WASHINGTON, D.C. - Subsidies for Iowa's farmers and renewable energy industry could be at stake in a Congress where newly empowered Republicans pledge to cut government spending.
The next farm bill already faced a serious budget crunch, given that more than 30 existing programs don't have funding after 2012.
A cap-and-trade climate bill that was supposed to raise money for renewable energy programs through the sale of emission permits couldn't get out of the current Congress and can't pass the next one either, as President Barack Obama acknowledged Wednesday.
"Most farmers do understand the federal budget issue and most of them understand that farm programs are not going to be immune," said Ron Litterer, a Greene farmer who is a former president of the National Corn Growers Association.
Republicans seized control of the House by winning the largest shift in seats during a midterm election since 1938. The next House speaker, Ohio Rep. John Boehner, said Wednesday that cutting government spending would be a top priority of the GOP majority.
Craig Cox, a senior vice president of the Environmental Working Group, said the Republican-controlled House is unlikely to pass a farm bill that continues existing farm programs. "I just don't see how that (GOP) leadership can allow a status quo bill to go forward," he said.
A key point of contention: The $5 billion in fixed, direct payments that are sent to grain and cotton farmers every year. About 10 percent of the money goes to Iowa, but the payments have come under heavy public criticism and the Iowa Farm Bureau Federation is pushing to shift the money into other forms of farm assistance.
Rep. Frank Lucas, the Oklahoma Republican who is expected to take over as chairman of the House Agriculture Committee, has made clear that he doesn't want to cut the direct payments. The payments are especially popular with farmers in the South and in the Plains states, including Oklahoma. Lucas replaces Rep. Collin Peterson, D-Minn., who was supportive of overhauling farm programs.
Iowa GOP Rep. Tom Latham, a close ally of Boehner, said the Iowa Farm Bureau's proposal is still likely to be a "major point of discussion" during debate on the next farm bill.
The Senate agriculture committee also will be under new leadership, although Democrats remain in control. The chairwoman, Sen. Blanche Lincoln, D-Ark., was defeated Tuesday and is likely to be replaced by Sen. Debbie Stabenow of Michigan, a state that unlike Iowa or Arkansas produces a wide range of fruit and vegetable crops that don't benefit from traditional federal subsidies.
The shift in chairmanships creates an "unknown factor" for agribusiness interests, said Larry Peterson, president of West Des Moines-based Heartland Cooperative, which manages 52 grain elevators in Iowa.
The farm programs that don't have funding after 2012 include a disaster assistance plan created in 2008, subsidies for farmers who grow new biofuel feedstocks, and payments for preservation wetlands and grasslands.
Latham also said that Republicans could offer a new source of money to develop the biofuels and the wind industries - an energy bill that would expand production of fossil fuels and use the royalties to subsidize clean energy.
Obama on Wednesday signaled openness to another approach to promoting the development of clean energy, saying that the cap-and-trade bill was "just one way of skinning the cat."
"I'm going to be looking for other means to address this problem," Obama said.
The existing corn ethanol industry can survive without federal subsidies, but developing biofuels from new feedstocks such as crop residue and switchgrass, sources of plant cellulose, would require billions of dollars in additional government assistance, said Bruce Babcock, an Iowa State University economist. Refiners are required to use increasing amounts of cellulosic fuels under the 2007 energy bill, but so little production is developing that the Environmental Protection Agency has had to slash the 2011 target.
"It's just not economical, and it's likely not going to be economical. I can't see how a fiscally conservative, budget-hawk House of Representatives is going to find money to pour into cellulosic biofuels," Babcock said.
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