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Arkansas rice farmers: Watching farm legislation closely

Opinions may vary on aspects of the farm bill, but one thing many Arkansas rice farmers are united on is a desire to keep current legislation in place.

“I'd prefer (Congress) just leave everything alone,” says Scott Matthews, who farms outside Weiner, Ark. “But that's unlikely.”

A dubious eye is cast on even tweaking the current farm bill.

“I worry about tweaks in the farm bill because if it's opened up for one change, it's open for others,” says Ray Vester, a rice farmer from Stuttgart, Ark., who also sits on the Arkansas Plant Board as rice farmer representative. “The incoming Senate Ag Committee chairman is pro-payment limits.

“So when you open it up for tweaking, some things you don't want tweaked might get changed. The average rice farmer, like me, would probably be better off and more comfortable (with the status quo) for a couple of years until we see how the economic structure in agriculture settles out.”

In the current legislative environment Vester says Freedom to Farm is the best producers can hope for. As prices change, as the opportunity for market price changes, farmers can “swing from one crop to another. It's worked well.”

As for counter-cyclical payments, “those are set up if prices are low you'll get payments to get through difficult times. That's the safety net aspect.

“Right now, it appears those payments aren't needed. Last year, there were some rice groups struggling with the fact we had to pay back some counter-cyclical funds on the previous year. When you put long-grain and medium-grain together, the stats showed there shouldn't have been a counter-cyclical payment.”

Old target price

If Congress does tackle a new farm bill, Matthews is intrigued with the old target price set-up. The reason is “without any mandatory reporting, the counter-cyclical is a farce. It's also a farce that (medium-grain), which controls 12-14 percent of the market, is effecting the counter-cyclical payment on rice.”

The Asian markets — particularly the Japanese — tie up the bulk of medium-grain rice. For the last few years, when viewed through a counter-cyclical lens, that's distorted the Southern long-grain situation.

“Others make the argument that if you look at the market situation over enough years, the situation was the opposite,” points out Gary Sitzer, who also farms near Weiner, Ark. “There were times when the low prices for medium-grain threw that comparison in reverse. The way trade has been going, it's almost like medium-grain and long-grain aren't both rice.”

“If you're going to do a broad spectrum payment — like with the counter cyclical program — I don't think the two should be linked,” says Matthews. “The truth is that (medium-grain) is a specialty crop when it's controlling 12-14 percent with two buyers: cereal and Asia. That's true whether everyone wants to admit it, or not. I don't think it should be figured into the overall pricing.”

Vester says the “scary thing” is the USDA's desire to adjust loan price. If that happens, “it'll fall harder on the long-grain market. I don't think that move would be beneficial for any farmer, medium or long-grain. It would set the loan price higher on medium-grain and lower on long-grain. If they lower the loan rate on rice, it'll damage the Southern long-grain grower and might cause an increase in medium-grain acres.”

Is there any way with the current set-up that medium- and long-grain can be kept apart?

“That would take a change in policy,” says Vester. “Historically, it's worked the other way. Long-grain producers have had a bit of an advantage in past years when medium-grain prices were pretty low and long-grain looked better. Even then, they blended the numbers together and allowed long-grain producers to get counter-cyclical payments…

“USDA says ‘what we're trying to do is make this more market oriented. We want to set the loan price that reflects what the market really is.’ That's their reasoning for…adjusting loan rates.”

If a new farm bill is written, all interviewed for the story worry about the South getting a fair shake.

Generic programs

“During the last farm bill, the trend — and I don't see why it would change — was to go with generic programs,” says Sitzer. “Basically, everyone gets to consider the same A, B, C, D programs. Where do you best fit in those? The odds of getting those programs further differentiated — particularly after this latest election when the House Agriculture Committee will be from Minnesota and his counterpart in the Senate is from Iowa while the USDA is being run by a Nebraskan — are really shaky.

“The South, for the first time ever, maybe, won't carry as much weight in how Congress approaches the new farm bill. The odds are against us. We can sure ask for what we need, though.”

Matthews suggests it would be wise to pay attention to how Congress approaches the corn crop. “Whatever the big hitters with corn end up with will be the bell-cow for the rest of us. Farmers will more than likely fall into a corn-like program.”

If they follow the WTO rulings, Congress will have to do away with planting restrictions.

“It's an open question whether they'll tell the WTO to jump in the lake,” says Sitzer. “Regardless, this time around, fruit and vegetable producers will be more involved. Those producers don't really want a farm program like row-crop producers do. They'd prefer money for research and the like — and Johanns wants to give it to them. That will take more money out of a limited pool.”

Outside the South, congressmen don't like cotton either.

“If you've got high-priced commodities, they'll say ‘Well, you don't need any help,’” predicts Matthews. “I believe the budget will be very, very tight. I think it will surprise everyone how tight.”

And environmentalists won't be silent.

“They're already lining up their strategies for approaching the new farm bill,” says Sitzer. “They're going to want a big piece of the funds and the Democrats will give them an ear. (Iowa Democrat and Senate Agriculture chairman) Tom Harkin is big on the environment.”

If the environmental groups are successful at siphoning off some funds coupled with payment limits, “it looks bleak for (Southern agriculture). Odds were already slim we'd see any positive movement on payment limits. Lately, a lot of folks were just hoping to keep what they had. Now, I think our chances for payment limit help is almost zero — the door is nailed shut. We'll be lucky if they don't drive a few more nails in.”

‘Leave it alone’

As a whole, the farm bill program works “if the government will just leave it alone,” says Vester. “If they let this farm bill go for another two years, I believe some economic strength will be built under agriculture that's been needed for a decade…It's critical to get the current bill extended for a year, preferably two years.

“Currently, we're in an extremely fluid economic agriculture structure. If they use a snapshot taken today to set the farm bill on, it would be a huge mistake.”

Everything runs in cycles, says Vester. In 1972, when commodity prices went out the ceiling and the government “thought agriculture was fixed forever, they learned different. About four years later, the situation turned against the farmers. Things catch up, costs catch up, and supply catches up.”

If a new farm bill is based on an economic boom, “it'll be doubly disastrous once the boom drops. Booms never stay forever. We need to keep that in mind until the ag economic picture really emerges.”

No matter what else is said, “The point of farm bills is to guarantee a safe, abundant supply of food at an inexpensive cost. That was true in the 1930s when the first one was written and it's true today.”

And while that's been accomplished, “it's increasingly accomplished on the back of the farmer. To the average American citizen, farmers are second-class citizens. I've had people kid me about driving an air-conditioned tractor while they work in an air-conditioned office. We're looked at differently.

“We have very little congressional support any more. There are fewer than 40 truly (ag-centric) congressmen left. The rural community is disappearing.”

How might a new farm bill affect Arkansas rice acreage?

“Every year, I think there will be an acreage reduction. It doesn't happen,” says Matthews. “But now, with us getting only 22 percent of advance deficiency payments in January (instead of the usual 50 percent), the lending institutions will have to do something different. That's what may change the planting landscape. You know, no counter-cyclical payment and 22 percent of the advance deficiency payment don't add up to acreage staying put.”

And no one's predicting a let-up in energy prices.

“It looks like we've settled into current price levels,” says Sitzer. “Even if they back off prices just a little, it's not enough. Rice uses more energy than other crops. And the drier it is, the more energy we use.”

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