Here & Now

UW Professor Bruce Jones Discusses Farm Bill in Congress

Frederica Freyberg:

Congress already extended the current farm bill once and now hopes for a vote this week on a new farm bill, but they may have faded. The five-year deal worth roughly $500 billion. Compromise has been illusive as the house and senate disagree over cuts to the $80 billion a year food stamp program. There is also the threat of higher milk prices. Any decisions in Washington will have a direct impact on the Dairy State. With us this week is Bruce Jones, director of the Renk Agribusiness Institute and professor at the University of Wisconsin Department of Agricultural Economics. Professor, thanks very much for being here.

Bruce Jones:

It’s a pleasure to be here.

Frederica Freyberg:

So what are the implications in Wisconsin if in fact no agreement can be reached on the farm bill?

Bruce Jones:

Well, it'll certainly up milk prices. If we revert back to the ’49 farm bill, in reading, milk prices could double. The likelihood of that happening are minimal. It could be very similar to what the executive branch did with the Affordable Care Act. They could just say, we’re going to wait and choose to follow those laws when we choose to. But with the uncertainty and turmoil that it could cause to change prices that much, I don’t think that’s going to happen.

Frederica Freyberg:

That’s kind of on the consumer side, or at least that's how it's reported a lot. What about for the farmers themselves?

Bruce Jones:

Well, the farmers are receiving a price right now that allows them more or less to generate a profit, that they can pay the bills and get a fair return for their resources. Feed prices have tempered, so that there’s better profit margins to be had over feed costs. So they’re not in a great deal of difficulty right now and things have been pretty good the last few years, and so I think that’s why you’re not hearing farmers all that worried about extension of the farm bill.

Frederica Freyberg:

That’s good news for a change.

Bruce Jones:

Yes.

Frederica Freyberg:

What about the proposals in the new farm bill? What do those look like and how will they affect farmers in Wisconsin?

Bruce Jones:

Well, there’s three separate policy initiatives on the dairy side that people are looking at. On the senate side, we’re looking at dairy security. This is a voluntary program where people would get margin assistance. Whenever the margin is narrowed to a threshold that was deemed too low, there would be a supply control mandate. Farmers would have to make supply concessions. On the house side, a similar voluntary program where you could get protection on the margins, but there are no supply controls on that particular policy. A third one that’s being thrown about is a continuation or expansion of the milk income loss contract, which we’ve been under, and on the back side an insurance program, but no supply controls on that. So three proposals, two with no supply controls, the senate proposal one with a supply control.

Frederica Freyberg:

And that is exactly what is holding this thing up right now?

Bruce Jones:

We can't– That’s one of the stick points that we’re trying to get the dairy issues resolved. The senate side wants to see the mandatory supply in case we have a narrowing of the margin. The house is more for let the market decide what the supply should be and we’ll offer people the opportunity to buy margin insurance, and they’ll make the decisions what they want to do.

Frederica Freyberg:

And so does it seem as a whole that this farm bill would move closer to kind of a market response to agriculture as opposed to government subsidies?

Bruce Jones:

Market response, or a better way to put it, less government involvement in directing supply and demand situations. So we’re allowing people to make the decisions. How much protection do you want? Here’s the protection you can buy in the marketplace. We’re willing to subsidize a portion of the premiums you would be expected to pay. And I can see that subsidy gradually disappearing over time.

Frederica Freyberg:

We’re talking about how the house and senate feel about it. How about Wisconsin? What’s best for Wisconsin, in your mind?

Bruce Jones:

Well, in my mind the protection is important, because farmers want to have some certainties about what their income could be in the event of market changes, et cetera. But we’ve got a lot of momentum in the state that we’ve made investment in infrastructure, in terms of producing milk and producing milk. So anything that would possibly curb supply, in my mind, would not be the best thing for the state. So I am inclined to believe that the Dairy Freedom Act is perhaps more in line with what’s in the best interests of Wisconsin.

Frederica Freyberg:

Now, what about crop subsidy programs? What’s going on there?

Bruce Jones:

The crop subsidy programs have been scaled back, almost eliminated. We had the direct payments that were paid the last farm bill, those have pretty much been eliminated. That’s how they’re going to pay for the program. We’re going to go more to an insurance program. Again, people will make a decision as to how much protection they want, how much they’re willing to pay, and we'll go that way.

Frederica Freyberg:

Do you think this thing will get done pretty quickly here?

Bruce Jones:

Yeah, I think so. We’re getting closer and closer, and all the things that were stick points we're coming closer and closer to. The real holdup has been on the food– the supplemental nutrition assistance program or the food stamps program.

Frederica Freyberg:

All right. Professor Bruce Jones, thanks very much for joining us.

Bruce Jones:

Thank you.

Frederica Freyberg:

Negotiations had hoped to set up farm bill votes next week before the house leaves for a week-long recess. As time goes on the expirations will start to affect planting decisions, we're told, of Wisconsin farmers.