Letter to Conferees Opposing H.R. 2419, the Farm Bill

April 18, 2008

The Honorable Tom Harkin
Chairman
Committee on Agriculture, Nutrition and Forestry
United States Senate
328A Senate Russell Office Building
Washington, DC 20510

The Honorable Collin Peterson
Chairman
Committee on Agriculture
U.S. House of Representatives
1300 Longworth House Office Building
Washington, DC 20515

The Honorable Saxby Chambliss
Ranking Member
Committee on Agriculture, Nutrition and Forestry
United States Senate
328A Senate Russell Office Building
Washington, DC 20510

The Honorable Bob Goodlatte
Ranking Member
Committee on Agriculture
U.S. House of Representatives
1300 Longworth House Office Building
Washington, DC 20515

Dear Chairmen Harkin and Peterson, and Ranking Members Chambliss and Goodlatte:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, would like to express serious opposition to provisions in HR 2419, the Farm Bill, as sent to conference by the House and Senate because it fails to reduce agricultural subsidies to farmers, encourage market-based reforms to the nation's agricultural policy, or promote international trade liberalization. Moreover, the Chamber is strongly opposed to increased spending in the Farm Bill if revenue for such spending is derived from a tax increase on America's businesses.

While certain provisions in the Farm Bill have the potential to foster real economic growth – such as those that increase broadband deployment to unserved and underserved areas of the country – there are several particularly egregious provisions that are being considered as the bill moves through conference, which the Chamber strongly opposes:

STATE OUTSOURCING

The Chamber opposes Section 4015 of the House-passed Farm bill, which limits the flexibility of states to administer their Food Stamp Programs by prohibiting states from utilizing private sector companies to improve service and efficiency. The section mandates that state employees administer virtually every function related to Food Stamp Programs and also prohibits a waiver of such requirements under any circumstances. Section 4015 would also have the effect of forcing the termination of existing state contracts, prohibiting future contracts, and therefore increasing costs to states significantly. As the nation's traditional laboratories for innovation, states should continue to have the flexibility to improve the administration of their Food Stamp Programs to determine the best approach to deliver the highest customer service. The Chamber opposes any language in the Farm Bill, which would limit the flexibility of states to operate their Food Stamp Programs.

SUGAR

The existing U.S. sugar program already represents a chronically flawed policy that creates and maintains an artificial gap between U.S. and world sugar prices. And now, rather than seizing the opportunity to fix this policy, Congress is poised to pass a Farm Bill that makes it much worse.

Both the House and Senate versions of the proposed Farm Bill increase, rather than reduce, price supports. And worse, the bill continues sugar marketing allotments, ostensibly to balance supplies, while simultaneously guaranteeing U.S. sugar growers an 85% share of the domestic sugar market. No other commodity enjoys such blatant protection. To the extent that imports threaten the 85% share reserved for growers, U.S. taxpayers will be required to absorb the cost of removing surplus sugar from the market and diverting it into ethanol production. The Farm Bill also restricts the administration of sugar tariff-rate quotas (TRQ) by requiring TRQs to be set at minimum quantities. The TRQ provision, coupled with the guaranteed mandate that U.S. domestic sugar producers must supply at least 85% of the sugar used in the U.S., acts as an impediment to trade and severely limits sugar imports to the United States.

It is critical that protection of one sector of the U.S. economy not threaten the ability of other sectors to compete and succeed globally. Therefore, the Chamber urges Congressional negotiators on the Farm Bill to take steps to modify the sugar program, and our nation's agriculture policies generally, for the benefit of citizens, the economy, and the U.S. international trading position.

ARBITRATION

The Chamber strongly opposes the inclusion of any anti-arbitration provisions in the Farm Bill that would effectively nullify pre-dispute binding arbitration clauses in livestock contracts agreed to by livestock and poultry growers. The long-term effects of such provisions, if enacted, would cause serious damage to the general use and availability of alternative dispute resolution (ADR) as well as weaken the Federal Arbitration Act (FAA). Many businesses rely on the FAA for enforcement of agreements to engage in ADR. Businesses and consumers use ADR mechanisms, such as arbitration, to fairly, quickly, and relatively inexpensively settle disputes. The inclusion of anti-arbitration provisions would weaken long-standing, clear congressional intent to encourage ADR and could also call into question the U.S. Supreme Court's continual reaffirmation of contractual arbitration clauses.

For these reasons, the Chamber strongly urges Congress not to include any of the above provisions in the Farm Bill, and hopes that any future farm bills will be based on substantive, market-based reforms.

Sincerely,

R. Bruce Josten

Cc: Senate Farm Bill Conferees
House Farm Bill Conferees