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Farmers Union sees smaller safety net in USDA proposal

Agriculture.com Staff 01/31/2007 @ 2:45pm

National Farmers Union President Tom Buis today praised Agriculture Secretary Mike Johanns for the USDA's hard work in crafting a farm bill proposal and for throwing ideas out early in the debate -- something which didn't happen before the 2002 Farm Bill was written.

But Buis opposed much of the proposed changes in commodity programs.

"The Secretary is proposing a drastic change in the safety net," Buis said.

It lowers loan rates and increased direct payments, "which in my view, takes us back to the future," Buis said.

Buis recalled the 1996 Farm Bill which included similar agricultural market transition assistance (AMTA) payments that Congress supplemented for five years in a row. The 1996 Farm Bill was also written at a time when there was optimism that commodity prices were going to remain high and price supports seemed less important.

Here are some of the specifics of the USDA proposal released today:

  • Loan rates would be calculated from 85% of a five-year average of market prices, throwing out the highest and lowest years. And they would be capped at the loan rates proposed by the Houe Agriculture Committee for the 2002 Farm Bill.
  • So, under the USDA proposal, the national average loan rate for corn would fall from the current $1.95 per bushel to a maximum of $1.89 per bushel. Soybean loan rates would fall from the current $5.00 per bushel to no more than $4.92 per bushel.
  • Corn direct payments would rise, but not until 2010. They would go from the current level of 28 cents per bushel to 30 cents. Soybean direct payments would increase from today's level of 44 cents-a-bushel to 47 cents in 2008 and 2009 and 50 cents in 2010.
  • The USDA's farm bill proposal keeps the marketing loan programs that use loan rates to determine loan deficiency payments. But it also proposes changing the calculation of posted county prices used to determine LDPs. Instead of setting PCPs daily, they would be set monthly, based on an average of five daily PCPs on pre-set days during the previous month.


National Farmers Union President Tom Buis today praised Agriculture Secretary Mike Johanns for the USDA's hard work in crafting a farm bill proposal and for throwing ideas out early in the debate -- something which didn't happen before the 2002 Farm Bill was written.

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