Keith Good Farm Policy: Southern Farmers Weigh In on Revenue Program
Four GOP members of the House Agriculture Committee (Chairman, Frank Lucas (Okla.), Randy Neugebauer (Tex.), Marlin Stutzman (Ind.), and Rick Crawford (Ark.)) held a Farm Bill field hearing on Friday at Arkansas State University in Jonesboro, Ark.
At the opening of the hearing, Chairman Lucas pointed out that, “Today, we’ll hear from a wide variety of producers from across the Southeast. I expect we’ll hear a different perspective than we got in the Northeast and Midwest.
“That’s why it’s so important that we offer a choice of policy options. The broad range of agricultural production makes our country strong, but it also creates challenges when we’re trying to write a single Farm Bill to support so many different regions and commodities.”
Chairman Lucas added that, “Now, I know that crop insurance-while a valuable tool for many producers-doesn’t work as well for producers down here.
“That’s why offering an array of programs is important and why we must work with the Risk Management Agency to improve crop insurance products for rice, peanuts and other crops that do not have higher buy-up levels.”
With the near certainty that direct payment subsidies will be eliminated, payments which Southern producers of cotton, rice and peanuts have historically relied upon to a greater degree than Midwestern corn and soybean farmers (related graphs here and here), Friday’s hearing provided lawmakers with perspective from the producers who perhaps face the greatest set of changes as the 2012 Farm Bill is drafted.
As farm policy mutates to policy variables that rely more on crop insurance, a program that historically has not been as comparatively functional or utilized in the South as it has in the Midwest, producers stressed that disparities in application should cause lawmakers to consider a range of options for producers as the next Farm Bill is drafted.
Recall that the Super Committee draft proposal submitted by the House and Senate Agriculture Committees last fall did not represent a “one size fits all” policy program for producers. A Des Moines Register article from November explained that, “The leaders of the Senate and House agriculture committees spent the last month drafting a farm bill in secret. The final details were never released but a draft summary that leaked last week confirmed that lawmakers were [considering] three separate programs for grain and cotton growers.
“Corn and soybean growers won inclusion of a revenue-guarantee program that they wanted. However, soybean growers in particular were unhappy that the bill also included a price-guarantee option that rice farmers were seeking. John Gordley, a lobbyist for the American Soybean Association, said the price guarantees were so high they would have encouraged farmers to grow crops such as rice and corn over soybeans, canola and sunflowers.”
And Reuters writer Charles Abbott reported back in November, in reference to the Ag Committee’s Super Committee work product that, “Three agricultural sources said that crops grown in the Midwest and Plains — corn, soybeans and wheat — would becovered by one subsidy plan, while cotton and rice, grown in the South, each would have a separate program.
“This three-track plan is designed to shore up support from a broader number of farm-state lawmakers for a new approach to farm policy.”
The Reuters article from last fall added that, “Under their plan, corn, soybean and wheat
“Cotton growers would operate with a higher marketing loan and revenue insurance policies. Target prices for rice and peanuts
At Friday’s hearing, Louisiana farmer John Owen explained to the Ag Committee Members that, “The bottom line is, I believe, and maybe more importantly my banker believes, the 2011 package that you put together serves as an excellent framework for you to develop the 2012 Farm Bill” (related audio– (MP3- 2:30)).
Georgia producer Tim Burch, who grows peanuts, cotton and cattle, indicated at the policy hearing that, “For the last several farm bills, peanut producers have relied on the University of Georgia’s National Center for Peanut Competitiveness (Center) for farm policy economic analyses. The Center has 22 U.S. Representative Peanut Farms established and maintained by the Center. As farm organizations, members of the House and Senate as well as public institutions offered farm policy concepts for the 2012 Farm Bill, the Center would analyze each proposal, including multiple scenarios through the 22 U.S. Representative Farms dispersed throughout the peanut belt.
“What was evident with each of these alternative or revenue type programs is that they did not work on the 22 Representative Farms. I recognize that some organizations believe that a one size fits all revenue program will work for the U.S. agricultural economy. I do not agree. Our cost structure and equipment needs alone are significantly different than the Midwest with our peanut producers requiring very specialized equipment.”
Mr. Burch went on to advocate for “producers having a choice between a counter cyclical type program with a target price of $534 per ton and a revenue program.”
“In addition,” Mr. Burch stated, “our growers must have access to a full range of workable and useful crop insurance products in order to compete for acreage.”
“It is critical that we have the support of RMA and the House Agriculture Committee to get the peanut crop insurance program viably priced and implemented in 2013. I would hope that the changes Congress makes for crop insurance, in the 2012 Farm Bill, would be to improve the programs and not harm crop insurance products,” Mr. Burch added.
