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Commodity groups make pitches to House Ag subcommittee

Groups representing corn, cotton, rice, soybeans, sunflowers, wheat and other commodities told members of the House Agriculture Committee Wednesday what they would like in the next farm bill. And one of the few issues that seemed to unite them was opposition to Agriculture Secretary Mike Johanns' proposals to bar commodity program payments to anyone with adjusted gross income over $200,000.

Representative Bob Etheridge, a North Carolina Democrat, chaired this year's first look at commodity programs by the Subcommittee on General Farm Commodities and Risk Management. He said that from previous hearings by the Ag Committee he believes that the 2002 farm bill safety net has strong support from farmers.

He also mentioned that recent government projections of spending available for those same programs "point to the same inescapable conclusion. We don't have a lot of money for the next farm bill."

Most of the changes farm groups asked for Wednesday would cost more, but their leaders are hoping that somehow the agriculture committees of the House and Senate will be able to find the funds from recent "reserves" of $15 billion approve in the Senate and $20 billion in the House. Those reserves will likely have to be financed by cuts in other programs or tax increases.

While most groups want changes in the current marketing loan and counter cyclical programs, the National Corn Growers Association made a pitch for a new program that would be something like a government supported Group Risk Insurance Protection (GRIP) program.

Extending the current farm bill does little to help farmers manage the risks of growing $4 corn, NCGA president Ken McCauley, a Kansas farmer, told the committee. Under the 2002 farm bill, "when yield are low, income protection has been less than adequate," he said.

NCGA's program would add no more than $500 million per year to the baseline projection for the cost of commodity programs under the 2007 farm bill, he said.

One way the program keeps costs down is by capping the value of corn that would be protected to $3.10 a bushel. The NCGA proposal would also increase the maximum value for wheat and soybeans from earlier proposals, McCauley told Agriculture Online after the hearing. The cap would b e $4.38 a bushel for wheat and $6.98 a bushel for soybeans. Payments would be made based on county-wide yields and a market-driven target price.

So far, though, NCGA hasn't been able to talk groups representing those crops into shifting from loan deficiency payments and countercyclical payments. Neither the National Association of Wheat Growers nor the American Soybean Association think the 2002 farm bill has worked perfectly, either, but each group has its own ideas for fixing shortcomings.

As North Dakota farmer Rick Ostlie, president of the American Soybean Association, pointed out, the effective price that triggers countercyclical payments for soybeans is $5.36 a bushel (or the target price of $5.80 minus the direct payment of 44 cents). "Prices never fell below $5.36 during the past four years of the farm bill," he said.

So the ASA wants to raise the target price used to calculate those payments from $5.80 to $6.85 a bushel. It would do that by raising all target prices to 130% of the Olympic average of commodity prices from 2000 through 2004.

Wheat growers, on the other hand, consider the direct payment the most reliable type of commodity program support, but it, too, isn’t high enough, they say. So the biggest change they propose is raising the wheat direct payment from the current 52¢ per bushel to $1.19.

"The 2007 farm bill has an opportunity to correct some of these imbalances," said John Thaemert, a Kansas farmer who is president of the National Association of Wheat Growers.

Several members of the subcommittee seemed to be pushing the commodity groups toward more concensus.

Representative Jerry Moran, the Kansas Republican who chaired the subcommittee until this year, said he found it interesting that in all the talk of rebalancing payments, "no one mentions that someone else’s target prices must be too high now."

Both Representative Collin Peterson, the Minnesota Democrat who chairs the full Agriculture Committee, and Representative K. Michael Conoway, a Republican member of the subcommittee, asked McCauley why their state corn grower organizations weren't supporting NCGA's revenue-based countercyclical payments.

McCauley said states are free to lobby on their own but that 70% of the delegates to NCGA's recent annual meeting support the new approach.

Subcommittee chairman Etheridge asked McCauley if the crop insurance industry had analyzed the Corn Growers proposal. McCauley said several land grant university ag economists have looked at the plan.

"We feel like we can do this without hurting the crop insurance industry's profits," McCauley said. Insurance companies would be able to sell higher levels of coverage based on individual farm yields, not just county-level yields.

Peterson asked if anyone supports the Bush administration's proposal to limit farm program payments to those with less than $200,000 adjusted gross income on their tax returns,

"I assume all of you guys are opposed to the President's payment limit idea?" he asked.

The commodity group representatives nodded their heads.

"It's unanimous," Peterson concluded.

Groups representing corn, cotton, rice, soybeans, sunflowers, wheat and other commodities told members of the House Agriculture Committee Wednesday what they would like in the next farm bill. And one of the few issues that seemed to unite them was opposition to Agriculture Secretary Mike Johanns' proposals to bar commodity program payments to anyone with adjusted gross income over $200,000.

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