First Cotton, Now Dairy and Soybean Groups Noting Farm Program Safety Net Problems

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USDA a few months ago spent $300 million to help the struggling cotton industry, largely because USDA Secretary Tom Vilsack and his lawyers did not agree with farm-state lawmakers who said there was authority via the 2014 Farm Bill to authorize cottonseed be eligible for safety net programs. Now dairy and soybean groups are calling for changes.

Emergency financial assistance for dairy urged. A bipartisan group of more than 60 lawmakers is asking USDA to provide emergency financial assistance to the dairy industry amid depressed market prices, which they allege are mainly the result of oversupply in the US, the European Union and countries in other parts of the world.

The lawmakers argue that Vilsack should use his authority under the Commodity Credit Corporation (CCC) and look to past precedent to decide what action to take.

The letter included dairy-state lawmakers like Sens. Patrick Leahy (D-Vt.) and Bob Casey (D-Pa.) and Reps. Collin Peterson (D-Minn.) and Chris Collins (R-N.Y.).

The dairy policy culprit. The lawmakers noted producers are still adjusting to the new margin insurance program in the 2014 farm bill. Producers and dairy industry officials have separately said it just hasn’t provided enough protection during the supply glut.

“We encourage USDA to take any and all actions available in order to make an immediate market injection and offer financial assistance that will directly support U.S. dairy farmers equally, while being cautious to not stimulate overproduction further,” the lawmakers wrote.

In the past, USDA has addressed economic setbacks in the dairy industry by purchasing surpluses, for example; but the secretary has multiple options to review before deciding what approach will have the best results for producers, Leahy spokesman David Carle is quoted as saying.

A USDA spokesperson said the department is focused on implementing the available safety net enacted in the 2014 farm bill, and “will do everything we can within our authorities to make sure our dairy producers have a strong, effective safety net, in addition to expanded market opportunities domestically and abroad.”

Now for the soybean issue. If current large disparities in subsidy payments to farmers in nearby counties as a result of a new program in the 2014 farm bill (Ag Risk Coverage/ARC program), it will be subject to criticism when debate on the next farm bill begins in 2017, the American Soybean Association (ASA) said Thursday. The group wants to avoid that possibility, and has had meetings with officials from the USDA Farm Service Agency (FSA), which administers the commodity support program.

But FSA has decided not to change its current system for determining payments out of concern it could create winners and losers or increase the program’s cost, ASA said in a blog post – link for details.

Background. ASA said the problem is county yield data that FSA uses to calculate payments under ARC, which the vast majority of corn and soybean producers signed up for. The agency uses National Agricultural Statistics Service (NASS) yields based on producer surveys if at least 30 are returned or those submitted represent at least 25 percent of a county’s harvested acreage for a crop. When that is not the case, the agency uses yield data from the Risk Management Agency (RMA), which are typically higher. ASA said they have proposed ways to ensure yield data, and therefore payments are more consistent between counties. But no changes, yet.

ASA leaders respond. “Since FSA has declined to change its current approach, ASA leaders decided at the just-completed July Board meeting to encourage farmers to submit NASS surveys in order to reduce the number of county yield discrepancies and make ARC-CO more defensible in advance of debate on the next farm bill,” the group said.

Meanwhile, Senator John Hoeven (R-N.D.) amended the FY 2017 Agriculture Appropriations bill to establish a pilot program for 2016 crops under which FSA would designate counties for which NASS yields in adjacent or comparable counties would be used to mitigate differences that would otherwise exist. ASA said it will support adoption of the Hoeven amendment in conference later this year “if efforts to have FSA change its current policy are not successful.”

Comments: Well isn’t this interesting. The cotton, dairy and ARC glitches lead one to ask why there was not analysis before those programs were either proposed or during debate that would have likely found some of the glitches. Some dairy producers and lawmakers are already talking about the need for supply management, so that is yet another issue ahead. The person or people who came up with the dairy Margin Protection Program (MPP) obviously did not realize only around 50 percent of producers would even sign up for the program. Perhaps the dairy industry should use other economists the next time. And, actual participation analysis and potential safety net outcomes should be made. Duh.

Ditto for the ARC proponents who just may have been so enamored with the shallow-loss payment program that not enough analysis was undertaken. Again, those economists who proposed ARC should not be used the next time around. Perhaps they did not understand why county-based farm safety net programs were not used in the past... because they don’t work and are complex and full of inconsistencies and inequities.

Another interesting line in the ASA blog: “Since FSA has declined to change its current approach, ASA leaders decided at the just-completed July Board meeting to encourage farmers to submit NASS surveys in order to reduce the number of county yield discrepancies and make ARC-CO more defensible in advance of debate on the next farm bill,” the group said. Does that mean NASS yields vs RMA yields are signaling errant data? Hmmm.

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