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Bill increases payments to Midwest

Senate Agriculture Committee Chairman Tom Harkin has unveiled a proposed farm bill that appears to pit smaller, less-productive farmers against larger, commercial farming operations that produce most of the nation's agricultural output.

The proposal was released over two days as Harkin, an Iowa Democrat, began a series of committee mark-up sessions aimed at crafting a new farm bill before the Senate adjourns for the year. Committee sources said Harkin had set a goal of completing a draft farm bill by Nov. 9.

As expected, Harkin's proposal would shift more federal dollars from the commodity programs that have been the mainstay of farm bills to conservation programs, including provisions from the Conservation Security Act he introduced last spring.

“I have long said that conservation would be a cornerstone of my approach to the farm bill, and that's exactly what we've done,” he said. “My approach will be good for our family farmers, good for our environment and good for our small town and rural economies.”

Included in the proposal are provisions that would increase the amount of land that could be enrolled in the Conservation Reserve Program (CRP) from 36.4 million to 40 million acres and raise the Wetlands Reserve Program (WRP) enrollment from less than 100,000 acres to 250,000 acres annually.

The Conservation Security Program would provide payments of $20,000 to $50,000 per year, depending on the type of conservation practices performed by the farmer. All told, Harkin would spend about $4.5 billion annually on conservation programs.

But it's the commodity provisions of the proposal that could cause the most rancor within commodity organizations and between regions of the country that would be winners and losers from the proposal's reshuffling of farm program payments.

For openers, the Harkin farm bill would alter the current formulas for determining farm program bases and yields, which date back to the 1985 farm bill.

New acreage bases for program crops would be calculated using the four-year average of acreage actually planted or “prevented planted” during the base period of 1998, 1999, 2000 and 2001.

Program yields would be based on the greater of (1) the average of the yield per harvested acre for the covered commodity for the 1998 through 2001 crop years or (2) the farm program payment yield in effect for the 2002 crop year. (Under the first, farmers could omit any one of the four years in which they did not plant the commodity or chose not to include the yield.)

Some observers believe the new yield formula would benefit farmers in the Midwest where corn and soybean yields have been rising at the expense of growers in the South and West where yields have plateaued in recent years.

Harkin's proposal also establishes a new “target revenue” for the average of acres planted to covered commodities during the years 1998 through 2001. The target revenue would be computed as the total crop production times the higher of the season average price or the national average loan rate for the crop divided by the average planted acres.

If the current year revenue was less than the target revenue in 2002 through 2006, the difference would be distributed to eligible producers based on their individual share of the total base acres and program yield for the covered commodity.

The target revenues per planted acre listed for the program commodities in the Harkin bill include: wheat, $120; corn, $270; sorghum, $130; rice, $475; soybeans, $215; and cotton, $360 per acre.

Based on the $360 target revenue in the Harkin proposal, a cotton producer with a 1,000-pound yield average thus would have a target revenue of 36 cents per pound while that for a producer with an 800-pound yield average would be 45 cents per pound.

Either would receive less benefit from the Harkin proposal than a corn producer with a 150-bushel yield average who would have target revenue of $1.80 per bushel or one with a 120-bushel yield average who would have a target revenue of $2.25 per bushel. The proposal, in effect, could provide potentially higher payments for lower-yielding producers.

In contrast, the farm bill passed by the House earlier this fall bases its counter-cyclical payment provisions on program yields rather than an arbitrary revenue target. Thus, the House bill rewards producers for their productivity rather than penalizing them for higher yields.

National Cotton Council officials criticized Harkin's revenue target proposal in a press release.

“I am glad Senator Harkin has put a proposal forward, and our industry looks forward to working with the committee in developing workable farm policy,” said Jim Echols, the Council chairman.

“Overall, however, the proposal is not sufficient for cotton producers and would be detrimental to virtually all commercial-sized farming operations. The proposal would have a negative impact on the competitiveness of U.S. agriculture and impose unreasonable limitations on farming operations.”

The Harkin plan also reduces fixed annual payment rates to grain and cotton farms and creates a new payment limit of $100,000 per individual for combined direct or counter-cyclical payments. Harkin has frequently criticized Agricultural Market Transition Act or direct payments, saying they benefit larger producers.

The proposal does increase marketing assistance loan rates for most commodities, including those for upland cotton to 54.5 cents per pound; for rice, $6.90 per hundredweight; corn, $2.05 per bushel; and wheat, $2.94 per bushel. Soybeans would be reduced from $5.26 to $5.20 per bushel.

But it also creates a new maximum quantity of a commodity that would be eligible for marketing assistance loans. For wheat, the total would be 200,000 bushels; for corn, 300,000 bushels; rice, 75,000 hundredweight; soybeans, 175,000 bushels; and upland cotton, 2.3 million pounds or 4,600 500-pound bales.

