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Corn growers pleased to see their concept in USDA Farm Bill proposal

Agriculture.com Staff 02/01/2007 @ 3:20pm

Ron Litterer, a Greene, Iowa, farmer who is first vice president of the National Corn Growers Association, is glad to see that an idea his organization has explored for several years was included in the USDA Farm Bill proposal released Wednesday.

Both the Corn Growers and Agriculture Secretary Mike Johanns would like to replace the current countercyclical program with what NCGA calls a revenue countercyclical program and USDA labels a revenue-based counter cyclical payment program.

"It's sort of what the Corn Growers were looking at, which is revenue, which gives you better protection," Litterer told Agriculture Online Thursday.

The current counter cyclical payment is triggered by market prices only and ignores yields, so it doesn't compensate real losses in revenue. It tends to under-compensate farmers when yields decline and overpay when they're high.

There are some key differences between the Corn Growers' idea and the USDA concept that makes the USDA proposal less likely to pay as much to farmers. Consequently, it's also less expensive to the federal government.

The NCGA proposal compensates farmers if either prices or yields fall enough in an individual county to trigger payments. The program would be similar to today's Group Risk Income Plan, or GRIP crop insurance, Litterer says.

Tuesday evening during a stop in Des Moines, Iowa, Secretary Johanns and USDA Chief Economist Keith Collins explained that the USDA proposal would be calculated using a national average yield and season-average price.

That's cheaper, Litterer said.

"You just know that when you go from a national trigger to a county trigger to a farm-level trigger, the cost is going to go up" Litterer said.

The differences do show up in the USDA's estimated costs for revenue protection released Wednesday -- estimated at $7.5 billion over 10 years (or $750 million a year). A Corn Growers' analysis of their own proposal released last October showed their own revenue-based payments costing $2.6 billion if it had been around in 2006 and dropping to $1.92 billion by 2010 -- still more than twice as much as the USDA program.

Litterer says the USDA idea is similar to a proposal the Corn Growers made for the 2002 Farm Bill that was not adopted. It too would have used national average statistics, not county-level prices and yields.

The Corn Growers will be analyzing the USDA idea and working on proposals to consider at their annual meeting during the Commodity Classic in Tampa, Florida March 1-3.

"We think going to a revenue-based approach makes sense and we just want to look at the details," Litterer said.

Ron Litterer, a Greene, Iowa, farmer who is first vice president of the National Corn Growers Association, is glad to see that an idea his organization has explored for several years was included in the USDA Farm Bill proposal released Wednesday.

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