Farm Bill Commodity Title Naysayers to Focus on Cotton, Northern Plains Provisions, Target Price Levels

November 22, 2011 03:05 AM
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via a special arrangement with Informa Economics, Inc.

No pay cap, more coverage for cotton industry-pushed STAX program already under attack

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Although the aborted farm bill written behind closed door failed along with the Super Committee's botched attempt to lead Congress toward debt reduction, some features of the commodity title provisions pushed by the Ag panel's two leaders and their staffs are already coming under review – and criticism.

Cotton is one example.

The cotton industry pushed its own revenue assurance program, but made sure to label it a crop insurance provision, most likely to escape any payment limitation for payments made under the program – the Stacked Income Protection Plan (STAX), based on recommendations made by the National Cotton Council (NCC).

The commodity title provisions reportedly included by Senate Ag Chairwoman Debbie Stabenow (D-Mich.) and Frank Lucas (R-Okla.) in the last package available set payment limits of $105,000 for the new safety net programs – but not apparently cotton because even though the STAX program would be heavily subsidized, growers would be required to cover 20 percent of the premium costs – this private contribution, cotton supporters note, exempts them from the $105,000 payment limitation on the revenue program. But another cotton win from the Stabenow/Lucas plan: the cotton program would have covered losses of 10 percent to 30 percent — a wider range than the revenue program for corn, soybeans and wheat.

Target price increases, some significant, are another example of focus ahead. Some commodity group lobbyists, including soybeans, are already openly fretting that some target price levels suggested in the recent farm bill language could skew acres toward some crops and away from others. Great Plains Democrats pointedly noted their opposition to what they called the high target price provided for rice (initially $14/cwt then lowered to $13.98). Those same senators went quiet when they got want they wanted regarding how revenue assurance payments would be made. While rice garnered a big target price increase, corn and soybeans garnered even higher percentage levels from existing target prices. And, based on some information available, the rice farm bill baseline was reduced more than corn and soybeans on a percentage basis, and as a share of total commodity funding.

Great and costly changes for Great Plains Democrats. The changes demanded by Great Plains Democrats forced billions of dollars in budget offsets that Senate Ag panel leaders had to find to help pay for provisions aggressively pushed by Sens. Kent Conrad (D-N.D.) and Max Baucus (D-Mont.), and even a staff aide of Sen. Conrad – Jim Miller.

It will be interesting to see if the Ag Committee leaders officially release what they sent to at least the Democratic co-chair of the Super Committee, including the Congressional Budget Office (CBO) scoring. Sources signal the commodity title savings was scored at $16.7 billion, a 27 percent reduction. While direct payments and the prior ACRE program were eliminated under the leadership plan, a new revenue protection plan (the Ag Risk Coverage/ARC) sucked up nearly $16.5 billion, and covered so-called shallow losses outside of the crop insurance typically bought by growers – losses from 13 percent to 25 percent would be covered totally by taxpayers' expense, with payments limited to 60 percent of planted (not base) acres.

The 60 percent of planted acres that ARC payments would be based on was lowered from a higher previous figure of 85 percent because CBO notified the Ag panel leaders and staff that the proposed revenue protection plans were over budget. And the need to lower the plant acreage percentage formula was also to pay for Great Plains senators winning a very costly concession from Stabenow and Lucas that would measure the losses against an individual farm, not a county or crop reporting district level. Also, the leaders included prevented planting acres in the shallow loss program, another change sought by Great Plains Democrats. Thus, Stabenow and Lucas made some major adjustments – much to the chagrin of corn and soybean producers. And, the yield plug for the revenue plan — used in cases of disastrous crop years — would have been reduced from 70 percent to 65 percent of the transitional yield.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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