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Farm bill deadline looms

DANIEL LOOKER Updated: 11/21/2013 @ 10:35am Business Editor

Farm bill negotiations are underway among the leaders of the House-Senate farm bill conference committee, but the group's self-imposed deadline of Thanksgiving to wrap up tough issues, including Title I on commodity programs, is looking doubtful.

"We feel like there's still kind of an impasse on whether to adopt either the House or Senate version of Title I," American Soybean Association president Danny Murphy told Agriculture.com Wednesday.

Late Tuesday, his group, along with the National Corn Growers Association and the U.S. Canola Association, released a compromise proposal aimed at breaking a disagreement over the way a target price program would pay farmers.

The House version of a farm bill has a "price loss coverage" program that would make payments to growers on their planted acres of covered commodities when prices fall below a "reference price"--$3.70 a bushel for corn. The Senate's version of that program makes "adverse market payments" on base acres previously planted to commodity program crops. And for most crops, it uses reference prices of 55% of a five-year national market price that excludes the high and the low years.

To an outsider, these might seem like arcane differences, but deciding to use base acres or planted acres reflects contrasting philosophies over the role of government in agriculture.

The corn and soybean groups, and key Midwestern members of the Senate Ag committee, argue that the relatively high "reference prices" in the House bill, combined with using planted acres, will lead to farmers planting crops for government payments, not market prices.

"The government would almost be dictating what's planted instead of the market, which would result in continued oversupply," Murphy said. The USDA role in the marketplace was strong until the 1996 farm bill, when some payments were decoupled from crop acres.

"I think farmers really embraced freedom to farm in 1996," Murphy said. "The free market system, that's what the United States is based on and our economy is based on, and we'd like to see that in our farm programs."

ASA and the Corn Growers have been strong advocates of shifting to a revenue-based program that is similar to crop insurance, except that the benchmark for payments is more than one year. In essence, it offers farmers a few years to adjust to changing markets.

To break the impasse over acres, ASA is promoting something that falls between making payments on a fixed number of "base acres" and on planted acres.

Wednesday, ASA and the other two commodity groups made public a letter they sent Tuesday to the four Ag Committee leaders.

"In the interest of finding common ground on this issue, we offer a compromise that would allow us all to move forward," the letter says. "We propose using the average of planted acres during the five years previous to the current year as the payment base for both the revenue and the price programs. The average would move forward, adding and dropping a year every year, in order to remain as current as possible without including the current year, which would serve as a deterrent to building base."

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