highest of the last three years level, and then you would be paid on a portion of that base, full indemnity. If you expanded production significantly, faster than the national average, then anything that you increased above that base would only be paid 25% of the indemnity instead of 100%. So the incentive will not be the supply management provision that Speaker Boehner so adamantly opposed. Instead it will be an incentive where you wouldn t get as much coverage, and so if you decide to increase your production significantly, you re only doing it for a market signal, you re not doing it for a government program. Mr. Adams: Any word whether Congressman Peterson is on board with that? Ms. Thatcher: My understanding is that Congressman Peterson and Speaker Boehner are accepting of that new deal. Mr. Adams: All right, what about payment limits? Ms. Thatcher: Payment limits, I think they will be implemented. Again, I suspect it ll be in the 850, $900,000 level. Not real sure how they have resolved the actively engaged language. That may still be one of the things that they are considering. No real announcements yet about country of origin labeling or GIPSA. 2

3 Mr. Adams: Yeah, that s been interesting. The debate over COOL has really picked up here towards the end. Any thoughts on which way that could go? Ms. Thatcher: I think it s It could go either way, or indeed, they could come up with some kind of a middle ground, like having a North American label instead of born in Canada, raised and processed in the U.S., etc. But that, I think, is also very closely tied to what happens with the GIPSA language on the protections provided for producers of beef, pork and poultry. So yes, some very significant discussions about that in the last couple of days. Mr. Adams: And we re still at that, what, 8.8 to $9 billion figure on nutrition cuts? Ms. Thatcher: I think we are. I think we re looking at about 8.6 is the number I heard that was floating around, and indeed, it s coming out of the heat n eat program where it will make it the states will have to pay a bit more to get someone involved in the heat n eat program, and therefore probably some folks will fall off food stamps that have been on when it was only a $1 a year instead of a $20 a year payment from the states. We re also, Mike, looking on crop insurance on indeed having conservation compliance in the bill, but not having payment limits on crop insurance. That was something that was very important to us, was to not get payment limits involved. Mr. Adams: But there will be conservation compliance, you think? Ms. Thatcher: There will. Mr. Adams: Okay. Talking with Mary Kay Thatcher, Senior Director of Congressional Relations for the American Farm Bureau Federation. All right, Mary Kay, do you think, based on what you ve just told us, is that a bill that can pass on the floor of the House? Ms. Thatcher: I think so. I think it s going to take some work. We re going to have to make sure that we get some of those folks along. But it s, to me, still unlikely that you re going to get very many Tea Party Republicans that will think 8.6 billion is enough. They passed a bill with 40 billion in cuts and they wanted something at least there or even north of there. But I think now that we have Collin Peterson on board with the dairy provisions, he will bring along numerous Democrats. So it s not a given yet. I think that probably we have to work harder on the House side than the Senate side, but we re not leaving any stone unturned at the moment. Mr. Adams: That was going to be my next question. Do you think if it passes the House that s the biggest hurdle, that it s more likely to pass the Senate? 3

4 Ms. Thatcher: Correct. You know, the Senate, again, every senator has agriculture in his or her state, so every senator cares about this. That is not the case in the House, and it s just a bigger uphill battle there. Mr. Adams: Well, we know how it works in politics, especially after a long wrangling like this. Everyone that s had a stake in this is going to try to spin it to where they were the winners. So when you look at it, from where we started to where we are now, who won in this thing? Ms. Thatcher: Well, I think, you know, probably all farmers won because we have to move away from the direct payment idea. We were just getting crushed in the press on how can prices be so good and producers are still getting a direct payment. I think most of our producers would say making sure that crop insurance was not harmed, and indeed, it was helped there will be more money into crop insurance, be it the supplemental coverage option program, or the STAX program for cotton, or even some improvements like allowing farmers to separate irrigated and non-irrigated yields. So crop insurance, I think, is a winner. Specialty crops, I suspect you ll see the block grant money in specialty crops increase significantly. You ve got to look at dairy. You know, we were looking at $300 million baseline for dairy, and my understanding is the new baseline is somewhere in the range of 1.2 or $1.3 billion. That s a huge win for dairy now and in the future, to be able, you know, if this program doesn t work, there s some money set aside so we can come up with something new. Hopefully it will work, but it s a new shot in the dark. Mr. Adams: If this passes the way you just described it, do you think it s a better bill, worse bill than what we would have had a year ago if they d have passed it then? Ms. Thatcher: Boy, that s a hard question, Mike. I would say I think it s a very good bill. I mean, I think it treats farmers very equitably. It looks at the regional issues that have to be dealt with, it puts money in the right places, and it s full of reforms, be it on food stamps, be it on elimination of direct payments, be it on a better conservation title. I think that this will go down as being a very good farm bill. Sure, it took us a long time to get there, and I m glad it s going to be over soon. I think especially in the major press we ve suffered a lot of blows to the head. But I think a very good bill now. Mr. Adams: But those critics of farm bills are always going to be there, right? I mean, they re never going to be satisfied unless there s absolutely no money going to the farm programs. Ms. Thatcher: Absolutely. I think all that happens is while crop insurance may be a winner in this farm bill, the target moves squarely to crop insurance. It s been trending that way. We ve already had hits to the program. But certainly now that 4

5 you ve eliminated direct payments, I think you ll see more hits at the crop insurance program than anything else. Mr. Adams: So you think good chance we ll see a vote in the House this week and the Senate, if not this week, early next week? Ms. Thatcher: Yep, I do. I think there s a real possibility of that. Now, it may slip. As I say, the House is going out Wednesday at noon and they won t be in the rest of the week, so if we don t make that deadline today to get it to the Rules Committee by this evening, we probably can t get it on the floor. But I think we re looking at a better than chance that that indeed will happen. Mr. Adams: Wow. We ll have to find something else to talk about if we get a farm bill passed. Ms. Thatcher: Oh, I think we ll have plenty of things to talk about, with implementation and crop insurance in the future, Mike, but it ll be nice not to talk about the farm bill and is something happening every once in a while. Mr. Adams: You re right. And I think that is the next key, implementing the farm bill. That will be the big challenge then, right? Ms. Thatcher: It will be. You know, we re really happy. Deputy Secretary Krysta Harden has been named as the person at USDA to be in charge of the implementation. She comes from a farm, she s worked on the Hill, she s worked farm programs, she s worked conservation. Couldn t be a better person. And they are already thick in it over there, trying to get some ideas together. Mr. Adams: Very good. Mary Kay, thank you for the update. Ms. Thatcher: Thanks, Mike. [End of recording.] 5

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