Currently on their August break, lawmakers – particularly those in the House -- have been getting an earful from rural constituents about their inability to pass a new farm bill.

On August 22, the pressure on Congress was only ratcheted up with the formation of Farm Bill Now, a broad coalition of 39 farm, commodity, livestock, energy, and financial groups. Among those participating: the National Cotton Council, the USA Rice Federation, National Corn Growers Association, American Soybean Association, the American Farm Bureau Federation, and National Farmers Union.

“Calling the farm bill the ‘farm bill’ suggests its impact is limited only to farms and to the rural areas to which they are so closely tied,” said a statement released by the coalition. “It’s really a jobs bill. A food bill. A conservation bill. A research bill. An energy bill. A trade bill. In other words, it’s a bill that affects every American.”

For more on the coalition, see here.

And it is imperative that Congress get the farm bill recipe right. With an economy that remains in low gear, farm states are especially vulnerable to the intricacies of the legislation.

For just one example consider the impact of removing direct payments – a sure goner from whatever farm bill is eventually crafted – from the farm-reliant economy of Arkansas.

“For the state of Arkansas, it’s a loss of $240 million (in direct payments),” says Eric Wailes, an agricultural economist at the University of Arkansas. “That has impacts on employment, off-farm impacts and more. Our estimates of the impacts are conditioned by how much of the payment loss is reflected in reductions of household consumption expenditures and farm investments. If the entire amount is applied to reduced household consumption, job losses are as high as 2,023, lost wages of $71.6 million and value added to the state economy declines by $131.8 million. State and local taxes would be $15.4 million less.”

In recent months, Wailes and colleagues have crunched the numbers and studied the program proposals in the House and Senate farm bills. With Arkansas the leading rice-producing state in the nation, they have paid special attention to that crop.

Interviewed by Farm Press in late August, Wailes had the following comments:

On the House’s Price Loss Coverage (PLC) and Supplemental Coverage Option (SCO) compared to the Senate’s Agricultural Risk Coverage (ARC) program…

“The bottom line is that the PLC proposal is very important for rice producers. In terms of providing a safety net it’s not comparable with either RLC or ARC. The level of support given a market price downturn are so much better.”

For more, see page 2 here.  

“That said, these are the average payment estimates based on when you actually get a payment. Remember, these are probabilistic payments. They aren’t guaranteed like direct payments. (Some of the other analyses) don’t point out the probability of farmers actually receiving these payments.

Here (see slide 16) we have a side-by-side comparison of the (proposed programs) for a Stuttgart farm. With ARC, the Stuttgart farm would get an average support payment of $18 per acre – but only 40 percent of the time would the payment be greater than zero.

“On the other hand, with PLC, when a payment is made that farm, on average, would receive $89 per acre. However, it would only get a payment greater than zero for 77 percent of the time.

“The $89 per acre is the average over five years for the 500 iterations we ran for that farm.

“It’s critically important for farmers to understand (the chances of actually receiving a payment) so they aren’t deluded into thinking this is an equivalent substitute for direct payments. Based on some of the questions I’ve received, it seems some think, ‘My goodness, this is better than the direct payments.’

“No, it’s not better than direct payments, which were certain. With direct payments they received payments on 85 percent of their program acreage or 83.3 percent, depending on the year, with 100 percent probability. Those payments were a certainty regardless of the price level.

“With (PLC), one only gets a payment when the market price is below $14 (per hundredweight). Basically, what we found is that for 77 percent of the time the market price is less than $14 and there will be an estimated PLC payment.

“The guarantee for rice with ARC is $13.”

More on ARC here.