A news release yesterday from the American Soybean Association stated that, “The American Soybean Association today released its proposal for the 2012 Farm Bill, ‘Risk Management for America’s Farmers.’ ‘This proposal will help farmers manage the risks they face from adverse weather, crop disease, and volatile commodity markets,’ stated ASA President Alan Kemper, a soybean producer from Lafayette, Ind. ‘ASA believes the current farm program safety net can be made more effective, efficient, and defensible by reallocating baseline funding to this revenue-based program that improves risk management and complements crop insurance,’ Kemper added. Because the proposal would replace current farm programs, this proposal would also result in savings that help agriculture contribute its fair share to deficit reduction.
“The ‘Risk Management for America’s Farmers’ program, or ‘RMAF,’ would partially protect revenue losses by farmers of soybeans and other program commodities that result from low prices or reduced yields for their crops. The program would establish commodity-specific revenue benchmarks for individual farmers based on historical yields and prices, and compensate them for part of the difference when current-year revenue for a commodity on their farm falls below a percentage of the benchmark. All planted and prevented planted acres would be covered under the plan. The program would complement the existing crop insurance program used by most farmers, which ASA strongly supports and believes should be continued.”
A news release yesterday from American Farmland Trust (AFT) stated that, “A national coalition of 56 policy and advocacy organizations is urging Congress to preserve funding for essential U.S. Department of Agriculture conservation programs and to take additional steps to enhance soil, water quality and wildlife on agricultural land. The coalition outlined a set of key principles [PDF] that lawmakers should observe as they write the Conservation Title of the 2012 farm bill and seek ways to trim the federal deficit.
“The 56 coalition members are asking Congress to:
“- Put a high priority on funding critical conservation programs at the current baseline level of $6.5 billion a year.
– Strengthen and enforce provisions that require farmers to implement basic conservation practices in return for farm subsidies and extend them to insurance subsidies.
– Target conservation dollars where the opportunities for conservation and environmental outcomes are greatest.
– Streamline existing programs by reducing unnecessary administrative burdens and ramp up their effectiveness by linking payments to performance and focusing more on whole-farm and whole-ranch conservation systems.
– Ensure that all segments of the farming community – women, minorities and beginning farmers – have access to funding and technical assistance. “
The AFT release added that, “The 2011 Survey on Agriculture and Environment [PDF] conducted on behalf of the David and Lucile Packard Foundation, shows clearly that Americans overwhelmingly view conservation as an important priority in national farm policy and don’t want to see conservation programs cut.”
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “While a key element in the dairy reform billannounced last week would be voluntary, the Congressional Budget Office has estimated that producers of at least 60% of the nation’s milk would sign up for it, National Milk Producers Federation President Jerry Kozak said Monday.
“A bill introduced Friday creates a new subsidized margin insurance that covers 80% of a milk farmer’s production history. A market stabilization program also would reduce milk production during times of low margins. If dairy producers wish to elect to sign up for the subsidized margin insurance program, they will automatically be enrolled in the stabilization program.
“The draft written by House Agriculture Committee ranking member Collin Peterson, D-Minn., initially made participation in a dairy market stabilization program mandatory, but after some dairy farmers told National Milk officials during a series of meetings this summer that they did not want to participate, the federation made the participation optional.”
Farm Bill: Budget and Policy Issues- Crop Insurance
The Washington Insider section of DTN reported yesterday (link requires subscription) that, “Some observers have been surprised that the administration’s proposal for changes in the crop insurance program have become a major storm, but they shouldn’t be. The program is big and important, and the administration’s proposal is complex and based on several assumptions.”
The DTN update indicated that, “While the [crop insurance] program is run through USDA’s Risk Management Agency, policy sales and servicing are done through private firms under contracts that guarantee a negotiated ‘return on investment.’ This deal is hammered out with the companies through a painful process most recently redone in 2010.
“Still, USDA thinks, and, has long thought, that the subsidies involved are still unnecessarily high, based on more recent estimates, it says. The program costs the government approximately $8 billion a year now, including $2.3 billion per year for the private insurance companies to administer and underwrite the program and $5.7 billion per year in premium subsidies for farmers.
“In the 2010 rewrite, USDA and the companies agreed to changes credited with saving $6 billion over 10 years —reductions that USDA says were not cuts to the programs. Now, it believes it has found additional ways to shrink administrative costs. Lowering its partner-companies’ returns on investment to a 12% target would save $2 billion over 10 years, USDA thinks, with no loss of program effectiveness.”
Update: Wallaces Farmer Online reported on October 10 that, “NFU says risk management must be made economical for all farmers, regardless of crop or geographic region, and that the next farm bill should use the funding from and combine parts of the SURE, Average Crop Revenue Election, countercyclical and direct payment programs. Mandatory disaster assistance should be improved so payments are reflective of actual market prices.”
