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Corn+Soybean Digest

Will Future Farm Bills Allow for No Payment Limit?

Could the 2012 farm bill be written in a way that payment limits would not be an issue?

That’s the possibility raised by House Agriculture Committee Chairman Colin Peterson, (D-MN), following the committee’s first outside-the-Beltway hearing on the next farm law in Des Moines, IA, on April 30.

Peterson and other committee members heard from farmers, conservation program leaders, crop insurance agents and agri-processing firm executives during three hours of hearings in the auction arena of the Cattle Barn at the Iowa State Fair.

The committee faces the daunting task of writing a new five-year farm law with the possibility of having less money than for the one it passed in 2008, Peterson and other committee members reminded witnesses. Congress debated the 2008 bill for two years and overrode three presidential vetoes to pass it.

“This will be a baseline bill,” Peterson says. “We want to improve the safety net with the money we have. That’s why we started early.” (The first hearing was held in Washington with Agriculture Secretary Tom Vilsack last month.)

Following the hearing, Peterson was asked about payment limits in the 2012 bill. “That depends on what happens with the programs,” he says. “If we make significant changes in the programs, the payment limit issue could go away.”

Some sectors of the farm economy, such as dairy producers, have expressed dissatisfaction with the way their programs are working, while others, such as cotton, have been forced into changes by World Trade Organization rulings. Peterson says he has asked all the commodity groups to review their portion of the farm bill.

“Dairy is working on a new program that would make no distinction in farm size,” he says. “My thinking is farm programs should be available whether you farm 100 acres or 10,000 acres.”

The chairman also hinted the programs might not be the same for all commodities in the next farm bill, noting that corn and soybean producers have seen better prices for their crops in recent years while others growers have struggled.

“You have discrepancies between the commodities on what they need,” Peterson says. “One of the things I’m looking at is whether it makes sense to have the same kind of program for everybody.”

Some of the witnesses also called for making program changes they said would strengthen the farm safety net without increasing the cost to the taxpayer. Those changes could include reductions in federal crop insurance subsidies.

“Further revisions of the agreement between the USDA’s Risk Management Agency and the crop insurance companies are needed,” says Varel Bailey, a corn and soybean producer and former chairman of the National Corn Growers Association from Anita, IA.

“Even with the changes pending in the negotiation of the agreement, the program is a rip-off for taxpayers and transfer of wealth from productive areas to marginal areas. That money will be better spent in other areas such as the new ACRE program.”

Bailey urges committee members to consider moving the so-called trigger mechanism for payments in the new revenue assurance program closer to the farm. “The current program was tied to losses at the state level because of funding issues,” he notes. “Ideally, the loss mechanism should be set on a farm-to-farm basis, but that would be cost prohibitive.

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