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Corn+Soybean Digest

Help For Tough Times

Revised commodity loan rates, producer-friendly crop insurance and trade with China are sure to be key topics of House Agriculture Committee farm policy hearings across the nation this spring.

Those were the hot issues discussed at the committee's first hearing, held March 6 in Lubbock, TX. Nineteen crop and livestock producers testified on ways to pull agriculture out of its depressed times. About 700 farmers, agribusiness representatives and others attended the hearing, the first of 10 planned sessions.

"We strongly encourage producers to detail the specific changes needed in federal farm policy, but just as importantly, to encourage our continuation of the policies that are working well for their operations," said committee Chairman Larry Combest (R-TX).

Combest has pushed hard for revised federal crop insurance that protects against input losses. He was impressed with an insurance proposal by Jerry Oswalt, an Abernathy, TX, cotton grower and chairman of a regional Federal Land Bank Association.

"In this proposal, an insurance policy covering replacement costs would be purchased at the time the (financing) loan is made," says Oswalt. "Coverage would be equivalent to a farmer's cost of production. Premiums would be forwarded to a federal fund that would pool them for the purpose of making indemnity payments."

Oswalt said this would be a self-insurance program. "Although the pool would be federally subsidized, just as crop insurance premiums are currently subsidized, the effect of this type of concept is very compatible with the cooperative principle that governs my lending institution," he said. "But, instead of farmers pooling their resources for the purpose of creating lendable equity, farmers would be pooling their resources for the purpose of self-insurance."

Deductibles could vary depending on the farmer's financial ability to handle additional risk. "Premiums could be adjusted to reflect the varying production risks in different parts of the country," said Oswalt. "If sufficient income is not generated to cover the costs of production, an indemnity payment, minus the deductible, would be drawn from the pool and paid to the farmer."

The bottom line with the proposed program, he said, is that if a grower faces "unusually low prices or production, he can stay in business to farm another day. That's what an insurance program should be all about."

Several growers testified on the need for revised government loan programs that would benefit those who held acres out of production - the "flexible-fallow" plan.

Taking a different approach was Weldon Melton, Plainview, TX, grower and chairman of the Texas Soybean Producers Board. "Our loan rates need to be tied to the strength of the dollar in 1996 (prior to the Asian economic crisis)," he said. "This would help the American farmer when one of our major competitors devalues its currency, thus undercutting our price in world trade."

Expanded trade with China, a hot topic before Congress this year, was favored by those testifying. All were polled by U.S. Rep. Charles Stenholm, (D-TX), the ag committee's ranking minority member. "There was overwhelming support for PNTR (Permanent Normal Trade Relations) with China and the importance of lifting all sanctions," said Stenholm.

The farm policy hearings are scheduled to continue through May 13. April hearings are set for West Chester, OH, and Kutztown, PA. May meetings are planned for Sacramento, CA; Sioux Falls, SD; Boise, ID; and Peoria, IL.

All regional meetings are carried on the ag committee's Web site, agriculture.house.gov.

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