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Senate farm bill update: Wheat versus corn

Agriculture.com Staff 10/24/2007 @ 3:54pm

When the Senate Agriculture Committee started marking up the farm bill Wednesday, senators from wheat states raised several arguments against the bill's biggest change in the commodity title, an optional average crop revenue program (ACR).

And Senator Pat Roberts (R-KS) offered an amendment that would cut 15% from the acres that would get payments under the ACR. Roberts asked the committee to wait a day before voting on his proposed changes.

The ACR would work something like a state-level group risk insurance program, with a $15 per acre payment that would replace direct payments for farmers who sign up for the program. Farmers would be paid if revenue declined below a combination of state level yields and prices. They would have the option of buying separate coverage losses at a county level or on the farm level from existing crop insurance.

The new program is similar to proposals from the National Corn Growers Association, which supports it. It has drawn opposition from the National Association of Wheat Growers, which has been lobbying instead for a doubling of direct payments.

"The more I get into this ACR, the more I become concerned about unintended consequences," said Senator Kent Conrad (D-ND).

One of those, Conrad said, is that he worries that crop insurance premiums may become more expensive for farmers who stick with the current system of commodity payments and don't enroll in the ACR program.

Committee chairman Tom Harkin (D-IA) disagreed with Conrad's suggestion that Iowa farmers would opt out of crop insurance if they signed up for ACR.

That means they'd be putting their farms at risk of tornadoes or other local weather disasters which wouldn't be covered by the state-level ACR program.

That means they'd be putting their farms at risk of tornadoes or other local weather disasters which wouldn't be covered by the state-level ACR program.

"Farmers are gamblers, but I don't think they're that big a gambler," Harkin said. About 95% of Iowa's crops are covered by some level of insurance and Harkin said he believes many farmers would instead use the savings from ACR to buy higher levels of on-farm coverage.

Keith Collins, USDA's Chief Economist and a member of the Federal Crop Insurance Corporation board, was asked about how ACR might affect premiums. He said he wasn't certain, but that USDA has been trying for the past five years to make rates in all areas more actuarily sound.

"I don't want to leave the impression there's going to be a large change in rates," Collins said at one point.

Roberts wanted to know why ACR will be paid on 100% of base or planted acres, not 85%, as is the case with current programs. And he wondered if the higher coverage would violate World Trade Organization agreements.

Collins said it would not.

Roberts also said that an analysis of ACR shows that for wheat farmers in his state, ACR would have paid only in two of the last nine years.

Roberts said he'll offer an amendment that will reduce the amount of acres ACR would cover to 85% of a farmers base. His amendment would also allow farmers to sign up for ACR only once during the five-year life of the next farm bill. Harkin's draft of the farm bill would allow farmers to decide each year whether or not to enroll in ACR. And Roberts would place a $60,000 payment limit on the ACR.

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