The 800-pound gorilla has spoken. The American Farm Bureau Federation, the nation’s largest farm organization, is asking Congress to write a new, fiscally responsible farm bill that “works for all farmers.”
For months, Farm Bureau leaders have said they preferred an extension of the 2002 farm bill. But with other farm organizations offering commodity-specific proposals without regard to “their impact on the whole of American agriculture,” the AFBF said it had decided to unveil its vision for improving the new farm law.
“Farm Bureau members produce everything from apples to wheat,” AFBF President Bob Stallman told reporters attending a press briefing. “Our proposal reflects that agricultural diversity and balances the needs of all farmers and ranchers.”
Stallman said Congress – and more specifically the House and Senate Agriculture Committees – will be faced with a serious balancing act when they begin writing the 2007 farm bill next (this) month.
“America’s food supply is secure thanks to our productive farmers and ranchers and the support they receive from the farm bill,” he said. “The Farm Bureau proposal would continue that support in a balanced way, within the budget constraints we face and consistent with our international trade commitments.”
Budget constraints will make writing the new law even more difficult, he noted, because the Congressional Budget Office estimate of the baseline funding available for agriculture over the next six years is nearly $57 billion less than what Congress committed to spend in the 2002 farm bill ($42.4 billion vs. $98.9 billion).
The Farm Bureau proposal addresses the budget issue by including funding offsets for all proposed increases within a section of the bill, Stallman noted.
The organization recommends maintaining the baseline funding for the farm bill’s commodity title of $7 billion per year and conservation title of $4.4 billion per year, for example, rather than transferring funding from one title to the other.
“These baselines already incorporate sizable cuts from the 2002 farm bill level,” said Stallman. “It is anticipated farm programs will cost $21 billion less over the six-year life of the 2002 farm bill than the projected cost when the bill became law.”
Commodity Credit Corp. outlays decreased from a record high of $32 billion in 2000 to $20 billion in 2006 and are trending toward $13 billion in 2007, he said. Using the March 2007 CBO baseline, the farm program components cost $16 billion less than projected over the first five years of the bill.
Farm Bureau leaders said they will also support a revenue-based counter-cyclical safety net program to protect against both low prices and low yields and provide payments to farmers “when they need them most.”
In that recommendation, the AFBF appeared to be aligning itself with the National Corn Growers Association, which came out in support of a revenue-based counter-cyclical payment program when it unveiled its farm bill proposals last month.
The Corn Growers and other farm groups have said the current counter-cyclical program provides payments to grain farmers when they don’t need them without helping growers when they do. The NCGA concept involves county-based revenue averages, while the Farm Bureau proposal would be state-based.
“Counter-cyclical payments were adopted in the 2002 farm bill as a way of providing certainty and stability to ad hoc emergency market loss payments enacted after three years of low market prices,” Farm Bureau said. “There is a continuing need for an effective system to help agricultural producers survive the vagaries of markets and weather.”
Under the current law, CCP payments are made when the season average farm price of a program crop is below the effective target price. Growers receive payments on 85 percent of their base acres without regard to what or how much of any crop they grow on the base.
Counter-cyclical payments are likely to provide even less support to farmers if the program remains unchanged in the next farm bill, according to AFBF. CBO projects Congress will only have $1 billion annually for the program from 2008-2013 compared to a projected $4.5 billion when it passed the current law and the $2.5 billion per year spent in the first five years.
AFBF cites two reasons for the lower figure: 1) CBO projects reduced payments due to much stronger commodity prices and 2) the decline in effective support caused by the 2002 farm bill’s freezing of target prices and loan rates and rising production costs.
“Continuation of the 2002 bill’s frozen target price and loan rates through 2013 will reduce effective support another 10 to 15 percent based on USDA’s projected cost increases,” Farm Bureau said.
“To put this in perspective, increasing the 2008-13 target prices and loan rates to put them back where they were at the start of the 2002 period relative to cost increases would add $3 billion in both counter-cyclical payments and marketing loan payments to the CBO baseline.”
AFBF figures show that the target prices used to calculate CCPs covered an average of 83 percent of total production costs in the 1997-2001 period preceding the 2002 farm bill but only 77 percent of total production costs for the 2002-2007 period. Using USDA’s projected cost increases through 2013, target prices will only cover about 70 percent of farmers’ total production expenses.
Besides the new revenue counter-cyclical payment program, Farm Bureau is recommending Congress enact a standing catastrophic assistance program that would be integrated with a revamped crop insurance program. Crop insurance coverage would be reduced from the current coverage level because the new standing catastrophic assistance program would cover 50 percent of losses.
Farm Bureau also supports eliminating the fruit and vegetable planting prohibition that was enacted in previous farm bills to reduce potential competition for fruit and vegetable growers who do not receive price support payments. Congress is being asked to provide an additional $250 million a year in conservation program funding for those producers.
It also supports retention of non-environmentally sensitive land in the Conservation Reserve Program and allowing the production of cellulosic energy crops, such as switchgrass, on that land.
Farm Bureau also remains on record as opposing any changes in the current farm bill’s payment limitations or income means testing, such as USDA’s proposal to reduce the adjusted gross income limit for farm payment recipients from $2.5 million to $200,000.
On the international front, Farm Bureau believes the 2007 farm bill “should not be written to comply with what someone assumes will be the outcome” of the Doha Round of World Trade Organization negotiations.
“We are not far enough along in the negotiations to anticipate a likely WTO outcome and to make fundamental changes to the farm bill,” said Stallman. “Farmers and ranchers are willing to lower farm program payments via the WTO negotiations if – and only if – we can secure increased opportunities to sell their products overseas.”