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Stakeholders Propose Farm Safety Net Programs

posted on March 16, 2012

Rising gasoline prices drove U.S. consumer costs sharply higher in February.  Elsewhere in the broader economy though, inflation was benign. 

The Labor Department reported Friday that the Consumer Price Index rose 0.4 percent last month in its largest increase in nearly a year.  Analysts blamed most of the spike on a 6 percent monthly rise in gasoline prices. 

Food prices were unchanged for the first time in 19 months.  And excluding the volatile food and energy sectors, so-called "core" prices rose a modest 0.1 percent.

Rising fuel prices, however, threaten to put the brakes on America's economic recovery.  Unleaded gas sold for a national average of $3.83 per gallon Friday... up 32 cents from the February average. 

Prices of agricultural commodities like corn and cotton have retreated from record highs but remain at profitable levels for most producers.  And that's putting pressure on Congress to cut spending -- or even eliminate -- some federal farm programs. 

Legislative wrangling over the next Farm Bill has begun in earnest, and while direct payments appear to be an early casualty, lawmakers continue to ponder some form of a “safety net” for America's farmers and ranchers.

Stakeholders Propose Farm Safety Net Programs

Emphasizing that the era of direct farm payments is over, Senate Agriculture Committee Chairwoman Debbie Stabenow reiterated that the Farm Bill really is about jobs.

Chairwoman Stabenow said. “Sixteen million people in this country have a job because of agriculture. At our very first hearing, I asked my colleagues to keep those 16 million people in mind, and I ask that again today. The Farm Bill is a jobs bill, and no farmer in America should lose their job, lose their farm, because of conditions beyond their control.”

While the greatest amount of attention has been focused on payments to farmers, social programs actually account for more than 75 percent of the proposed $145 billion 2012 USDA budget. But, in light of high commodity prices, questions are being raised whether the farm safety net should be eliminated. 

The Obama Administration has already proposed eliminating direct payments to farmers, reducing the amount of funds allocated to crop insurance and extending disaster and market volatility programs adopted in the 2008 Farm Bill.

Steve Wellman, Americqn Soybean Association:  "Farmers want to make their living from the market not from the government.  We support policies that allow and encourage us to respond to market signals.  We believe we provide our country and a growing world with an abundant supply of high quality food, feed, fiber and fuel at reasonable prices."

While some in Congress are proposing a complete elimination of the farm safety net those who testified on Capitol Hill this week pushed for new ways to extend federal compensation to farmers in times of trouble.

Representatives of the major commodity marketing groups all proposed programs that included some kind of crop insurance component. Ideas ranged from the American Soybean Association’s streamlined ACRE program with a single farm-level market trigger to the National Corn Growers Aggregate Risk Revenue Program, already proposed by a bi-partisan group of lawmakers including Senators Richard Lugar of Indiana and Dick Durbin of Illinois.

And the American Farm Bureau favors a three-legged stool that includes crop insurance, a modified marketing loan program and a catastrophic revenue loss protection plan.

Bob Stallman, President, American Farm Bureau Federation: “While some take a simple view and conclude that farmers don't need a safety net, we all know that current market prices will not continue for some commodities.  We all know that weather disasters will occur in some places.  History proves this."

Tags: ACRE American Farm Bureau American Soybean Association Farm Bill National Corn Growers Senate Agriculture subsidy SURE