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Farmers Union backs a grain reserve

DANIEL LOOKER Updated: 03/06/2012 @ 8:55pm Business Editor

By a large majority, delegates to National Farmers Union’s annual meeting in Omaha voted Tuesday for a 2012 farm bill program that would allow farmers to voluntarily take grain off the market if prices reach low levels.
But the vote in favor of the group’s Market-Driven Inventory System (MDIS) prompted heated debate before it was passed over what sounded like a handful of opponents in a voice vote of more than 100 delegates.
Myron Blumhagen, a delegate from North Dakota, kicked off the debate with his own doubts.
“I’ve talked to several older producers that were part of the previous farmer-owned reserve. One of the things we learned from past history is that it didn’t work then,” he said. The original farmer-owned-reserve did take out the highs and lows in the market, he said, but “if you want consistently low prices, put this in place.”
Other delegates pointed out significant differences between the old reserve and the new inventory system, including the fact the only farmers, not grain companies, would own stocks of grain, and they would not be released until prices rose 60% higher than when they were taken off the market.
MDIS was developed based on a study from the University of Tennessee’s Agricultural Policy Analysis Center commissioned by NFU.

According analysis by the Center’s economist, Daryll Ray, net farm income over the next 10 years would be $79.6 billion annually, slightly higher than extending today’s farm program for 10 years, with projected income of $79.2 billion. It would cost the federal government almost 60% less than continuing current programs, which is extremely unlikely. Nearly everyone among farm groups and on ag committees in Congress expect the direct payment program to end with the current farm bill.
Under Ray’s study, corn would be eligible to enter the program when prices fall to $3.50 a bushel. Wheat would be eligible at $5.28 a bushel and soybeans at $8.97.
Grain companies and others who didn’t like the old farmre-owned reserve program sabotaged it, said Nebraska Farmers Union president, John Hansen.
“If we don’t go forward with this, we’re going to go forward with other things that work a lot less well,” he said.
Several NFU members said relying on crop insurance and programs tied to it will work only when prices are relatively high and farmers can insure a high level of revenue.
Missouri Farmers Union president Richard Oswald pointed out that much of the land that will be coming out of the conservation reserve program will likely go into some form of grain production, adding to supply.
The MDIS program is a way to handle surpluses, supporters said.
“If we don’t deal with surpluses in the Farm Bill, it will be just like the 1980s and there will be half of us here in 10 years,” said Kent Peppler, president of Rocky Mountain Farmers Union.
Advocates also pointed out that a more stable supply of grain would help the ethanol industry and livestock production.
In other policy issues, NFU members voted in favor of maintaining the current crop insurance program and expanding it to more crops
The group also supports re-establishing conservation compliance requirements for federal crop insurance eligibility.
It favors streamlining conservation programs but continuing adequate spending on both conservation and energy programs, including some that expire this year such as the biomass crop assistance program, which helps pay for establishing energy crops like switchgrass.
NFU, an early advocate of country-of-origin labeling, called on the U.S. Trade Representative to resolve the current dispute with Mexico and Canada over COOL and to appeal a recent World Trade Organization ruling against COOL.  If that fails, NFU favors amending WTO rules or having the U.S. considering withdrawing from the WTO. Some delegates said pulling out of the WTO isn’t realistic, but delegates voted to keep that option in their policy.

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