Yesterday, the House passed the Farm Bill, and as my blog indicated yesterday, I voted against this bill for a variety of reasons, but there is one piece I am sure that Democrats will be sure to exclude from their talking points.  An earmark inserted by Senator Max Baucus (D-MT) for a “Qualified Forestry Bonds Program”, which would provide federally funded-tax credit bonds for purchases that meet the following standards:

• The forest must be adjacent to U.S. Forest Service Land;
• Half of the parcel must be turned over to the U.S. Forest Service;
• It must include at least 40,000 total acres; and
• It must be subject to a “native fish habitat conservation plan approved by the United States Fish and Wildlife Service.”

You might have guessed it, but there is only one piece of land that meets these qualifications, a 1.6 million acre piece of land, owned by the Plum Creek Timber Company.

The Plum Creek Timber Company is attempting to sell the qualifying land to the Nature Conservancy, which has been touted by the Washington Post as the “world’s richest environmental group, with $3 billion in assets.”

This earmark will allow the Nature Conservancy to claim a $250 million ‘Tax Refund’ which would basically provide additional motivation for the group to purchase the land.  Keep in mind, that this tax refund would go to a conservancy group that has 501(c)3 organization, so it doesn’t pay taxes in the first place, according to the earmark the tax refund would be provided anyway.

If that wasn’t enough, according to the FEC, employees of plum Creek Timber have donated nearly $17,000 to Senator Baucus’ campaign fund.

The endowment of $250 million of taxpayer funds to encourage a rich environmental group to purchase land from a Senator’s wealthy campaign donors…I wish I could say the audacity of some Members of Congress surprises me, but I can’t. 

Today the House passed HR 2419, the Food, Conservation, and Energy Act of 2008, better known as the Farm Bill.  I was one of 106 who voted against the bill, I want to take a moment to let you know exactly what this bill does….all 673 pages of it.

Since 1933, Congress has passed some version of a Farm Bill every couple of years.  Unfortunately, all too often U.S. Farm Bills fail to consider the real needs of a responsible Agriculture policy.  The real problem impacting farmers is not persistent poverty, but rather normal yearly income fluctuations.  Below you will find several reasons why this is the wrong direction for Farm policy in America.

• This bill continues to subsidize wealthy farmers.  All farmer income tests are rejected by this farm bill and affluent will still remain eligible for permanent subsidies.  Most of these subsidies will go into large agribusiness interests.
• This Farm Bill waives the Democrat PAYGO rule, which requires any bill affecting mandatory spending or revenue to be deficit neutral. This conference agreement increases spending by $10 billion over the next decade, and $10 billion in gimmicks are also included.  Not to mention, this Farm Bill uses the spending from 2007, which allows for more spending than that of the 2008.
• The measure ignores the plight of consumers facing skyrocketing food prices by making a bad sugar program worse. Due to the current policy, sugar prices in the U.S. are twice the worldwide average and cost consumers nearly $1.8 billion last year, according to the GAO]. This Farm Bill will worsen this situation by increasing the sugar loan rate, and by creating a new sugar-to-ethanol mandate that will purchase sugar at inflated prices and sell it to ethanol producers at a substantial discount. This sweet deal for sugar producers will leave a sour taste in the mouths of American taxpayers.
• This Farm Bill creates a new, $3.8-billion Permanent Disaster Relief Program that disproportionately assists those with political clout, not real needs. This duplicates at least three existing crop insurance programs, along with other subsidy programs. This new program also creates incentives for the use of marginal lands that would otherwise not be farmed. To make matters worse, the cost of the program is likely to be double this amount due to a funding cliff that makes a “permanent” program disappear after only 5 years.
• The Farm Bill contains numerous wasteful earmarks. These include a $250-million earmark for land in Montana, an earmark that requires the USDA Forest Service to sell land to a ski resort, and a $170-million earmark for the salmon industry in San Francisco.
• The true cost of the Farm Bill is much higher than the advertised by the conferees. PAYGO gimmickry and special interest tax breaks and earmarks not contemplated within the advertized $10-billion framework push the overall cost to $23 billion over what the current Farm Bill pays for. 

Despite a much needed revamp of the entire farm bill, conferees continue to struggle through negotiations, but there is at least one group of planters who will come out ahead.  However, despite this congressional gridlock, there is at least one group of planters who continue to make money off the old farm bill. Sugar cane and sugar beet growers have actually managed to increase the size of their proverbial pot in the new package. Why? Because of government sponsored mandates for a “sugar-to-ethanol” program in the United States.

The U.S. Sugar industry has long enjoyed the comfort of a federal security blanket.  With interlocking price supports and import quotas, sugar tycoons have been able to sell their product in the marketplace with little or no foreign competition.  However, with the implementation of free trade agreements such as the 2005 Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) and new provisions in NAFTA, the sweet deal U.S. growers had was about to be disrupted.  Not to be outdone, a strong lobbying effort was launched on behalf of sugar growers in order to help regain their cozy and secure spot in the U.S. market.

If these provisions in the Farm Bill are implemented, the price for U.S. Sugar (which is already above the global price) will increase, with additional mandates to encourage part of the sugar market towards ethanol production.  In addition, the U.S. based ethanol industry also benefits from high tariffs limiting ethanol imports, mostly on sugar derived ethanol from Brazil.

This is a sour deal and contrary to proven free market principles. Ethanol tariffs combined with the sugar subsidies keep Americans from accessing ethanol from its most efficient source, which is sugar.