Not your father’s farm bill?

by | February 20th, 2014 | Posted in Blog, Poverty | Comments (0)
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usda-farmer-photo-8723645345The long-awaited 2014 farm bill reauthorization was signed into law in early February.  First passed in 1933 to ease the economic pain of the Great Depression, it now bundles dozens of federal agriculture and food programs into one piece of omnibus legislation.  Since agriculture is a driving economic force in our state and thousands of Oklahomans struggle with food insecurity, this post outlines what you need to know about the new farm bill.

Farm bill reauthorization happens every 5 years or so, typically with strong bipartisan support and little fanfare.  This time negotiations were contentious.  The compromise was dubbed “almost a miracle” by Oklahoma Rep. Frank Lucas, who chairs the House agriculture committee.  The authors of the Agricultural Act of 2014 tout major reforms and cost savings – it’s “not your father’s farm bill” according to Michigan Senator Debbie Stabenow.  While it does deliver $17 billion in savings over ten years according to the nonpartisan Congressional Budget Office, whether it delivers actual reform is up for debate.  

Many critics from across the political spectrum see the new farm bill as business as usual. Anti-hunger advocates were troubled by cuts to the nation’s primary nutrition assistance program at a time when a sluggish economic recovery is still taking its toll on the average worker. Deficit hawks cheered the elimination of direct subsidy payments to farmers, but are skeptical over the expansion of a cost prohibitive crop insurance program.

The Supplemental Nutrition Assistance Program (SNAP) – or ‘food stamps’ – will take an $8.6 billion hit, far lower than the $40 billion in cuts originally approved by the House.  The good news is Oklahoma won’t see much of a cut (if any at all) in grocery benefits for low income families, because those billions in savings rely almost entirely on closing an eligibility loophole that Oklahoma doesn’t use.  To understand why, it’s important to first understand how states calculate a household’s food stamp benefit.

If you meet all the other eligibility criteria, your SNAP benefit amount is calculated using your income and household size.  The grocery benefit amount increases for larger households/lower incomes.  Your benefit also increases if other factors are present, for instance if your fixed shelter costs (rent, utilities) are so high that they trade off with your ability to afford an adequate diet.  Under current law, a state can use a household’s receipt of LIHEAP (Low Income Home Energy Assistance Program) as evidence of exorbitant utility costs.  This pathway is affectionately referred to by advocates for low income families as ‘heat and eat’ eligibility.  

In sixteen states, some SNAP recipients were issued LIHEAP ‘loophole’ payments in insignificant amounts ($1 in some cases) in lieu of providing paper documentation of utility costs, which can be quite difficult if utilities are included in rent.  Advocates defend the practice as a routine simplification, not an attempt to skirt the rules.  Part of their rationale is that LIHEAP is not an entitlement, and states are not able to assist every household that is eligible.

The new farm bill closes the loophole by requiring that a household’s LIHEAP benefit be at least $20 a year before the state can presume automatic eligibility for a shelter deduction to increase their SNAP benefit.  Less than 10 percent (8.6  percent) of Oklahoma’s SNAP households are linked through LIHEAP eligibility, but the state has never issued ‘nominal’ payments to trigger a higher food stamp benefit so nothing should change.  

Before the compromise, members of the House were pushing drastic cuts to farm and food programs in the name of reducing federal spending and lowering the deficit. Curtailing the LIHEAP loophole does trim billions from the federal budget, but the savings will come directly out of the grocery budgets of some 850,000 low income households nationally. This is an important point, especially considering that the same bill expanded subsidies for profitable insurance and agribusiness companies.

The federal government has been slowly shifting away from handing out direct farm subsidy payments, and towards premium subsidies for crop insurance to protect farmers (and the food supply) from environmental and market risk.  Crop insurance has slowly morphed from safety net insurance against catastrophic crop loss, to a program that guarantees income to some of the nation’s largest, most profitable, and most secure enterprises.  The cost of crop insurance has exploded from $1.5 billion in 2002 to $7.4 billion in 2011.  

The new farm bill expanded crop insurance to the tune of $7 billion and abandoned a bipartisan amendment to exclude participants with gross income above $750,000 a year.  It’s worth noting that 95 percent of Oklahoma farms receiving a subsidy have gross incomes less than $200,000 a year.  Some agribusinesses could receive $1 million a year in taxpayer money to buy crop insurance that they would have had no trouble buying on their own.  It will be hard for fiscal conservatives to maintain credibility on their flagship issue if they aren’t taking it seriously themselves.  

Fiscal responsibility is important, but safety net programs that protect our most vulnerable residents shouldn’t be the only programs on the chopping block.  Families rely on SNAP to feed their families and makes ends meet while they work to regain their financial footing.  A truly responsible approach would find savings in programs that benefit those who have the most to spare, not the least.

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