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Soybeans given program status

The House Agriculture Committee released a “Draft Farm Bill Concept Paper” that would provide farmers with counter-cyclical support payments in times of low commodity prices and make soybeans a program crop with their own AMTA payment and target price.

The paper is expected to provide a blueprint for the new farm bill Chairman Larry Combest, R-Texas, has promised the committee will write before Congress' scheduled Aug. 3 recess. Combest and Rep. Charles Stenholm, D-Texas, the committee's ranking minority member, released the paper on July 12.

“The commitment from House Agriculture Committee members focuses first on producers' goals for flexible and predictable farm policy,” Combest said in a statement released with the concept paper.

“Farmer and commodity groups have detailed the policy needs, Congress has again proven support for rural America in this budget, and the House Agriculture Committee can now move to complete the re-write of farm policy this summer,” he said, referring to nearly a year of hearings and discussions on a new farm bill.

The paper retains the marketing loan and Agricultural Market Transition Act (AMTA) payments of the 1996 farm bill (Freedom to Farm), but it also creates a third form of farm program payments — counter-cyclical payments that would be based on the old target price formula of earlier farm legislation.

The plan would use the same target prices levels of the 1991 farm bill — 72.9 cents per pound for cotton, for example. Loan rates would remain at current levels except for soybeans, which would be reduced from $5.26 to $4.92 per bushel.

But, soybeans would also be brought in as a program crop with a newly created AMTA payment of 34 cents and a target price of $5.76 per bushel. The target price for minor oilseeds such as sunflowers would be set at 10.8 cents per pound, according to the paper.

Counter-cyclical payments would be derived by subtracting the higher of the national 12-month season average price received by producers or the national average CCC loan rate plus the AMTA payment or “fixed decoupled payment rate” from the target price.

For cotton, that would mean a 2002 counter-cyclical payment of 15.44 cents per pound (that is, the 72.9-cent target price minus the 51.92-cent rate plus the 5.54-cent AMTA payment for 2002) if the House and Senate can agree on the legislation and President Bush signs it in time for the 2002 crop year. (See table for payments for other commodities.)

Agriculture Secretary Ann M. Veneman issued a statement commending Combest, Stenholm and other House Agriculture Committee members for their work in developing the proposal, but stopped short of endorsing it.

She said USDA currently is developing principles related to future food and agriculture policy that meet the objectives outlined by the president. Those include insuring a strong income safety net, pursuing a more market-oriented U.S. farm policy and opening up new trade opportunities abroad.

“This is an important beginning and a serious response to the needs of our nation, its farmers and ranchers and citizens,” she said. “We expect to release our principles in the near future and look forward to working together with Chairman Combest and the committee, as well as the Senate Agriculture Committee, as we address these important issues.”

The concept paper said producers may retain their current program crop base or update their acreage base by using the average acres planted to an AMTA contract crop or oilseed for the crop years 1998 through 2001. Payment acres for both the AMTA and counter-cyclical programs would remain at 85 percent of base acres.

Farmers would continue to use their current AMTA payment yields. For oilseeds and farms without current AMTA payments yields, the secretary of agriculture would be directed to develop payment yields that are comparable to current AMTA yields in the area.

Payment limits would be maintained at $40,000 per person for AMTA payments and $75,000 per person for loan deficiency payments and marketing loan gains for all crops. Farmers would receive a new limit of $75,000 per person on counter-cyclical payments. Generic commodity certificates would still be available.

The plan also includes the planting flexibility that most farm organizations said their members wanted to keep from the 1996 farm bill. Farmers could continue to plant most crops — except for fruits and vegetables — and remain eligible for farm program benefits.

All told, the committee plan calls for spending $48.886 billion over the next 10 years for the program crops. For other crops, the committee paper would:

  • Eliminate the marketing assessment on sugar. The result would be a cost of $440 million over 10 years.
  • Plan to spend $3.4 billion over 10 years to allow for development of a peanut program reform “before reporting of a farm bill.”
  • Extend the milk price support program at $9.90 per hundredweight. Cost $773 million over 10 years.
  • Reinstate a nonrecourse loan program for wool and mohair at a projected cost of $164 million over 10 years.
Proposed loan rates, fixed payment rates and target prices
Loan rates Fixed rates Target prices
Crop $/unit 2001 Proposed 2002 AMTA Proposed 1995 Proposed
Wheat bu. 2.58 2.58 0.46 0.46 4.00 4.00
Corn bu. 1.89 1.89 0.26 0.26 2.75 2.75
Sorghum bu. 1.71 1.89 0.31 0.31 2.61 2.61
Barley bu. 1.65 1.65 0.19 0.19 2.36 2.36
Oats bu. 1.21 1.21 0.02 0.02 1.45 1.45
Upland cotton lb. 0.5192 0.5192 0.554 0.554 0.729 0.729
Rice cwt 6.50 6.50 2.04 2.04 10.71 10.71
Soybeans bu. 5.26 4.92 --- 0.34 --- 5.76
Minor oilseeds lb. 0.093 0.087 --- 0.006 --- 0.1018

Although fruit and vegetable producer organizations have been calling for direct payments for their crops, the concept paper only gives the agriculture secretary authority to decide to combat outbreaks of plant and animal diseases with emergency funds. It also retains planting restrictions on fruits and vegetables on base acres.

The concept paper indicates the committee would make a number of changes in conservation programs, providing $15.05 billion over 10 years — a 75 percent increase over baseline spending.

It would also allocate $900 million over 10 years for the Market Access Program, which provides funding for overseas promotion of U.S. agricultural commodities. It earmarks $100 million to increase transportation funds to allow for additional food aid

Total spending for farm programs in the draft paper would be $73.498 billion over the next 10 years — all but $2 million of the $73.5 billion in the budget resolution for fiscal years 2002 through 2011 passed by the House last spring.

Most commodity groups said they were pleased with the concept paper.

“The House Committee has presented a bipartisan proposal on new farm policy that enhances support for producers, improves export assistance programs, strengthens and enhances important conservation programs and is sensitive to budget concerns, said James Echols, National Cotton Council chairman.

“This is a significant accomplishment. Chairman Combest and Mr. Stenholm have demonstrated strong leadership by presenting this concept for response. We applaud this bipartisan effort to complete a new farm bill in a timely fashion. In many respects, this concept paper follows a blueprint outlined by the Council in testimony before the House Agriculture Committee, including the establishment of a new counter cyclical program for cotton and other commodities.”

But, National Farmers Union President Leland Swenson said the plan needs “significant modifications.”

“We are pleased that most members of the House Agriculture Committee, including Chairman Combest and ranking member Stenholm, see the urgency of drafting a new farm law,” he said. “We are disappointed, though, that this current proposal does not raise market prices, nor does it provide greater equity among program crops or reduce the production distortions of Freedom to Farm. With a few exceptions, their proposal is much like the current policy that has not served our nation's family farmers and ranchers.”


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