With new farming technologies on the rise, some are seeking a major overhaul of current farming legislation to reflect these new developments. During today's OnPoint, American Farmland Trust President Ralph Grossi discusses several proposals made for the 2007 Farm Bill, including the "green" payments program. Grossi addresses the importance of meeting the needs of America's farmers. He also explains why he thinks extending the 2002 farm bill is a bad idea.
Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining me today is Ralph Grossi. He's the president of the American Farmland Trust. Ralph thanks a lot for being here today.
Ralph Grossi: Glad to be here Brian.
Brian Stempeck: Now your organization, just a few weeks ago, came out with some new recommendations regarding the 2007 farm bill. The debate is already starting to get under way. You were talking with some of the former agriculture secretaries under President Reagan. Just broadly, before we get into details, what are you looking for in the '07 Farm Bill that's so different from the 2002 farm bill?
Ralph Grossi: Sure, sure. We believe the current farm programs that are rooted in the '30s, in New Deal era programs, need to be changed. That they don't serve all of agriculture well and that there are many unmet needs in agriculture that could be better served by reallocating the funding to pressing contemporary 21st century needs. So we believe significant reform of the current farm programs to a different kind of farm policy that better serves the needs is in order and timely.
Brian Stempeck: There are a large number of environmental and conservational oriented programs under the farm bill that came out in 2002.
Ralph Grossi: Sure
Brian Stempeck: And according to one of your group's recent reports you said that, I think, three out of four farmers who apply for a lot of the conservation funding don't end up getting it. Can you explain why is that that these programs don't seem to be working?
Ralph Grossi: Well most of the conservation programs are in the discretionary spending portion of the farm programs. And because of that they get cut first instead of other programs when budget pressures come down on the federal budget. So while there was a significant amount of money, about $3.8 billion authorized in the 2002 farm bill, there's actually been about $1 billion less than that actually appropriated. So because of that there are many programs that are underfunded. Farmers are lining up to do things to improve the environment, to fence out streams, to improve animal waste facilities, that sort of thing, but the money's not there. So it's time to rethink that whole process.
Brian Stempeck: As you look at the '07 bill, is that something you can really change? I mean as you said, this is money that was authorized. This is something we see not just with the farm bill, but with other energy programs, programs across the board where the money authorized isn't necessarily met by appropriators. Isn't that kind of just a question of the will of Congress and their right to fund things as they see fit?
Ralph Grossi: Well it may be the will of Congress, but it's also a matter of priorities. Money is going as needed to the various commodity programs as we know them. Most people know them as the farm subsidy programs. Those programs have now been, some of them have been ruled illegal by the World Trade Organization. They only serve a relatively small portion of American agriculture, about one third of agriculture. A high percentage of the money goes to a relatively small number of farmers. So we think that that money should be kept in agriculture, but should be spent differently. And one of the ways to spend that money is to help farmers who want to improve the environment by providing incentives and cost share programs and a new Green Payments Program that would reward stewardship.
Brian Stempeck: Looking at the commodity system you basically just brought up, I mean aren't you dealing with a lot of entrenched interests there? You have all the big agricultural lobbyists on the Hill who are going to fight tooth and nail to keep the system as it is. You have a lot of members of the House and the Senate agricultural committees who have a lot of constituents who benefit from these programs.
Ralph Grossi: Sure.
Brian Stempeck: I mean it seems like it's a really uphill battle.
Ralph Grossi: Sure. Anytime programs have been around as long as these have, and remember these programs were first established in 1933 when then secretary of Agriculture told the Senate that it was necessary to have these temporary programs to help farmers through these difficult times. Seventy-three years later much of that is still in place. So there, of course, are interests who will guard the status quo. We think that is very shortsighted, that there is a better way to invest public dollars in agriculture that meet the needs of more of agriculture, of more citizens. And can simply be updated to more contemporary issues. Yes there will be a fight over this as expected, but in the end I think good public policy will rule out and we'll have a different kind of Farm Bill at the end of 2007.
Brian Stempeck: As you mentioned, the WTO is taking a look at a lot of these subsidies, a lot of payments kind of around the world. There's a lot of negotiations going on with that.
Ralph Grossi: Yeah.
Brian Stempeck: How do you expect that to kind of play into negotiations as the 2000 farm bill gets going? Some people have suggested that one possibility is just to do a year or two extension of the current farm bill.
Ralph Grossi: Well we think it's a bad idea to extend the farm bill. We think change is inevitable, whether it happens next year or in the following farm bill, a decade from now there will be a very different kind of farm policy. So if we agree that change is on the horizon than the sooner you start in redesigning the system to get at that change the easier the transition will be. Now is the time to begin that process of a new kind of farm bill in this country. Delaying it by extending the farm bill is simply the wrong thing to do. The Doha Development Round, the current round of discussions in the World Trade Organization, is very much up in the air right now as you know. But we'll know in a few months whether or not this round of discussions will bear any real fruit, whether there'll be any real progress. By the time the farm bill has to be rewritten next year, in 2007, we'll know the status of Doha. And in any case the existing Uruguay Round rules at the World Trade Organization are in place. And if we don't change than we are subject to additional legal challenges by other countries on our current domestic programs.