– Iowa Soybean Association- “Iowa Soybean Association Asks Lawmakers’ Continued Support For Strong U.S. Agriculture.” (9.23). “The Iowa Soybean Association (ISA) released its Farm Bill Priorities paper on Tuesday, making the point, ‘U.S. agriculture in general is the brightest spot in the economy. U.S. farmers now export 40 million acres of whole soybeans and even more in meal, oil and livestock products as a result of public and private investments in research that has led to increased yields, trade development programs and an improved transportation system.'”
“The 56 coalition members are asking Congress to: Put a high priority on funding critical conservation programs at the current baseline level of $6.5 billion a year; Strengthen and enforce provisions that require farmers to implement basic conservation practices in return for farm subsidies and extend them to insurance subsidies; Target conservation dollars where the opportunities for conservation and environmental outcomes are greatest; Streamline existing programs by reducing unnecessary administrative burdens and ramp up their effectiveness by linking payments to performance and focusing more on whole-farm and whole-ranch conservation systems; and, Ensure that all segments of the farming community – women, minorities and beginning farmers – have access to funding and technical assistance.”
– Letter from the Rural Coalition, National Family Farm Coalition, National Sustainable Agriculture Coalition and other organizations to House and Senate Agriculture Committee leaders highlighting Farm Bill priorities that impact beginning and socially disadvantaged farmers and ranchers. (10.24).
– A group of over 30 national and regional organizations, including the National Sustainable Agriculture Coalition. (10.27). Letter to House and Senate Agriculture Committee Leaders highlighting the Organic Agriculture Research and Extension Initiative, Specialty Crop Research Initiative, and Beginning Farmer and Rancher Development Program.
– Advanced Ethanol Council. (10.28). News release- “In a letter to Senate and House ag leaders, the Advanced Ethanol Council (AEC) urged the current farm bill discussion to include extensions and smart modifications to a number of important rural energy initiatives currently being administered by the Department of Agriculture (USDA).”
– National Association of State Departments of Agriculture. (11.1). News release- “As the Chairs and Ranking Members of the House and Senate Agriculture Committees reportedly finalize a Farm Bill reauthorization proposal to submit to the Super Committee this week–and trim $23 billion from Farm Bill programs in the process–NASDA President Bill Northey articulated NASDA’s Farm Bill priorities in a letter sent to Agriculture Committee leaders last week.”
– Wisconsin Dairy Business Association and the Wisconsin Cheese Makers Association. (10.24). News release- “Wisconsin Dairy Business Association & Wisconsin Cheese Makers Association Oppose Dairy Security Act: Economic Modeling Shows that with Strong Participation by Dairy Farms, USDA Could Spend Up to $3 Billion – About $2 Billion More than Current Dairy Programs.”
– National Farmers Union (NFU). (10.28). News release- “NFU sent a letter to leaders on the U.S. House of Representatives and Senate Agriculture Committees urging them to continue working to reform dairy policy in the farm bill as part of the Joint Select Committee on Deficit Reduction process. The Dairy Security Act of 2011 (DSA) could lead to further vertical integration of the dairy industry if additional steps are not taken.”
– International Dairy Foods Association. (11.3). News Release- “Top executives of six of the country’s biggest dairy exporters strongly object to the Dairy Security Act of 2011. In a letter sent today to members of the Joint Select Committee on Deficit Reduction, they outlined the negative effects the act would have on domestic and global dairy markets and said it has no place in deficit-reduction talks. It is expected that the dairy program will be part of the recommendations submitted by House and Senate Agriculture Committee leaders to the supercommittee for inclusion in the debt-reduction bill. ”
DTN Ag Policy Editor Chris Clayton reported on Friday that, “With a new proposal from a bipartisan group of senators, the fight over the farm safety net and commodity program survival is shifting from direct paymentsto the permanent disaster program.
“Possible policy options are coming in quickly as the congressional super committee begins its work to cut the rate of growth of the federal debt over the next decade. The House and Senate Agriculture Committees have less than one month to offer proposed budget cuts as part of the process. It’s becoming more evident that the super committee process will translate into writing the next farm bill.”
In an interview yesterday with FarmPolicy.com that focused on the Farm Bill and the supercommittee , Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) indicated that, “First and foremost, we’re focused on the recommendations that we’re being asked to give to this joint committee, the super committee, and we’re focusing on proactive policy changes rather than just giving them a list of areas to cut.”
Sen. Stabenow noted that, “My colleagues and I are working on a bipartisan basis to come to agreement on a set of policies that would actually make sure that our farmers and our small businesses are able to be able to be successful and have the tools they need when they need it, and at the same time providing real and credible reforms to reduce the deficit, so that’s what we’re working on.”
After commending the National Cotton Council and National Corn Growers Association for “coming forward with responsible solutions, creative solutions, to help us at a time where we have a very tight budget environment,” Sen. Stabenow added that, “I am working with other commodity groups as well, and am strongly encouraging them to come forward with what they believe are the important risk management tools that we need to have for farmers so that we make sure we have help for them when they need it.”
David Rogers reported this week at Politico that, “Washington’s debt crisis brings American agriculture to a crossroads this fall and no other sector of the economy may have more to gain or lose from the debate in Congress over deficit reduction.”
