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Thursday, October 24, 2013

Budget Issues Shaping a Farm Bill in 2013

Jim Monke
Specialist in Agricultural Policy

The budget situation for the farm bill is more difficult this year than for recent farm bills because of attention to the federal debt. The desire by many to redesign farm policy and reallocate the remaining farm bill baseline—in a sequestration and deficit reduction environment—is driving much of the farm bill debate. Uncertainty persists about broader deficit reduction plans, some of which have targeted agricultural and nutrition programs with mandatory funding. Much of that uncertainty affects the farm bill but is beyond the control of the agriculture committees. Moreover, some popular 2008 farm bill programs do not have a baseline that would provide continued funding and thus will require budgetary offsets to continue.

The political dynamics of sequestration and deficit reduction pose difficult questions about how much and when the farm bill baseline may be reduced. In an era of deficit reduction, Congress faces difficult choices about how much total support to provide for agriculture and nutrition, and how to allocate it among competing constituencies.

Funding to write the next farm bill is based on Congressional Budget Office (CBO) baseline projections of the cost of farm bill programs, and on varying budgetary assumptions about whether programs will continue. The CBO baseline is an estimate (projection) at a particular point in time of what federal spending on mandatory programs likely would be under current law.

In May 2013, CBO projected that the current farm bill programs, if they were to continue beyond the 2008 farm bill, would cost $973 billion over the next 10 years (FY2014-FY2023). About $764 billion of this amount is for nutrition programs and the other $208 billion is divided among various agriculture-related programs. This baseline estimate already has been reduced by $6.4 billion over the same period because of the budget sequestration ordered on March 1, 2013.

When new bills are proposed that affect mandatory spending, their impact (or score) is measured as a difference from the baseline.

  • The Senate-passed farm bill (S. 954) would reduce farm bill baseline spending by $17.9 billion (-1.8%) over 10 years. 
  • The House-passed farm bill (H.R. 2642, as combined from the texts of H.R. 2642 and H.R. 3102) would reduce spending by $51.9 billion (-5.3%) over 10 years. 
For nutrition programs, the

  • Senate bill’s reduction in nutrition is $3.9 billion (-0.5%) over 10 years; 
  • House bill’s reduction in nutrition is $39.0 billion (-5.1%) over 10 years. 
For the agriculture-related (non-nutrition) portion of the bill, the

  • Senate bill’s reduction in agricultural programs is $13.9 billion (-6.7%) over 10 years, 
  • House bill’s reduction in agricultural programs is $12.9 billion (-6.2%) over 10 years.

Date of Report: October 21, 2013
Number of Pages: 36
Order Number: R42484
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