Potential Major Changes in Coming Senate Farm Bill Draft

April 19, 2012 03:56 PM

via a special arrangement with Informa Economics, Inc.

Mid South and Delta states, crop insurance could be losers; soybeans, corn and wheat winners

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

Subject to substantial change before the Senate Ag Committee officially releases its draft version of the farm bill for markup next week, sources familiar with ongoing discussions signal significant changes from the farm bill draft that surfaced last fall as part of the failed Super Committee process.

Unless key decisions change, cotton producers reportedly may no longer have their proposed STAX program (Stacked Income Protection Plan). In fact, some contacts signal a way may still be found to provide a STAX program in the final draft language.

There apparently would be no target/reference prices.

And in a key change, producers may reportedly be given an option to either base the revenue trigger for a new revenue assurance program (called Ag Risk Coverage or ARC last fall) with on-farm revenue, or on an area basis (for example, county-level). Another key potential change: if producers choose the on-farm revenue trigger, any payments reportedly would be based on a band of 75 to 85 percent of planted acres, including prevent plantings, but not to exceed base acres. If producers choose an area-price trigger, the percentage calculation reportedly could jump to as high as 90 percent and as low as 80 percent. One source said, "I do not think the low end will be 75 percent, nor the high end of 90 percent. Under the ARC proposal last fall, the percentage for producers who chose the revenue assurance option would have had any payments made on 60 percent of the acreage calculation, a lower percentage for all ARC participants to help pay the $8 billion over ten years in additional budget costs of going to an on-farm revenue trigger pushed aggressively by Sens. Kent Conrad (D-N.D.) and Max Baucus (D-Mont.).

Sources stressed that the above details and information to follow are subject to change, especially as disgruntled lawmakers and some farm groups vent their opposition, versus those lawmakers, namely from the Midwest, Oklahoma and Kansas, and northern tier states and perhaps others states like California support the package. 

Meanwhile, some lawmakers and others have also commented on a letter sent to the Senate Ag Committee on Thursday which detailed eight farm groups' "common views" on several key issues (see link for article and letter).

One source who disagreed with some of the letter's viewpoints noted the following: "There is always this slight curtsy to crop insurance just before policy is embraced that threatens the future of crop insurance. Read the San Francisco paper this morning (link). The media, the public, and even some lawmakers cannot distinguish between revenue and crop insurance. Critics determined to kill crop insurance and farm policy are seizing on the confusion."

A contact said, "Why doesn't anyone ask USDA for a professional economic assessment of the planting distortion claim [in the farm groups' letter] for both target prices and revenue? Could it be that they already know the answer and it does not support their claim? The pure solution is pay on base acres even if updated but that is something that would pinch some of their own feet, so don't expect that solution any time soon."

A veteran farm policy observer noted that, "It is bizarre how the letter states that they oppose fixed price supports but then it endorses the marketing loan. The marketing loan is certainly justifiable, but the groups' inconsistency on support for crop insurance, their inconsistency on planting distortion, and this last inconsistency suggest something's rotten in Denmark."

Bottom line: If the coming Senate farm bill draft is anywhere near that detailed previously, there will be time for these issues and more to be discussed in full on the Senate floor. And based on talks with some lawmakers and others, some of them will have a field day in opposing what they believe to be an inequitable approach to farm policy.

A veteran farm bill contact said, "You should take the first draft of any mark with a grain of salt because there are usually behind-the-scenes negotiations already occurring that will change, sometimes substantially, a final mark. That doesn’t occur by accident."


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






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