How SURE Supporters Want to Change the Program Via New Farm Bill

September 30, 2011 04:12 AM
 

via a special arrangement with Informa Economics, Inc.

Some draft details of a new proposed SURE package, dubbed Crop Revenue Guarantee Program

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


The following are what sources detail are the latest provisions of a plan being pushed by Senate Budget Chairman Kent Conrad (D-N.D.) regarding the controversial Supplemental Revenue Assistance (SURE) program, which would get a proposed new name: Crop Revenue Guarantee Program.


Eligible Crops:

Wheat, Feed Grains (corn, grain sorghum, barley, oats), Rice, Soybeans, Upland Cotton, Minor Oilseeds, Peanuts, Pulse Crops (dry peas, lentils, chickpeas).

Revenue Guarantee:

For all acreage of eligible crops in all counties owned or operated by a producer and/or landlord, the sum of the product(s) of:

(90) percent; [provides for a 10% revenue loss before program becomes applicable]

Actual planted and prevented planted eligible crop acres for each crop, except as described below;

The higher of the Actual Production History yield as calculated for federal crop insurance, or the most recent 5-year Olympic Average of Actual Production History yields as calculated for federal crop insurance, for each crop;

The commodity price guarantee which shall be equal to the higher of: the 2008 Farm Bill target price for the 2010 crop production year for each commodity or the immediately preceding 5-year Olympic average of National Average Price received by producers by commodity class (e.g. 3 class of rice, 6 classes of wheat) as determined by the Secretary. Except, for each crop, the commodity price guarantee cannot exceed the forecasted full economic cost of production for the crop year as determined by the Secretary (e.g. utilize ERS forecasted cost of production estimates)

Total eligible acres cannot exceed 100 percent of the sum of all eligible historical program crop base acres as determined for the Counter-Cyclical Payment program. If total planted and prevented planted acres exceed total program crop base acres, payment acreage for each crop will be reduced by a percentage proportionate to the total of each individual crop's acreage compared to the total planted and prevented planted acreage. [whole farm base acres and would allow full planting flexibility – no CRGP payments for ineligible crops]

Actual Production Revenue:

For all acreage of eligible crops in all counties owned or operated by a producer and/or landlord, the sum of the product(s) of:

Total harvested acres (if a farm has total harvested and prevented planted acres of eligible crops that exceed the total base acres for the farm, acreage will be adjusted proportionately to not exceed total base acres for each farm);

The actual yield for each crop;

The National average price received by producers for each commodity as determined by the Secretary for the first four months of the marketing year during which the crop would normally be expected to be harvested;

except the National Average Price cannot be less than the commodity marketing loan rate for each commodity in each county.

The National Average Price shall be adjusted for average quality loss discounts as determined by the State FSA committee (SURE - Section 12033 (b), (4), (B)).

Plus other revenue equal to, federal crop insurance indemnities received for the eligible crops (net of the producer paid premium) and the total direct payments received for all eligible crops.

Other Considerations:

  • Any subsequent disaster payments a producer might receive for an eligible crop as a result of Congressional or Administrative action shall be reduced by the amount of Crop Revenue Guarantee Payments received by a producer for losses suffered during the year such additional payments are attributed as determined by the Secretary.

  • Exception: Any crop subsequently planted on land determined for federal crop insurance purposes to be prevented plant acreage shall not be considered in calculating either the Guaranteed Revenue or Actual Production Revenue for a farm ("Ghost Acres") except in those instances where the farm has a history of "double-cropping" and is located in an area where double cropping is an acceptable farming practice for federal crop insurance purposes.

Payments:

Payments shall be made to an eligible program participant – producer, landlord or both, equal to the lesser of:

(60 percent) times the difference, between the revenue guarantee and the sum of: the actual production revenue plus other revenue as described above, or;

(60 percent) times the revenue guarantee less 83.3% of the revenue guarantee. (Effectively creates a maximum shallow loss payment of 9% of the revenue guarantee – payment range in this example between 90% of expected revenue and 75% of expected revenue)

Crop Insurance Options:

  1. Require purchase of a minimum of Catastrophic level of coverage (NAP if applicable)

Limitation on Payments:

Total amount of Crop Revenue Guarantee Program payments an eligible producer and/or landlord may receive is limited to ($100,000). Also subject to 2008 Farm Bill AGI limitations and conservation compliance.

Budget Offset Assumptions:

Elimination of current counter-cyclical program, SURE program for crops seligible for the Crop Revenue Guarantee Program, the Average Crop Revenue Election program, and the Direct Payment Program.

Other Program Considerations:

Extend the Livestock Indemnity Program. Reduce payment rate from 75 percent of market value to (60 percent).

Extend the Livestock Forage Disaster Program. Reduce payment rate from 50 percent of the monthly feed cost to (40 percent).

Extend the Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish Program. Reduce the authorized funding from $50 million per year to ($30 million) per year.

Extend the Tree Assistance Program. Reduce the payment rate from 70 percent of the cost of replanting (60 percent). Reduce the reimbursement rate for pruning, removal and other costs from 50 percent to (40 percent).

Establish an "ELAP" type of program for specialty crops.


Comments: Of note, The American Farm Bureau Federation on Thursday via its new farm bill recommendations said the SURE program should be allowed to lapse "and that no further support for that program or a modified SURE program should be pursued." Sens. Kent Conrad (D-N.D.) and Max Baucus (D-Mont.) will continue to support the program, trying to make the program less complex (a goal many say will not likely be met), and more defensible (unlikely with the cost of the program coming in at least $8 billion over five years; $16 billion over a more typical 10-year baseline). President Obama recently included $8 billion to resurrect the program in his recent "debt reduction" proposal. SURE has so many negatives (complex, payouts come way too late) that Conrad has even renamed the program in his coming proposal to the Crop Revenue Guarantee Program. But with Sen. Baucus part of the Super Committee charged with coming up with at least $1.2 trillion in budget cuts and/or revenue, and with President Obama and Sen. Conrad pushing hard for the program, a revamped SURE cannot be counted out.


 

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


 


 

 

 

 

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