The National Corn Growers Association on Monday released a commodity title proposal for the 2012 Farm Bill called the Agricultural Disaster Assistance Program.
"Our delegates in March charged us with investigating transitioning direct payments into a better form risk management than what they are," said Anthony Bush, chairman of NCGA's Public Policy Action Team. "We started really thinking about what kind of a safety net we were looking for and thinking about the current budget situation and what could we do to be part of the solution instead of the problem."
Bush says that is what led the group to ADAP. It was designed with the help of University of Illinois Agricultural Economist Gary Schnitkey and would replace the current direct payment program.
"This program is designed to work within about 70% of what the direct payments cost," Bush said. "So we are in essence offering 30%, give or take, in budget reduction."
ADAP builds on what the Average Crop Revenue Election program started in the 2008 Farm Bill, a revenue-based safety net that triggers when actual on-farm losses occur.
"That's where we started at and this program is designed to be more simple," Bush said. "We went through numerous studies and surveys with our membership as to why ACRE sign-up in the last Farm Bill was very small. Overwhelmingly we heard it was too complicated, so we set out to make this program a lot more simple and use-friendly, and we believe we have done that."
The ADAP program would be crop specific and use harvest prices exactly the same way that current crop insurance does rather than the season average price that ACRE uses now. Bush says that is designed to make the payments sooner rather than later and should actually be able to be paid in the current crop year when the loss was experienced. Another change is that guarantee and payment would be based on crop reporting districts rather than the state guarantee that the current ACRE program is.
"It gets it closer to the on-farm level," Bush said. "There are roughly nine crop reporting districts in each state. It's not perfect, we looked at getting down to the county level, however NASS is not as confident of their data at the county level as they are at the crop reporting district. So, that was about as low as we could go or as close to the farm as we could actually get."
Under ADAP, the guarantee would be an Olympic average of five years of revenue rather than ACRES five year Olympic average times rolling two-year averages of season price. The guarantee would be 95% of the average compared to ACRE's 90% and the maximum payment would be 10% of the guarantee rather than the 25% under ACRE.
"One thing we heard from Capitol Hill was that this could possibly overlap with crop insurance, individual crop insurance coverage," Bush said. "By dropping to that 10% level rather than 25% that eliminates that overlap."
Other changes under ADAP include payments based on actual planted acres, elimination of direct payments, and restoration of marketing loan rates to current levels and not require a 30% reduction on what is eligible to take a marketing loan on.
"We really studied this thoroughly and feel this is something we can defend to the taxpayers," Bush said. "This is something we hope we never see a payment on; you're actually going to have to experience an on-farm loss to receive a payment under this program."