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Bakersfield merchant expects same payment limits

Bakersfield, Calif., cotton merchant Ernie Schroeder Jr. will be “absolutely shocked” if Congress does anything other than leave current farm payments alone.

Schroeder, chief executive office for Jess Smith and Sons, the nation's seventh largest privately owned cotton merchandising firm, was one of a wagonload of agricultural leaders testifying recently before The Commission on the Application of Payment Limits to Agriculture.

Schroeder said he was encouraged that he and the others would be successful in staving off efforts to modify payments limits because of the “united front” agriculture presented to the commission.

There was only one farmer from North Dakota who favored tighter limits. Everyone else, representing corn, cotton, rice and soybeans, said any further tightening of payment restricts would destabilize the nation's farm economy, said Schroeder.

Schroeder and others pointed out that the impact of any tightening of payment limits would go far beyond the row crop turn rows.

West feels first

Mark Lange, National Cotton Council president, told the commission that 600,000 acres of highly productive cotton land in California and Arizona would be shifted out of cotton literally overnight into other crops. This would be disruptive to others segments of the highly productive Western agricultural economy because that land would be planted to other crops, likely creating critical oversupplies.

Any changes in payments limits would be felt more quickly in the West. Already, crop values and cost of production are higher than in other parts of the country and California and Arizona producers reach existing payment limits more quickly than peers elsewhere in the Cotton Belt, said Schroeder.

“The ability to use the government loan as well as exercise redemptions with generic certificates, the benefits of the loan deficiency payments, direct payments and counter cyclical payments have been an absolute necessity to the cotton grower,” Schroeder testified.

Any further limitation on these payments “would cripple all segments of the cotton industry in California overnight.”

California producers are already facing higher costs for fuel, labor, chemicals, insurance and environmental regulations than producers in other states.

“In today's economic environment, we need to be seeking additional funds to keep our farmers in business, not seeking tighter payment limits to put them out of business,” said Schroeder. “The ‘one rule fits all’ policy definitely will not work for California.”

The commission workshop was is the first of its kind where the issue of payment limits was addressed via a congressional commission. It was established as part of a compromise worked out on more stringent payment limit language in the 2002 Farm Bill. The commission is expected to issue a report on its finding this month or next.

Issue to remain

While Schroeder was encouraged at the united agricultural front before commission, “the issue will not go away as long as members of Congress want to take dollars away farm support for farm support an give it to farm conservation.

“The debate may never go away, but the commission is an encouraging sign that farmers and others in production agriculture will have more of a say in the payments limits debate,” said Schroeder.

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