Updated cost estimates of the farm bills that were considered in the Senate and the House during the 112th Congress

http://www.cbo.gov/publication/43966

In response to several requests, CBO has prepared updated cost estimates of the farm bill legislation that was considered in the Senate and the House during the 112th Congress. The updated estimates are relative to their most recent baseline projections for agriculture, conservation, and nutrition spending. The estimates show the effects on direct spending of:

• S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012, as passed by the Senate on June 21, 2012, with appropriate modifications to implement the legislation if it were enacted near the end of 2013. (During the 113th Congress, this legislation has been introduced as S. 10, the Agriculture Reform, Food, and Jobs Act of 2013.)
• H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012, as reported by the House Committee on Agriculture on September 13, 2012, with appropriate modifications to implement the bill if it were enacted near the end of 2013. (This legislation has not been introduced during the 113th Congress.)

In 2012, CBO estimated that enacting either the Senate or House Farm Bill proposal would reduce spending relative to what their estimated spending would be if the 2008 farm bill (Public Law 110-246) policies were continued. Relative to their most recent baseline projections for commodity prices, land conservation, and nutrition spending, CBO expects that those legislative proposals (as modified to account for a later enactment) also would reduce future spending relative to continuing current policies, but the reduction would be significantly smaller than they estimated in 2012. 

Senate Farm Bill Proposal

CBO now estimates that enacting S. 3240 (as modified to account for a later enactment) would bring total direct spending for the affected Department of Agriculture (USDA) programs to $963 billion over the 2014-2023 period, or $13.1 billion less than what we project will be spent over that period if those programs continue to operate as under current law.
 

Last year, CBO estimated that enacting S. 3240 would have reduced spending relative to continuing current policies by $23.1 billion over the 2013-2022 period.

http://en.wikipedia.org/wiki/Farm

Significant differences between the cost estimate CBO prepared on July 6, 2012, for S. 3240, and their estimate for a modified version of that legislation relative to our 2013 baseline projections of spending are shown in Table 2 and are as follows:

• CBO now estimates that spending on commodity programs under title I of the legislation would cost $3.8 billion more over the next 10 years than we estimated in 2012 because: recent higher commodity prices increase the expected cost of the income guarantees in the Agriculture Risk Coverage Program offered under the legislation; lower milk prices increase the cost of the Margin Protection Program for dairy producers; and, it is now clear that the recent drought conditions will increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.
• CBO now estimates that spending on conservation programs under title II of the legislation would cost $1.4 billion more over the next 10 years than we estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings we previously expected from the proposal to cap enrollment in the program.
• CBO now estimates that spending on nutrition programs under title IV of the legislation would be $4.4 billion more over the next 10 years than they estimated in 2012 primarily because of a change in their estimate of a provision regarding utility allowances in the Supplemental Nutrition Assistance Program. CBO has obtained new information on state practices and USDA’s interpretation of current law with respect to how households qualify for utility allowances.

Accordingly, CBO now believes that states would have more flexibility under the proposal than was assumed for the previous estimate. Thus, CBO now expects that this provision, as drafted, would result in little to no reduction in the cost of nutrition programs.

House Farm Bill Proposal

CBO now estimates that enacting H.R. 6083 (as modified to account for a later enactment) would bring total direct spending for the affected USDA programs to $950 billion over the 2014-2023 period, or $26.6 billion less than what we project will be spent over that period if those programs continue to operate as under current law. 

Last year, CBO estimated that enacting H.R. 6083 would have reduced spending relative to continuing current policies by $35.1 billion over the 2013-2022 period.

Significant differences between the cost estimate CBO prepared on July 26, 2012, for H.R. 6083, and their estimate of a modified version of that legislation relative to their 2013 baseline projections of spending are as follows:

• CBO now estimates that spending on commodity programs under title I of the legislation would cost $1.1 billion more over the next 10 years than they estimated in 2012 because: lower milk prices decrease feed cost margins for dairy producers; and, it is now clear that the recent drought conditions would increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.
• CBO now estimates that spending on conservation programs under title II of the legislation would cost $1.7 billion more over the next 10 years that we estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings they previously expected from the proposal to cap enrollment in the program.
• CBO now estimates that spending on nutrition programs under title IV of the legislation would be $4.3 billion more over the next 10 years than they estimated in 2012 primarily because of a change in their estimate of a provision regarding utility allowances in the Supplemental Nutrition Assistance Program. CBO has obtained new information on state practices and USDA’s interpretation of current law with respect to how households qualify for utility allowances.  Accordingly, CBO now believes that states would have more flexibility under the proposal than was assumed for the previous estimate. Thus, CBO now expects that this provision, as drafted in the legislation, would result in little to no reduction in the cost of nutrition programs.
• CBO now estimates that spending on crop insurance under title XI would cost $1.4 billion more over the next 10 years than they estimated in 2012 because increased participation in the Price Loss Coverage Option offered in title I will make more producers eligible for benefits under the Supplemental Coverage Option offered under title XI.

U.S. Congressional Budget Office www.CBO.gov
Douglas W. Elmendorf, Director
Letter to Honorable Debbie Stabenow, Chairwoman, Committee on Agriculture, Nutrition, and Forestry
United States Senate

March 1, 2013