Southwest farmers may be caught in a “Catch-22-like” situation that could cost them thousands of dollars if they receive a supplemental AMTA payment later this year.
Congress' FY 2002 budget resolution includes $5.5 billion for supplemental AMTA payments in the 2001 fiscal year. Presumably, those would be made at 1999 rates, which are significantly higher than for 2001.
Therein lies the rub: Many farmers have picked up additional acres through attrition, acquisitions or expansions. Other producers and landlords may have re-allocated payment acres among various entities based on the lower 2001 payment rates.
But, unless Congress changes the rules, the 2001 supplemental Agricultural Market Transition Act payments will still be subject to the $40,000 per person payment limit, meaning that any amount over that figure would be left on the table.
When Congress authorized AMTA payments in the 1996 FAIR Act, it took a specific figure and divided it among the program commodities for payment over a seven-year period. More money was put in the early years because the law was designed to transition the government out of agriculture.
Thus, the 2001 cotton payment rate (5.99 cents) is 24 percent lower than the 1999 rate (7.88 cents); for rice, the 2001 payment (2.10 cents) is 25.5 percent lower than 1999's (2.82 cents).
“Normally, producers who picked up additional acreage might have elected to create new payment entities, but the reduced payment rates did not dictate or require such action because the additional acreage could be absorbed under the existing payment limits of the particular payment entity,” says attorney Mike Cone of Jonesboro, Ark.
“However, this decision was based on the applicable 2001 payment rates. If the 2001 supplemental payments are based on the higher 1999 payment rates, then substantial funds will not be paid to the producers because of the $40,000 payment limitation.”
Cone says the situation may be “simply an oversight, but the potential impact is critical given the state of our farm economy.”
The House Agriculture Committee was scheduled to mark up emergency assistance legislation on June 14. Cone says it would be simple for the committee to increase the payment limitation for the 2001 supplemental AMTA payment only.
Several farm organizations, including the National Cotton Council, are attempting to persuade Congress to eliminate or at least increase the payment limit. But, recent changes in the political landscape may have raised the bar on such legislation.
Iowa Sen. Tom Harkin, who became Agriculture Committee chairman after the Senate changed hands on June 6, seemed to be slamming AMTA payments in an interview: “These payments are not based on anything other than what farmers had 20 years go, and most of it goes to the bigger farmer who may not need all that much help.”
His staff reportedly said the senator wants the payment system reviewed but may not try to change it.
The former committee chairman, Indiana's Richard Lugar, was quoted as saying the Senate needs to move quickly to pass emergency legislation by Oct. 1. He called AMTA payments a “proven, efficient and timely way of getting money into the pockets of producers so obligations can be met.”