Farm Bill Cuts

January 10, 2012 06:19 PM

Plan might have to go back to drawing board

At press time, leaders of the House and Senate Ag Com-mittees had developed a farm bill that trims more than $23 billion from agriculture spending. The draft, which cuts $15 billion from the commodity title, $6 billion from the conservation title and $4 billion from the nutrition title ($2 billion has already been added back for livestock disaster and other efforts), will more than likely serve as a starting point, instead of moving full steam ahead toward legislation.

One key of the plan: Direct payments would be eliminated beginning with 2013 crops. Farm program opponents have targeted the $5 billion that flows to producers regardless of price or production in an effort to find funding for a better revenue assurance safety net and higher target prices.

Also gone would be the Supple-mental Revenue Assistance Payments (SURE) and Average Crop Revenue Election (ACRE) programs. As a replacement, the Ag Risk Coverage (ARC) program would supplement the current lineup of crop insur-ance programs.

The new target/reference prices used to establish payments would be set at higher levels than for current programs. Corn would be set at $3.64 per bushel versus the current $2.63, wheat at $5.50 (versus $4.17); soybeans at $8.31 (versus $6); and rice at $13.98 (versus $10.50).

Joe Outlaw of Texas A&M compared the average cost of production with the proposed target prices and found that corn and soybeans are the only commodities set above their average cost of production.

Release the Language. Senate Ag Committee ranking member Pat Roberts (R-Kan.) and House Ag Committee ranking member Collin Peterson (D-Minn.) called for the language of the package to be released. Peterson says it’s important to see the specific details of the various programs, particularly the gross margin, supply-management dairy program, so it’s apparent where the changes have been proposed.

Senate Ag Committee Chair-woman Debbie Stabenow (D-Mich.) says she hopes the package will be the starting point for developing a comprehensive farm bill that will move to a more regular process, with hearings beginning in February.

While Peterson is confident the House Ag panel will be able to produce a solid farm bill, all bets are off once it leaves his committee. "When it gets to the floor, who knows what will happen," he laments, noting that several votes in Congress this past year came out different than lawmakers expected.

He insists, though, that for the bill to steer clear of the 2012 election, it must be done by May.


Cotton Cropped Out

During farm bill debates this winter, cotton growers joined together to support what is dubbed STAX: the Stacked Income Protection Program. The effort would focus on a revenue-based crop insurance program consistent with crop insurance delivery and would complement existing crop insurance programs. STAX would address shallow revenue losses on an area-wide basis, with producer premiums offset to the maximum extent possible using available cotton program spending authority.

The program would basically remove cotton from the commodity title and put it under the crop insurance title of the farm bill. A switch to STAX would also mean no payment limit, which could be a double-edged sword in a growing season that results in large payouts to cotton producers.

Senate Ag Committee ranking member Pat Roberts (R-Kan.) commended the cotton industry at the Farm Journal Forum in early December. "They knew they had a problem," Roberts said, "and they came up with an innovative program."

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