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An uncomfortable shave

Agriculture.com Staff 04/28/2008 @ 2:52pm

Farm and biofuel groups are pleased with the late-Friday announcement of progress on the farm bill, but still concerned that cuts to favored programs might be an uncomfortable shave.

The new permanent disaster program, was cut from $4 billion in new funding favored by the leaders of the Senate Finance Committee to $3.8 billion, according to a statement released by Senator John Thune (R-SD).

"One of the hardest fought battles in the farm bill process was carrying the permanent disaster program we passed in the Senate to the finish line," said Thune. "The biggest obstacle to overcome was the fact that only the Senate farm bill included permanent disaster, and it was one of the first farm bill components the House was willing to bargain away in pre-conference negotiations with the [Bush] administration. Thanks to a unified Senate in the conference committee we now will have for the first time in years a comprehensive permanent disaster program that will provide a safety net and fill in the gaps where crop insurance and other programs stop short."

The National Corn Growers Association is pleased that its new approach to a farm financial safety net, called the Average Crop Revenue Program, is reported to have survived in the bill.

With rising production costs and market volatility, "any additional risk management tool out there would be very much appreciated," NCGA lobbyist Sam Willett told Agriculture Online.

But the voluntary program might not start until 2010, he said.

"We would prefer that it go back to 2009," as passed in the Senate version of the bill, Willett said.

Putting it off another year might save money, as would putting off the rebalancing of loan rates and target prices.

Another money saver is a reported $400 million cut in direct payments over 10 years, out of a program estimated to cost a little more than $5 billion a year.

That's a disappointment to the National Association of Wheat Growers, which had made increasing direct payments a top goal for the new farm bill.

"Until we see anything in writing, we can't comment that much," said David Cleavinger, a Texas farmer who is president of NAWG.

"Like we said two years ago, this is the only form of government assistance that's reliable and is WTO (World Trade Organization) friendly. It can withstand a WTO challenge," Cleavinger told Agriculture Online.

Parts of West Texas wheat country haven't had significant rain since last July and the forecast for later this week is temperatures near 90 degrees and 30-mile an hour winds, he said. That's hitting as the wheat is heading. And even those with irrigated wheat are paying much higher pumping costs, as well as the higher fertilizer and diesel costs hitting all farmers.

"All that adds up to the fact that these markets look great, but if you don't produce, you don't participate," he said.

Another way the farm bill would be paid for is with a cut in the size of the tax credit for ethanol, reportedly from 51 cents a gallon to 45 cents.

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