Harkin's increased emphasis on conservation programs would triple the existing enrollment of wetlands in the program over the next 10 years. The WRP has helped restore more than 1 million acres of wetlands since its enactment in the 1991 farm bill, according to a Harkin statement.

The bill would increase funding for the Environmental Quality Incentives Program (EQIP) up to $950 million a year, including a $100 million loan fund for livestock operations to obtain low interest loans for livestock manure management facilities.

It would raise funding for the Wildlife Habitat Incentives Program (WHIP) to $100 million annually and allow for long-term easements in addition to cost-share for restoration of wildlife habitat.

It would expand the Agricultural Land Protection Program (formerly the Farmland Protection Program) to include prairie and ramps up annual funding to $250 million.

The proposal would initiate a new grassland reserve program to purchase permanent and long-term easements on up to 1 million acres of grass and prairie lands that are subject to development pressures.

And it increases access and funding for technical assistance to help farmers implement the conservation programs.

“As chairman, I am proud to have developed a strong proposal that moves conservation to the forefront of agricultural policy,” Harkin said. “My proposal will help secure the environmental benefits that have resulted as farmers have already put conservation measures in place and will encourage other farmers to help us expand those conservation benefits to other working lands.

“If enacted, this will be a real win for our environment, farmers and all Americans who care about the quality of our natural resources.”


Arkansas senators to offer farm bill

By Forrest Laws
Farm Press Editorial Staff

Arkansas Senators Blanche Lincoln and Tim Hutchinson have announced they plan to introduce a new farm bill that they want to see passed in time for farmers to plan for their 2002 crops.

The bill, which is expected to be similar to the Farm Security Act passed by the House earlier this fall, would be the third proposal offered for consideration by the Senate Agriculture Committee. Committee Chairman Tom Harkin of Iowa and ranking member Richard Lugar of Indiana have also introduced farm bills.

“Arkansas farmers have been in limbo year after year waiting for Congress to pass emergency spending bills because the existing farm policy we have in inadequate,” said Lincoln, a Democrat. “I have become increasingly concerned and dismayed that, as the Senate rushes to complete its business for the year, farmers will again be left out.”

Both Lincoln and Hutchinson said their bill would include a solid safety net that “insures not only the financial viability of our farmers, but also the viability of local bankers, merchants and other rural institutions that depend on them.”

“In each of the past four years, rescuing the farm economy has cost over $30 billion in emergency farm aid,” said Hutchinson, a Republican. “As we have seen, our current program is not working and substantial improvements are needed. The crisis in agriculture is real, and it is imperative that we have a farm bill this year that properly addresses the most pressing issues facing our farmers.”


Louisiana farmers oppose controls in new farm bill

Louisiana farmers believe there were good and bad parts to the 1996 farm bill and are hoping for improvements in the upcoming one now being debated in Congress, according to an agricultural economist with the LSU AgCenter.

“Farmers like the flexibility and ability to choose what to plant, and they like the government staying out of inventory control,” said Kurt Guidry of the LSU AgCenter's Department of Agricultural Economics and Agribusiness. “Nearly 40 percent believe government shouldn't manage grain inventories.”

The bottom line, Guidry said, is farmers don't like the government setting or manipulating inventory and supply levels.

The information came from a survey of Louisiana farmers Guidry conducted as part of a 28-state effort “to get the views of people most impacted by ag policy,” he said.

The questionnaire linked to a new farm bill was similar to another one used during development of the current bill in 1996.

Using a random sample from the Louisiana Agricultural Statistics Service database, the Louisiana survey was sent to 2,245 agricultural producers — 1,800 selling less than $100,000 in commodities a year and 445 selling more than $100,000, the level Guidry considers commercial farmers.

The U.S. Department of Agriculture considers an agricultural producer as anyone with $1,000 or more in gross sales. “But a large percentage of them are non-commercial farmers,” Guidry said, explaining he believes those with less than $100,000 are not commercial farmers. “They're not as involved in or concerned with agricultural policy,” he said.

Commercial farmers, Guidry said, want Congress to increase income support payments to the highest levels permitted by the World Trade Organization. “These come from both loan rates and direct payments,” he said.

Guidry also said the majority of respondents believe programs in environment and conservation would be appropriate. “Farmers understand the importance of conservation and the environmental benefits and are concerned about them,” Guidry said.

In response to the question, “Would you accept payment to remove land from production in order to improve water quality in your local watershed?” nearly 70 of the respondents checked “yes,” Guidry said.

“It would probably be marginal, erodible land,” he said, “Most farmers believe in the importance of the Conservation Reserve Program and support increased funding and enrollment levels.”

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