Rep. Stutzman queried the first panel of farmers about credit conditions and loan availability at The Natural State hearing on Friday. In near unanimity, producers indicated that without the backdrop of direct payments, lenders would be scrutinizing the financial statistics with much greater intensity. This would occur on top of the already heightened level of financial record examination that has occurred over the past couple of years due to the economic crisis stemming from 2008. As one producer said in reference to producer relationship with bankers: “The days of just knowing who you are dealing with are over.”
On a separate issue, livestock producer Dan Stewart pointed out that, “As a cattle producer and a user of feed I am against any subsidies for ethanol. I think these subsidies have artificially raised corn prices to the point it has really affected the livestock industry. Ethanol should stand on its own.”
Also on Friday’s hearing, the AP reported that, “‘We’re entering the farm bill debate at a disadvantage if one of the main things that works for us is the direct payment and that is the one thing that’s going to be eliminated under this bill,’ said Paul Combs, who farms rice, soybeans, cotton, corn and wheat in Missouri.
“Randy Veach, president of the Arkansas Farm Bureau, said that eliminating direct payments to farmers would have a $243 million impact on Arkansas’ economy. He said federal crop insurance would not be enough to replace those payments.”
And an NCC update posted on Friday at the Western Farm Press stated that, “With cotton as their primary focus, the testimonies of [Walt Corcoran, Eufaula, Ala.] and [Bowen Flowers, Clarksdale, Miss.] emphasized the need for completion of a farm bill this year as those involved in production agriculture make long-term investment decisions based on federal farm policy. It was noted that the combination of the marketing loan, Direct Payments and Counter-cyclical Payments has provided a good safety net, and in recent years, has required minimal federal spending. The need for sound crop insurance and risk management tools in new farm legislation was conveyed along with support of the NCC’s innovative Stacked Income Protection Plan. Known as STAX, that revenue-based crop insurance product would replace the direct and counter-cyclical payments for cotton, thus directly addressing one of the programs found to be at fault in the World Trade Organization dispute with Brazil.
“Corcoran testified that, ‘In the opinion of the U.S. cotton industry, this structure (STAX) will best utilize reduced budget resources, respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control, and build on the existing crop insurance program, thus ensuring no duplication of coverage and allowing for program simplification. I strongly urge that crop insurance not be weakened during this farm bill. In today’s environment of volatile prices and high input costs, effective risk management has never been more important.’
“Flowers implored the Committee not to impose any further restrictions on payment eligibility including lower limits or income means tests in the ’12 farm bill saying ‘effective farm policy must maximize participation without regard to size or farm income.’ He reminded the Committee that the ’08 farm law contained significant changes with respect to payment limitations and payment eligibility – and included the most comprehensive and far-reaching reform to payment limitations in 20 years.”
Rep. Tim Walz (D-Minn.), and 38 of his colleagues have also pointed out to the House leadership that passage of the 2012 Farm Bill is important. In a letter last month, the lawmakers indicated that, “[W]e want to stress how important it is to pass, and sign into law, a farm in 2012 as soon as possible.”
In other news, Ken Anderson reported on Friday at Brownfield that, “Nebraska U.S. Senator Mike Johanns, a former Secretary of Agriculture and current member of the Senate Agriculture Committee, spoke to American Agri-Women at their mid-year meeting in Nebraska City on Friday. Prior to his address, Brownfield asked Johanns for his thoughts on the 2012 Farm Bill”- related Brownfield audio – MP3- 4:59.
In part, Sen. Johanns stated that, “Well, I have some optimism, on the Senate side at least. Let me tell you where I think we are at there. We had a bi-partisan meeting just within the last few days. We all sat down, and looked at a schedule and said to ourselves, ‘You know in the late April, maybe early May time-frame, we think we will be prepared to get together and start writing up a Farm Bill.’”
“In anticipation of that our individual staff members, who work ag policy, are going to sit down and literally start working through the details title by title by title. Then they will come back to us, we’ll kind of work through those details, we’ll kind of give the thumbs up, and then hopefully, we will literally be able to write up a Farm Bill.”
Sen. Joanns indicated that, “My thinking is that there is a pretty good chance that the Senate Ag Committee can vote a Farm Bill out to the floor…[b]ut if we can get it out in early spring it gives me some hope we could get a Farm Bill through the Senate maybe even yet this summer.”
Meanwhile, Meredith Shiner and John Stanton reported today at Roll Call Online that, “Even though the House Republican budget is dead on arrival in the Senate, the benchmark it sets for spending battles could cause serious headaches for top Agriculture Committee members tasked with passing a farm bill this year.”
“‘It will make it very difficult to pass, no doubt,’ [Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.)] said. ‘The level of cuts they’re talking about, even Chairman Lucas expressed concerns, so we’re going to move forward with the bipartisan agreement that we put together in the fall, which gives a significant deficit reduction, but it’s fair.’”
