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Senate Ag Committee votes out a farm bill

The Senate Agriculture Committee unanimously approved a farm bill that critics are already saying doesn't go far enough in reforms.

Like the House bill passed last summer, it has no firm cap on commodity program payments and it does not make the dramatic changes in commodity and conservation programs that Congress passed in 2002 when the federal government had a budget surplus. Most of the commodity title looks a lot like that 2002 farm bill, continuing marketing loans and direct and countercyclical payments.

The bill does have some new money for nutrition programs, cellulosic energy development and conservation. And it offers a new commodity program which Chairman Senator Tom Harkin (D-IA) credited to the work of the corn grower groups.

The new Average Crop Revenue Program (ACR) would be offered to farmers on a voluntary basis if they opt out of the current safety net -- the direct and countercyclical payments and marketing loan program. Instead, producers would get a fixed $15-per-acre payment for all crops each year as well as payments if yields and prices drop below expected revenue on a state level. It would not start until 2010.

"That will give farmers an option of whether they stick with the old ways of doing things or if they want to try something new," Harkin said.

Unlike old programs, the ACR would be tied to rolling averages of both prices and yields, so protection could actually increase if prices continue to rise, Harkin said. Loan rates and target prices, which were increased slightly in the Senate bill, would remain the same for five years.

Harkin had to accept changes in the program, however, when the committee adopted an amendment offered Wednesday by Senator Pat Roberts (R-KS). Roberts wanted the ACR to be paid on only 85% of base acres, not 100% as in Harkin's farm bill. And, because of concerns about the ACR's effect on the crop insurance industry, the amendment removed a reduction in crop insurance premiums that farmers would have gotten when they enroll in ACR.

MIXED FEELINGS ABOUT CHANGES

Ron Litterer, the Greene, Iowa, farmer who heads the National Corn Growers Association, had mixed feelings about the Roberts amendment.

"We really appreciate Senator Harkin's advocacy of our proposal," he told Agriculture Online.

But the amendment makes ACR less attractive, Litterer said

"Payments can still be made but we won't have the reduction in premiums," he said. "I think it's going to vary considerably but because of the crop insurance removal, it will significantly reduce participation."

During debate, agriculture committee members disagreed over how much the crop insurance industry has benefited from the Roberts amendment.

Senator Sherrod Brown (D-OH), a strong supporter of ACR, said members of the committee were unwilling to take on the crop insurance industry.

"They profits continue to rise. The've done very well. Everybody should make a contribution [to savings in the farm bill]." Brown said.

Senator Kent Conrad disagreed.

"There've been a lot of people around this table willing to take on the crop insurance industry," Conrad said.

The Senate bill would save well over $2 billion by cutting the reimbursements USDA pays to insurers for the administrative and operating expenses, he said.

Roberts' amendment did roll back part of the cut in reimbursements to the crop insurance industry, Senator John Thune (R-SD) said in a press conference Thursday. Roberts' amendment cuts reimbursements to the industry by 2%. Harkin's bill would have cut them by three percent, Thune said. The cuts apply to all crop insurance programs and aren't directly related to the ACR.

But Thune, a member of the Agriculture Committee, told Agriculture Online that he had not heard from industry representatives the past few days.

"They weren't as engaged on it as I thought they might be," he said. "Crop insurance, in my view, took a pretty big hit both in the House bill and the Senate bill."

Instead, commodity groups in favor and against the ACR were calling him, he said.

BLAMES CROP INSURANCE INDUSTRY

NCGA's president, Ron Litterer, said he views the changes to ACR as coming mainly from the crop insurance industry.

"I think it's pretty apparent they are responsible for most of these changes," he said.

The Corn Growers' proposal did gain some changes in negotiations between ag committee members Thursday. Roberts' amendment Wednesday would have given farmers only once chance to sign up for the ACR before it takes effect in 2010. Thursday he agreed to let them sign up one time for the program, starting in 2010 2011 or 2012.

The exact cost of Roberts' changes wasn't known Thursday, but Roberts agreed that if his amendment saves enough money to pay for it, the ACR payments could be made on more than 85% of base acres. Depending on what the savings would allow, they would be made on somewhere between 85% and 100% of base acres.

Acting Secretary of Agriculture Chuck Conner praised several aspects of the Senate Farm Bill and criticized it for doing almost nothing to cap commodity payments to wealthy Americans.

Conner said the USDA likes the idea behind the Senate bill's ACR program. When former Agriculture Secretary held listening sessions on the next farm bill, many farmers complained that the current program doesn't help enough when they don't have a good crop and pays them when they don't need it.

"We're supportive of the concept," Conner said of the ACR. "This is an effort to address the problem we've identified."

Conner said the USDA looks forward to working with both the House and Senate to get a revenue-based program into the final farm bill that will work for producers.

The full Senate still has to vote on the Senate Ag Committee's bill, which Harkin said is likely to take place next week or in early November. After that, both houses will put together a final farm bill in a conference committee.

Harkin said there will be several amendments when his bill reaches the Senate floor, including an effort by Senators Byron Dorgan (D-ND) and Chuck Grassley (R-IA), to cap commodity program payments at $250,000.

Five years ago, when the Senate voted on a farm bill, 67 senators voted to cap farm program payments at $275,000.

"I believe there will be at least that many votes for Dorgan-Grassley," he said.

The Senate Agriculture Committee unanimously approved a farm bill that critics are already saying doesn't go far enough in reforms.

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