The article indicated that, “Cotton interests got an early taste of this anger in a June floor fight in the House [related audio from the floor debate available here], and the August debt crisis greatly accelerated the process, making it impossible to wait for a new farm bill next year and throwing the agriculture debate into a more partisan, ideological arena.”
Reuters writer Charles Abbott pointed out earlier this week that, “President Barack Obama on Monday proposed to end a ‘direct payment’ subsidy that gives $5 billion a year to farmers regardless of need, as part of his larger effort to reduce the federal budget deficit.
“Direct payments, created in 1996 as a temporary measure, will be the largest farm subsidy this year and terminating them would be a dramatic re-shaping of the U.S. farm program.”
Farm Bill: President Obama’s Deficit Reduction Plan- General Overview
Zachary A. Goldfarb reported in today’s Washington Post that, “President Obama made a defiant call on Monday for $1.5 trillion in new taxes as part of a plan to find $3.2 trillion in budget savings over the next decade, issuing his most detailed proposal yet to tame the soaring federal debt.
“Abandoning earlier compromises, Obama adopted a posture that cedes far less ground in cutting the nation’s social safety net and demands much more in terms of new levies on millionaires, other wealthy Americans and some industries.
“The proposal drew an angry response from key Republicans, underscoring the considerable opposition to his plan on Capitol Hill as a special bipartisan committee on deficit reduction ramps up its work in coming weeks.”
Helene Cooper reported in today’s New York Times that, “President Obama will unveil a deficit-reduction plan on Monday that uses entitlement cuts, tax increases and war savings to reduce government spending by more than $3 trillion over the next 10 years, administration officials said.
“The plan, which Mr. Obama will lay out Monday morning at the White House, is the administration’s opening move in sweeping negotiations on deficit reduction to be taken up by a joint House-Senate committee over the next two months. If a deal is not struck by Dec. 23, cuts could take effect automatically across government agencies.
“Mr. Obama will call for $1.5 trillion in tax increases, primarily on the wealthy, through a combination of closing loopholes and limiting the amount that high earners can deduct. The proposal also includes $580 billion in adjustments to health and entitlement programs, including $248 billion to Medicare and $72 billion to Medicaid. Administration officials said that the Medicare cuts would not come from an increase in the Medicare eligibility age.”
“The corn growers unveiled the ‘Agriculture Disaster Assistance Program,’ which would not only replace ACRE, but would also replace the more traditional Direct and Counter-Cyclical Program as well.”
Mr. Clayton indicated that, “The proposal would use harvest prices and establish a five-year Olympic average of farm revenue as the basis for payments. Further, rather than using state yields, NCGA proposes using National Agricultural Statistic Services regional crop reporting districts in each state to set the crop-revenue guarantee. In testimony before the Agriculture Committees, farmers have often suggested using a county yield average, but [Anthony Bush, a Mt. Gilead, Ohio, farmer and chairman of the NCGA Public Policy Action Team] said NASS just isn’t able to get yields that detailed across the entire country.
“‘The problem with going past reporting districts is NASS doesn’t feel they have adequate data for every county,’ Bush said. ‘They feel confident in their data for CRDs (crop reporting districts). That is why we chose to go crop reporting districts.’
“NCGA’s proposal also would make some other tweaks to ACRE. For one, NCGA calls for basing the new program on a farmer’s actual planted acres, not program base acres.”
Although yesterday’s report focuses on the ACRE program, an ERS summary of the study stated in part that, “The Average Crop Revenue Election, or ACRE, program is a commodity support program that bases coverage on aggregate State-level and individual farm-level revenue variability. Changing the level of aggregation from State to one closer to the farm level—Crop Reporting District or county—would generally increase payments.”
Recall that Mr. Clayton’s DTN article indicated that, “NCGA has run the Agriculture Disaster Assistance Program through computer models that project the proposal, as crafted by the group, would cost about 30% less than the current Direct and Counter-Cyclical Program. Few commodities are in a price range to pay counter-cyclical payments, but direct payments cost about $5 billion annually. Projected out over a 10-year congressional budget score, the NCGA proposal saves roughly $15 billion compared to current policies.”
In part, Chairman Lucas addressed issues associated with the budget and the work of the supercommittee and discussed the potential interaction of this process with the development of the 2012 Farm Bill- this portion of yesterday’s AgriTalk program can be heard here (MP3- 5:03).
Greenwire writer Jean Chemnick reported yesterday at The New York Times Online that, “The first eight months of 2011 have been a difficult time for American farmers, who have seen their operations disrupted by an endless stream of snowstorms, floods, droughts and record heat affecting regions across the country.
“As a result, farmers and their trade associations are telling Washington they need a more robust crop insurance safety net, making disaster relief a top ask for the 2012 farm bill. They are also hoping that insurance programs are spared in this autumn’s deficit-reduction talks.
“Still, agriculture groups are reluctant to link their new emphasis on risk management to the weather events of the past few years, and they reject outright the notion that they are trying to insulate themselves from climate change.”