New Farm Bill Safety Net Offers Come from House, Then Senate

December 13, 2012 01:01 AM
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Major differences remain, with Senate proposal continuing to favor corn and soybeans

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

Despite new farm bill safety net proposals, significant differences remain over how to blend revenue assurance and target/reference price safety nets.

Both sides accuse the other of not going far enough in compromise, sounding a lot like what is occurring in the fiscal cliff debate.

The key remains: Farm bill issues will accelerate once farm-state lawmakers know how much they need to cut over ten years, and how long they will have to write the new farm bill language. The level of nutrition spending cuts will be determined by President Obama and congressional leaders.

What is clear is that the Senate's Ag Risk Coverage proposal is a money hog, with budget assumptions showing most of the spending going to that program as opposed to a target proposal which under the Senate counterproposal is simply a return to the counter-cyclical program (CCP), with increased target prices for only some commodities but not all -- designed to make sure the ARC is picked by the vast majority of corn and soybean growers.

Base vs planted acres. Also, Senate aides and lawmakers continue to insist that any target/CCP proposal be based on base acres and not planted, but they insist that ARC payouts be based on planted acres.

The House new farm bill safety net proposal appears to be a far more balanced approach. The House proposal is the House price loss coverage and the Senate revenue programs (area wide and on-farm options) except the revenue band is reduced from 89%-79% to 87%-77%. In this offer, the House adds the on-farm revenue of the Senate bill (it is not in the House bill) and increases the revenue band from 85%-75% to 87%-77%. Under this compromise, price loss coverage and revenue coverage spend a nearly identical amount of the baseline. But the Senate counteroffer reportedly noted that a split of $13 billion between price and revenue programs is inequitable and does not work because of the interaction with Supplemental Coverage Option (SCO).

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


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