Administration supports forward-looking legislation that facilitates
long-term prosperity for the nation's farmers and ranchers. The Administration
believes it is possible to craft a policy that is better for rural
America, better for the environment, and better for expanding markets
for our producers than H.R. 2646. Hence, the Administration does not
support H.R. 2646 and urges the House of Representatives to defer
action on the bill.
2646 would increase federal spending by more than $70 billion over
the next ten years. The current farm bill does not expire until
September 2002. In the context of the current state of the nation,
consideration of large new financial commitments that do not require
immediate action are not timely. In addition, we believe a ten-year
farm bill, which is unprecedented, would limit our flexibility to
address the rapidly changing agriculture sector over the next decade.
As drafted, H.R. 2646 misses the opportunity to modernize the nation's
farm programs through market-oriented tools, innovative environmental
programs, including extending benefits to working lands, and aid
programs that are consistent with our trade agenda. The Administration
recognizes the essential and unique nature of our farm sector, but
now is not the appropriate time for consideration of this bill.
the past decade, the nation's farm sector has changed significantly
due to new production and information technologies, globalization,
industry consolidation, and environmental concerns. H.R. 2646 does
not reflect these changes. Specifically, the bill:
overproduction while prices are low. A direct consequence
of American farm policy for many decades has been excessive production
and low prices. This policy began to change in the last farm bill.
The Administration believes strongly that our national farm policy
should not distort market signals, thereby directly or indirectly
depressing farm prices. H.R. 2646 would continue to contribute
to overproduction caused partially by increased production-based
payments to farmers per bushel grown at above-market prices.
to help farmers most in need. While overall farm income is
strengthening, there is no question that some of our nation's
producers are in serious financial straits, especially smaller
farmers and ranchers. Rather than address these unmet needs, H.R.
2646 would continue to direct the greatest share of resources
to those least in need of government assistance. Nearly half of
all recent government payments have gone to the largest 8 percent
of farms, usually very large producers, while more than half of
all U.S. farmers share in only 13 percent of the payments. H.R.
2646 would only increase this disparity.
critical markets abroad. We must significantly expand access
to foreign markets to keep our farmers in business. Over 96 percent
of all consumers now live outside the United States and 25 percent
of U.S. farm income is generated by exports. The 1996 farm bill
made increased trade and leveling the international playing field
a high priority. H.R. 2646 would depart from this pro-trade direction
by significantly increasing domestic subsidies to levels that
would undermine our negotiating position in the next round of
World Trade Organization negotiations. This bill would likely
induce other countries to raise barriers to our products. Despite
language that would restrict future counter-cyclical payments
to the World Trade Organization cap levels, this legislation calls
into question the nation's commitment to free and open trade,
hampers its ability to meet existing trade obligations, and reduces
our ability to further expand opportunities for our producers
in growing world markets.
federal spending at a time of uncertainty. The level of spending
provided in the House bill far exceeds farm spending in the past,
even taking into account the record assistance payments made in
recent years. For instance, if the bill had been in effect for
the 2000 and 2001 crop years, the level of spending on farm programs
would have been $1 billion to $2 billion higher per year than
what actually occurred, even with the supplemental assistance
provided by Congress.
today's economic uncertainty makes this the wrong time to lock
in $170 billion in long-term spending. More time is needed for
the fiscal picture to clear. In the near-term, the Administration
is focusing on recovery and national security. During this period,
spending in other important areas must be balanced against these
specific timing and extent of necessary offsets for this spending
will require more information regarding expected farm conditions,
future economic conditions, the nature of the offsets, and the
anticipated obligations that will result from any new entitlements
or programs. This information will become much clearer by the
end of this year. This should allow plenty of time to adjust
agriculture program spending or find offsets, if necessary,
before a bill is marked up next year.
Administration strongly believes that a methodical examination of
all farm policy is needed at this time. The Administration believes
that acting now on the significant fiscal and policy commitments
of H.R. 2646 would be premature. The upcoming year will provide
Congress and the Administration a valuable opportunity to take a
much-needed critical review of the nation's agricultural and rural
economy, examine the policy's implications for our trade relationships,
and evaluate our long-term fiscal capacity. The Administration looks
forward to working with Congress to develop a farm policy that better
serves and balances these interests.
2646 would increase direct spending above the baseline and, therefore,
would be subject to the pay-as-you-go requirement of the Omnibus
Budget Reconciliation Act of 1990. The Office of Management and
Budget's preliminary scoring estimates of this bill are presented
in the table below. Final scoring of this legislation may deviate
from this estimate.
(dollars in millions)