Today’s article added that, “‘Clearly, that’s a tougher, a steeper hill to climb,’ said Senate Republican Conference Chairman John Thune (S.D.), a member of the Agriculture panel. ‘We’re going to probably be marking up a bill … in the next few weeks, and we’ll see whether we can get time for it, for consideration on the floor, but I think under any circumstance, we know that there are going to be significant reductions in spending in a lot of areas.’
“The effort has not been any easier in the House, where [House Ag Committee Chairman] Lucas has taken a slower approach to putting together his legislation.
“According to GOP aides, Lucas has been hesitant to introduce his version of the farm bill until he is sure Stabenow will be able to move hers through the Senate.”
Chairman Lucas was a guest on this week’s Agri-Pulse Open Mic program with Agri-Pulse Senior Editor Stewart Doan. A summary of the Open Mic interview stated that, “House Agriculture Committee Chairman Frank Lucas makes a return appearance to Open Mic to discuss the impact of the CBO March baseline projection and the House-passed Ryan Budget and its reconciliation directive on the development of new farm policy. Lucas lays out his roadmap for passing a five-year farm bill out of committee but seems less sure how it will move through the full House. He identifies some common themes that have surfaced during the panel’s series of field hearings on the farm bill – themes that will likely be included in the Chairman’s mark.”
The full Open Mic interview is available here.
A news release Friday from USDA’s National Agricultural Statistics Service (NASS) indicated that, “Driven by favorable prices, U.S. farmers intend to plant 95.9 million acres of corn in 2012, up four percent from 2011 [related graph], according to the Prospective Plantings report released today by [NASS] If realized, this will be the largest corn acreage in the United States since 1937, when producers planted 97.2 acres of corn.
“Producers across many of the Corn Belt states are expected to set new record highs in 2012. Farmers in Iowa, the top U.S. corn-growing state, intend to set a new record for the state by planting 14.6 million acres, up four percent from 2011. Growers in Idaho, Minnesota, North Dakota and South Dakota also intend to plant record-high acreages. The largest year-over-year increase is expected in North Dakota, where farmers are recovering from last year’s floods and declared their intentions to plant 3.4 million acres of corn, up 52 percent from last year.”
The NASS update added that, “The corn acreage increase, coupled with weather conditions in the Southern Plains resulted in a soybean acreage decrease. U.S. soybean growers intend to plant 73.9 million acres in 2012, down one percent from last year… [A]lso affected by difficult weather conditions, U.S. cotton growers expect to plant fewer acres in 2012. The expected cotton area this year is 13.2 million acres, down 11 percent from last year.”
Paul Hollis reported on Friday at the Southeast Farm Press Online that, “U.S. peanut producers intend to plant 1.42 million acres in 2012, up 25 percent from the previous year, according to USDA’s first planting intentions report of the season.
“South Carolina is anticipating a record-high planted area, with 105,000 acres, compared to 77,000 acres in 2011.”
The AP added on Friday that, “Farmers in Mississippi, where an Oklahoma peanut processor proposes to set up two buying and drying warehouses in time for this year’s crop, plan to triple their peanut acreage, [NASS] says.”
Meanwhile, Gregory Meyer and Emiko Terazono reported on Friday at The Financial Times Online that, “The US also said stocks of domestic corn left over from last year’s harvest totaled 6bn bushels on March 1, down 8 per cent from a year ago. The number was slightly lower than anticipated and suggested very low inventories before this year’s harvest begins.”
Reuters writers Tom Polansek and Charles Abbott reported on Friday that, “The dramatic expansion raised hopes that the next harvest would ease razor-thin supplies that have kept corn prices near historic highs.”
Owen Fletcher and Bill Tomson reported on Friday at The Wall Street Journal Online that, “Still, analysts warned that a large infusion of supplies is far from guaranteed with harvest months away. Going forward, traders will be watching how much grain each acre yields, determining final production.”
And, in other news, the AP reported on Friday reported that, “Fruit plants budding and blooming weeks earlier than usual were damaged by frigid temperatures this week, but farmers in the Great Lakes and Northeast say they’re still assessing the toll and some crop loss won’t be apparent until mid-summer.”
Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “House Republicans on Thursday introduced a bill that would merge the Environmental Protection Agency (EPA) and the Department of Energy, a move supporters say could save $5.3 billion by cutting duplicative functions in both agencies like legislative affairs, public affairs and human resources.
“‘If we are going to put America back on the right path to prosperity, we should start by embracing any offer by the President to cut heavy-handed and outdated regulations and programs,’ said Rep. Marsha Blackburn (R-Tenn.), the sponsor of the bill.”
Maggie Fox reported on Friday at National Journal Online that, “The Food and Drug Administration infuriated environmentalists on Friday by denying a petition asking it to ban the controversial chemical Bisphenol-A, or BPA, from food packaging.”
The ICE Dec and Mar contracts gave back 160 and 87 points on the week, respectively, as last week’s inversion between the two contracts gave way to partial carry. Well,