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Harkin thinks direct payments may be funding target

Sen. Tom Harkin says he expects at least one more attempt will be made to divert money from direct payments to conservation, rural development and nutrition programs when the Agriculture Committee-passed farm bill goes to the Senate floor.

Harkin, the committee chair and an Iowa Democrat, says an amendment to that effect could be one of several November “surprises” that emerge when the Senate takes up the legislation, which was scheduled to occur Nov. 5 or 6.

At press time, farm, conservation and anti-poverty groups were squaring off for the farm bill debate, which Washington observers say could last a week or longer. (Senators have announced they plan to offer more than a dozen amendments to the ag-committee bill once it hits the floor.)

“As you know, I’ve never been a big fan of direct payments,” Harkin told reporters during an update session on the farm bill. “I will have more to say about that when we get on the floor, and I present the bill.”

Harkin said he would have preferred to report a “different” kind of farm bill out of the Senate Agriculture Committee but didn’t have the votes. The legislation that passed, which is similar to that in the House-passed farm bill, could face problems down the road.

“I think we are going to have a lot of WTO challenges on this,” said Harkin, noting that he agreed with Acting Agriculture Secretary Chuck Conner’s complaints that the bill “paints a bulls-eye on U.S. farmers’ backs.”

“That’s why I would like to shift some of the ways we support farmers to more green payments, which I’ve been trying to do for a lot of years now,” he said. “But there was just not the support in the committee for it. The support was for higher target prices and higher loan rates for crops.”

The votes also weren’t there for radical changes in farm policy such as the legislation proposed by Indiana Sen. Richard Lugar, a former chairman of the Agriculture Committee. Lugar’s Farm Ranch Equity Stewardship and Health or FRESH Act would target assistance to help farmers when farm revenue declines and provide $6 billion more for conservation programs.

(Lugar sent a letter to his colleagues Tuesday (Oct. 30), complaining that the current farm policies actually hurt family farmers. He said today’s farm programs benefit a select few while “leaving the majority of farmers without support or safety net.”)

Harkin said he pushed for the average crop revenue or ACR option in the Senate Ag Committee-passed farm bill to help “mollify” some of the demands from Lugar and other senators and environmental and anti-hunger groups. Under ACR, farmers could receive counter-cyclical payments based on state-level revenues rather than target prices.

“Some people want to totally change the farm programs, but I don’t think the votes are there to do that,” he said. “I know Sen. Lugar’s been trying to do that for some time but the votes just aren’t there for that. You just don’t make sharp turns in farm policy; you bend the rails a little bit and maybe get it moving in a different direction.”

Harkin said he was concerned about eleventh-hour changes made to the ACR program through an amendment offered by Kansas Sen. Pat Roberts that reduced the number of payment acres for the program and wiped out a proposed reduction in crop insurance rates for ACR participants.

“I thought we had a good agreement when we went into committee,” said Harkin. “I was not prepared for Sen. Roberts’ proposals on that. But I wanted to get the bill moved, and I thought, ‘you know, you live to fight another day,’ and perhaps we can address this on the floor.”

Roberts said his analysis of the ACR program indicated it would have produced positive results for Kansas wheat farmers in only two of the last nine years. The program could also harm the federal crop insurance program and raise premiums for farmers who did not enroll in ACR, he noted.

The National Corn Growers Association, one of the original proponents of a revenue-based counter-cyclical program, said it was disappointed with Roberts’ amendment stripping the link between crop insurance and the revenue-based program. “The amendment makes the revenue proposal a much less attractive option,” said NCGA President Ron Litterer.

On the Roberts’ amendment provision for reducing ACR payment acres to 85 percent, Harkin said he believes Congressional Budget Office scoring will help move the amount closer to 100 percent of base acres. Roberts agreed to allow the percentage to rise if the savings from the ACR program were found to offset the cost of a 100-percent payment.

Asked about the potential for conflict between ACR and the permanent disaster program amendment that is also expected to be offered on the Senate floor, Harkin said he expected the proposal from the Senate Finance Committee to get a better reception.

“Keep in mind on this permanent disaster program, which I’ve never been a big fan of, that this one will be different because it’s built on crop insurance,” he said. “You do have to have crop insurance in order to qualify to get a disaster payment.”

Harkin has had his eye on direct payments since early in the farm bill process. At one point, he discussed moving $4.2 billion out of direct payments and into conservation and energy programs, a move that was opposed by the American Farm Bureau Federation and commodity organizations.

The Senate Ag Committee chairman hinted that another amendment was in the works as he prepared for the farm bill floor debate. “One amendment that’s being worked on would take some out of direct payments and put some in rural development; put some in conservation that we were short on, maybe even some in energy and some in nutrition,” he said.

Groups like the American Soybean Association have complained that the committee-passed bill reduces baseline spending under the Commodity title by about $3 billion and allocates it to other titles. ASA and other farm organizations have opposed shifting funds out of program crops.

Another obstacle involves the $6 per bushel target price in the new farm bill. “ASA does not believe that a $6 target price provides an adequate safety net for soybean producers or a level of equity with other program crops,” said ASA President John Hoffman. “We believe the soybean target prices needs to be increased to a minimum of $6.30 per bushel.”

Harkin said he believes the principle has been established that funds can be transferred out of the Commodity Title to other titles of the farm bill. “So what I’m saying is that those who want to argue, ‘Oh no, we can’t take any money out of Title I for anything other than Title I commodities,' will have some explaining to do because the principle has been established that we can.”

Asked who he thinks will sign up for the ACR option should it become part of the farm law, Harkin said he thinks farmers “with good market prospects” will elect to join the ACR, which would replace direct payments with a $15 per acre fixed payment and replace non-recourse with recourse commodity loans.

“They’re protecting themselves on the downside,” he said. “A lot of people who get direct payments now don’t get a lot of payment because it depends on their base acres, and it’s made on 85 percent of those acres.”

He also disagrees with Roberts’ claims the ACR will have a negative effect on crop insurance purchases. “If you have a state-level guarantee, it will reduce the crop insurance premiums. Farmers won’t buy the same coverage they’ve had in the past, but they can buy up to higher levels. Quite frankly, we may change some of this on the floor.”

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