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In drought's aftermath: New worries enter farm bill debate

Senator Saxby Chambliss, R-Ga., chairman of the U. S. Senate Committee on Agriculture, Nutrition and Forestry, admits that the farm sector faces serious challenges as both Senate and House committees begin deciding what to do with farm legislation.

“I am pleased with the way the current farm bill is working,” Chambliss told witnesses and a sizeable audience at a farm bill hearing recently in Lubbock, Texas.

“But we face challenges as we debate a new farm bill. The DOHA has shifted the debate. Some domestic programs may not mesh with international trade.”

He said grain use for energy also creates a dilemma for livestock producers who need affordable feedgrains.

“And the federal budget deficit will affect farm bill funding, although we spent less on the 2002 act than expected.”

Chambliss said ag committee members are concerned with drought that hammered the South and Midwest this summer. “Some parts of Texas are considered in extreme or exceptional drought,” he said. “We are looking into a permanent disaster program as part of the farm bill.”

Chambliss also praised Texas for a forward-looking water use plan that is “admired across the nation.”

Farm leaders who testified at the hearing encouraged Chambliss and his committee to maintain as much of the 2002 act as possible, with minor adjustments.

Ted Higgbottom, president of the Western Peanut Growers Association, encouraged Congress to assure that the peanut program created in the 2002 act is administered properly.

“The U.S. Department of Agriculture has administered the repayment rate in such a way as to price U.S. peanuts out of the export market. USDA's unwillingness to provide a market-clearing repayment rate has led to … excessive peanut stocks that overhang the market.”

He said USDA refused to “give us the marketing loan we were promised by Congress.”

Tommy Womack, past president of the National Wheat Growers Association and the Texas Wheat Producers Association, said wheat farmers received little benefit from two key components of the 2002 farm act: the counter cyclical program and the loan deficiency program.

“The 2002 farm bill has strong points,” Womack said. “And the wheat growers I represent believe the next farm bill should build on these strengths. But, while wheat growers generally support current policy, much of the safety net provided by the 2002 bill has not been effective for wheat farmers.”

He said both the loan and LDP are ineffective when growers do not make a crop. “And the target price on the counter cyclical program for wheat was set considerably lower than market conditions indicated and severe weather conditions in some areas have created a short crop, which led to higher prices in other areas. As a result, there has been little support in the form of counter cyclical payments.”

Troy Skarke, a grain sorghum farmer from Claude, Texas, said farm policy in the next five years likely will be significantly different from current programs because of potential WTO agreements, efforts to cut the federal deficit and increased interest in energy policies.

Skarke said grain sorghum will be of particular importance to the nation's drive toward energy independence. “Ethanol production is the fastest growing value-added market for the sorghum industry,” he said. “Producers are working to attract ethanol plants to their areas because it can increase local cash prices. Sorghum is a good fit for ethanol production because one bushel of sorghum produces the same amount of ethanol as one bushel of corn.”

He said the National Sorghum Producers and the sorghum industry is “supportive of the current farm bill. However, we believe Congress can clarify rules so the USDA interpretation does not affect producers' abilities to use sorghum in profitable cropping systems.”

Texas corn producers also weighed in in favor of maintaining the current far program.

“The 2002 farm bill is popular with farmers,” said Jimmy Wedel of the Corn Producers Association of Texas. “I believe it has lived up to what it was designed to do and what farmers must have, a safety net during times of low prices. I support extending the 2002 farm bill and its budget baseline.”

If Congress rewrites the bill he encourages them to keep many of the basic concepts of the 2002 legislation. He agrees that some tweaking will improve the program.

He said the 2002 bill allow farmers to update counter-cyclical payment yields and base acres. “This was a major improvement but left many producers stuck with low direct payment yields. Farm program rules in the 1980s and '90s placed caps on crop yield updates. In my area many producers were forced to continue using non-irrigated county yields for sorghum even though they were growing irrigated corn.”

That means many farmers have direct payments for 27 bushels per acre when actual production is well over 200 bushels per acre.”

He said energy will be an important part of the next farm bill debate and should serve as a reminder of where agriculture does not need to go.

“We are dependent on the world for our energy; only sound agricultural policy will prevent us from following the same road in food and fiber.”

Ricky Bearden, speaking on behalf of the Texas Cotton Producers and the National Cotton Council, said the current farm program provides “a stable and effective national policy for our country. The combination of direct and counter cyclical payments provides an effective means of income support, especially when prices are low, without distorting planting decisions.”

He said one shortcoming of the 1996 law was “a counter cyclical payment that triggered when prices got low. As a consequence, farmers were forced to request emergency assistance from Congress year after year. This has been alleviated with the counter cyclical program. The direct payment mechanism helps provide financial stability required by lenders and suppliers without distorting production decisions.”

He said continuation of the marketing loan program is essential. “It is our top priority. The marketing loan responds to low prices but does not cause low prices. It triggers, when necessary, regardless of the cause of low prices and ensures that U.S. cotton farmers are not left as residual suppliers when they are unable to compete with the treasuries of foreign governments.”

L.G. Raun, El Campo rice producer, said the U. S. rice industry “supports maintaining an effective farm safety net that includes a marketing loan program, as well as income support payments and planting flexibility.”

He also supports extending the 2002 act “until such a time as the World Trade Organization provides a multilateral trade agreement that is approved by the U.S. Congress.”

Raun said rice farmers need:

  • An effective farm program that provides basic support through marketing loan eligibility for all production and income support through counter cyclical and direct payments;

  • Maintaining eligibility for farm programs benefits for rice operations of all sizes;

  • Development and expansion of global markets for crop off-take.

Producers also support an improved crop insurance program that provides enhanced coverage at a reasonable price.

Womack said current insurance programs leave as much as 35 percent of a grower's potential production un-insured. “That's a big deductible,” he said.

Congressman Randy Naugebauer, who welcomed the committee and panel to Lubbock, heart of his Congressional District, supports improvements in crop insurance as a substitute for frequent disaster programs.

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