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Payment Limit Commission hears 'rest of story'

While there was only one reference to the dreaded E-word, it was clear from the outset that row crop farmers and their organizations saw the meeting as a chance to respond to the months of anti-row crop farmer propaganda they have been subjected to by members of Congress and the Environmental Working Group.

“Let’s face it, that Web site is the reason we’re having this meeting today,” said Roger Johnson, commissioner of agriculture for North Dakota, referring to the EWG Web site that listed raw data on millions of dollars in farm program payments to farmers.

The daylong event was the only public hearing scheduled by the 10-member Payment Limit Commission, which was authorized as part of a compromise worked out on more stringent payment limit language in the 2002 farm bill. The commission is expected to issue a report on its findings in July or August.

National Cotton Council President Mark Lange, the hearing’s lead-off witness, told commission members that the current law’s payment limits “are sufficiently restrictive and burdensome to U.S. agriculture.”

Lange noted that the new farm bill tightened payment limits beyond those in previous farm acts and added an adjusted gross income test designed to deny program payments to individuals with off-farm income exceeding $2.5 million.

“Any further restrictions would be tremendously destabilizing to a sector that is only in its second year of recovery from the lowest commodity prices observed in 40 years,” he said. “More arbitrary restrictions on program benefits will also negatively affect U.S. cotton producers’ ability to compete globally.”

The commission heard testimony from representatives of two producer-owned cooperatives who explained how their organizations rely on commodity certificates to market members’ crops. Legislation proposed by Sens. Charles Grassley of Iowa and Byron Dorgan of North Dakota would eliminate the use of commodity certificates.

David Stanford, vice president for marketing at Lubbock, Texas-based Plains Cotton Cooperative, outlined the intricate procedures and communications required with USDA to ensure that none of its 28,000 shareholders exceed their individual payment limits.

Describing Riceland Foods cooperative marketing pool operations, Riceland President and CEO Richard Bell said the cooperative’s ability to place commodities under CCC loan and redeem on behalf of members “is fundamental to the successful operations” of the marketing pools.

The testimony had to be especially gratifying for Bell, whose organization was singled out by Rep. Nick Smith, R-Mich., as a “mega-farming operation that is becoming wealthy from farm program payments,” in a speech aimed at promoting new payment limitation regulations on the House floor last year.

“Judging from the newspaper accounts, you would think we were bigger than Cargill,” Bell told the Payment Limit Commission members, referring to the giant, Minneapolis-based grain trading company. “Our sole purpose in receiving marketing loan gains is to help our members market their crops.”

The former undersecretary of agriculture in the Nixon and Ford administrations said that Riceland received a total of $130.8 million in marketing loan benefits for eligible participants in its 2002/03 seasonal marketing pools. Those were distributed to 6,036 pool members, who received an average of $21,670.

“Without the availability of commodity certificates, that would not have been possible,” he said.

North Dakota’s Johnson was the only witness who spoke in favor of tighter payment limits, arguing that the continued negative publicity over farm payments could mean the end of farm programs.

“I believe that you should strictly enforce a rule of one payment limit per individual,” he told the commissioners. “The public has always been sold the idea that these payments are going to family farms. When you get away from that, you undermine the support for these programs.”

Johnson, a corn and soybean farmer from Bismarck, said there was ample evidence that farm program payments are capitalized into land values and cash rents, making it more difficult for young people to enter farming.

“Its’ clear that larger farms have an advantage to bid up farmland values because of the significant income they receive above operational and family living needs,” he noted. “That’s true in North Dakota, and I suspect it’s true elsewhere.”

He also said he believed farmer incomes should not be higher than the median household income in their area.

That comment drew a response from National Corn Growers Association President Tim Hume, who testified along with a number of other producers, cotton marketers and farm managers.

“The average family doesn’t have hundreds of thousands of dollars invested in a business or work 80 to 100 hours a week to keep their farm running,” said Hume. “Quite frankly, I’m not content with spending what managerial talent I have trying to earn an average income.”


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