Rep. Michael Conaway, R-Texas: “This hearing, on the Subcommittee on General Farm Commodities Risk Management to discuss commodity programs and crop insurance in advance of the 2012 Farm Bill will now come to order. ”
While the Senate Agriculture Committee has already passed its version of the next Farm Bill, members of the House Risk Management Subcommittee continue to wrangle with the more controversial parts of the legislation.
This week it was the Commodity Title. With the elimination of direct payments all but assured, agricultural interests are searching for effective alternatives to protect farmers when prices fall. While nearly all have agreed crop insurance must be part of the farm safety net equation, the main sticking point centers on how the final measure will be written.
Subcommittee Chair Michael Conaway, a Republican from Texas, wants the 2012 Farm Bill to support crop insurance, allow farmers to easily obtain bank loans, contain policies tailored to producer risk, and cover all agricultural commodities fairly.
Rep. Michael Conaway, R-Texas: “So far, this problem has been misreported as a North-South issue. But let me say just this, if we have a few more weeks of commodity prices taking the kind of thumping they took last week, the importance of meaningful price protection in a Farm Bill will become clear to everyone.”
Congressman Collin Peterson, a Democrat from Minnesota, agreed with Conaway and was adamant the bill has to be written with care.
Rep. Collin Peterson, D- Minnesota: "You know, if prices were to collapse today, which some people say we’re in a zone, here, where the prices are never gonna go down again. Well, this is the same thing we heard in '96, the Freedom to Farm, and I just want to remind everybody we spent quite a bit more money than we saved with Freedom to Farm in order to bail everybody out. And the thing that people need to understand this time, if this happens, there is no money coming from Washington. You can forget about gettin’ bailed out. So if you get this thing wrong, you know, good luck."
House Agriculture Chair Frank Lucas, a Republican from Oklahoma, agreed farmers had to be protected in a fair and equal manner.
Rep. Frank Lucas, R-Oklahoma: “That safety net has to exist for all regions and all crops and it has to be written with bad times in mind. These programs should not guarantee that the good times are the best but rather that the bad times are manageable. Farmers and ranchers have to deal with the uncertainties of weather, insecurities of the market, and, many times, dramatically unfair foreign competition so it's critical that we get the policy right."
The discussion was fueled by comments on how previously approved Senate legislation covers crop losses. The measure’s Agriculture Risk Coverage program, or ARC, pays producers when prices drop below the five-year average.
Dr. Joe Outlaw, Agriculture and Food Policy Center: “Most of the new programs being discussed would be paying on planted acres. And when you move to paying on planted acres, you’re gonna increase the amount of monies paid to corn and soybeans producers in this country. Each commodity ought to have an opportunity to stay in business if there is a loss. And the way the Senate plan is crafted, right now, I can't say that they can."
The Farm Bureau recommended a combination of crop insurance, a marketing loan program based on market conditions and a deep loss protection plan that pays farmers based on the number of acres planted.
Bob Stallman, American Farm Bureau:“A deep loss program, such as what we have suggested, would not provide producers with payments as often as other proposals being contemplated but it would provide more coverage in terms of catastrophic losses when assistance is most critical. Our concepts benefits would come into play only when they are needed rather than being an expected annual supplement to farm income. And it would eliminate the need for ad hock disaster programs.”
Cotton producers favor the Stacked Income Protection Program or STAX. According to the Cotton Council, the policy gives farmers the flexibility to choose the amount of coverage to handle shallow losses.
Chuck Coley, National Cotton Council: “The amount of machinery and the capitol intensiveness of growing cotton is one reason that we think this STAX program to prevent the shallow losses on years where we have a very wide loss where either a price decline would help prevent some of those when we have a bad, sharp reduction in price."
While the goal of farm programs is not to completely remove the risk associated with farming, farm programs should strive to provide opportunities for effective risk management.”
Regardless of specifics contained in the farm safety-net, the potential for geographical disparities could remain. Some have criticized policies outlined in the Senate version of the $500 billion measure for treating certain commodities unfairly. And rice producers are among those claiming the policy proposed in the Senate version favors corn and soybean producers.
Linda C. Raun, U.S.A. Rice Producers Group: "If we want only one or two crops grown in this country , no matter what the market or agronomic conditions say, the Senate Ag Committee has written the bill for you. But in the end, such a lopsided approach is not good for those on either the winning or losing side of this equation. Taking the risk out of farming for some while stripping away the safety net for others would ultimately hurt both. "