Brian Stempeck: Getting back to something you mentioned just a little bit earlier, talking about this Green Payments Program. This is kind of a policy idea that your group has been proposing. How exactly would this work in terms of kind of an on the ground payment system to reward a farmer? Say you have, you know, a corn farmer in Iowa who wants to qualify for a Green Payment Program, how would that work?
Ralph Grossi: Well, we've proposed to take the current $5.4 billion that goes to direct payments and use that money as a stewardship reward payment. So that that money would be available to all farmers and ranchers, not just those commodity programs that currently get payments, but it would be spread across all agriculture. And farmers and ranchers would be eligible to apply for the money based principally on the environmental services that they deliver to their community and to the public. So each farmer could make a proposal, it would be based on reaching some level of stewardship on their land. And higher levels would achieve higher payments. Of course there would be limits on that, but it would be a way of creating a new revenue source for farmers in that they produce environmental products. They produce open space and wildlife habitat, maybe carbon sequestration. There are a number of things that farmers could be producing and those could be, in effect, new revenue streams or new crops for farmers and ranchers across the country, a way to reward them, those that produce high-value environmental services.
Brian Stempeck: This idea of kind of the environmental services seems to be gaining a lot of currency with environmental groups. Kind of seeing it as a way to, basically you're using the economy, using the marketplace to pay people like farmers for these services. How do you make that system a reality though? I mean you mentioned kind of broadly that if you have farmlands providing wildlife habitat or sequestering carbon in the soil. How do you set up that so it works as a market? How do you set up the rules so that you can actually have these transactions going forward?
Ralph Grossi: Well, like most markets it's going to be framed in public policy. Government will set the rules and it will be critical to make sure it's done right. But we've learned some lessons with Conservation Security Program that was in the 2002 farm bill, though not well-funded. We've learned some lessons about how to structure these programs, how to create the right incentives, the right rewards, how to value different environmental services. It's still very early in the process, but not starting from ground zero. We've got some experience now and we think we can build a very good program going forward, one that understandably will have to have some flexibility to keep changing as we learn more and the science gets better about what kinds of services farmers really are producing and delivering to the environment.
Brian Stempeck: The 2000 farm bill debate is obviously still a little bit ways off.
Ralph Grossi: Yeah.
Brian Stempeck: In the near term, what kind of things are you working on? I mean are we seeing these policies go into effect in any of the states? Are we seeing pilot projects through the USDA? How are these things happening now?
Ralph Grossi: Well of course there are some things the 2002 farm bill that lay the groundwork for some of these broader ideas. The Partnerships and Cooperation Program in the 2002 farm bill was an attempt to encourage joint projects, multiple farmers. In our proposal for 2007 we want to build on that and actually hold back at least 20 percent of all the conservation money for cooperative projects, so that a group of farmers in a watershed could apply on a competitive basis for grants to improve the environment in their watershed. We think that would be much more efficient. So that's an example of how we can build off a small pilot program that was in the '02 farm bill and expand it dramatically in the next farm bill. We have a couple of other proposals, so one is what we call the Farm Profitability Grants Program. This is a program that would provide a billion dollars to the state departments of agriculture to work on promoting local agriculture, value added programs, retraining, viability programs, a lot of things that are better done at the state level than at the federal level. And that's generated quite a lot of excitement.
Brian Stempeck: One last question for you Ralph because we're running out of time.
Ralph Grossi: Sure.
Brian Stempeck: A lot of members of the House and Senate have basically said that as they're starting to look towards 2007 and the next farm bill they're thinking about a pretty lean bill. Not in terms of the 2002 bill which expanded a lot of these programs. What kind of discussions have you been having with members of Congress in terms of trying to get them to broaden their thinking on these issues?
Ralph Grossi: Sure. Well we've met, of course, with virtually all of the staffs and many of the members in the House and Senate agriculture committees to talk about what's ahead in 2007. I think there's some recognition of course that budgets are tight and agriculture budgets are going to be under a lot of pressure to be cut just like other budgets. We think that a different kind of farm program actually makes a better case for public spending than the current farm subsidy program. So we think there is a real plus in talking about change in a way that meets the needs of more of agriculture. Our proposal to change the commodity subsidy programs, to phase out the current farm subsidy programs over time and replace them with a revenue insurance based mechanism costs a lot less than the current programs. And that savings could either be used to help address the budget deficit or reallocated to conservation, research and other pressing needs in the dietary and nutrition areas.
Brian Stempeck: All right. Ralph, we're out of time. Thanks so much for stopping by on the show today. We appreciate it.
Ralph Grossi: Glad to be here Brian.
Brian Stempeck: I'm Brian Stempeck. This is OnPoint. Thanks for watching.
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