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House leans away from Senate farm bill
Members of the House Agriculture Committee cast doubt Wednesday that they’ll follow every detail of a Senate version of a farm bill, especially for crops that may benefit less than corn and soybeans.
Agricultural economists and farm groups appeared before the Subcommittee on General Farm Commodities and Risk Management, chaired by Representative Michael Conaway (R-TX), with the ranking member, Representative Leonard Boswell (D-IA) sitting nearby. But the full committee’s chairman, Representative Frank Lucas (R-OK) also weighed in, along with Representative Collin Peterson of Minnesota, the ranking Democrat.
“…as I have said many times, farm policy has to be equitable. The Farm Bill that we craft has to recognize the diversity of agriculture in America. It has to work for all regions and all commodities,” Lucas’s opening statement pointed out. “That’s why it is vitally important that the Commodity Title provide producers with options so they can choose the program that works best for them whether it is protecting revenue or price.”
The Senate bill’s Agriculture Risk Coverage (ARC) shallow loss program drew criticism from Linda Raun of El Campo, Texas, the chairwoman of the USA Rice Producers Group.
The Senate bill’s ARC program cuts the baseline of projected spending on rice by 65% in that version of a 2012 farm bill, she said.
“That basically takes away our safety net,” she told the subcommittee.
Raun pointed out that corn farmers have benefitted from increased demand for their crop caused by the 2007 energy bill’s renewable fuel standard, which mandates that gasoline blenders use ethanol made from corn. Rice didn’t benefit, she said. Nor has crop insurance worked as well for rice farmers, who irrigate, as it has for corn.
Raun said she supports the renewable fuel standard and crop insurance. “All I ask is that rice farmers not be left out in the cold,” she said.
Joe Outlaw, an agricultural economist from Texas A&M University, pointed out that because the revenue benchmark is based on an Olympic five-year average (which tosses out the high and low years), crops with higher prices in recent years will start out with better protection.
In his prepared testimony, Outlaw said that corn, soybeans, wheat and grain sorghum are projected to have Olympic average prices that are above 2011 production costs. (As the USDA’s former Chief Economist, Keith Collins pointed out to the subcommittee, ARC only pays on a narrow band of production losses for part of a crop, so it would not a guarantee full cost of production.)
Outlaw also pointed out that the ARC program is tied to acres actually planted to commodity crops, not historical base acres.
“When you move to paying on planted acres, you’re going to increase the amount of money paid to corn and soybeans in this country,” Outlaw said.
At another point in the hearing, agricultural economist Gary Schnitkey of the University of Illinois said that planted acres of corn and soybeans have increased in regions outside of the Midwest, while acreage of wheat and other crops has declined.
Peterson asked the economists what would happen if prices for corn fell to $3 a bushel and stayed there for several years, lowering the Olympic average, and in that way decreasing protection offered by the ARC program.
Schnitkey said that could happen, but the purpose of ARC is to give farmers several years to adjust to those changes. “It would be a buffer for that period” of lower prices, he said.
Peterson said that most revenue protection programs he’s seen offer farmers protection against a narrow band of price changes.
If corn prices fall and stay low, “we’re going to have people camped out here and we’re not going to be able to do anything about it.”
Those concerns were echoed by Dee Vaughn, a Dumas, Texas farmer who is president of the Southwest Council of Agribusiness.
The ARC program replicates crop insurance, said Vaughn, who is a past president of the National Corn Growers Association (NCGA). “The one thing that crop insurance does not cover is sustained lower prices,” he said.
Vaughn said he’s concerned that ARC would not work well if farmers have another experience like the market collapse after 1996, when commodity prices fell 44% by the year 2000. Vaughn, who raises corn, soybeans, wheat, cotton and grain sorghum, said that risk applies to all regions and all crops, not just those raised in southern states.
Chip Bowling, an NCGA board member who farms near Newburg, Maryland, testified in support of the Senate Ag Committee’s ARC program.
But when asked by the subcommittee Chairman, Conaway, if NCGA is in favor of a “one size fits all” approach to commodity programs in a new farm bill, Bowling said, “We are not. We’ve been willing since the inception to work with other commodities,” he said.
At the end of the hearing, Conaway said, “My personal opinion is that a one-size fits all [approach] is not going to work.”