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Senate farm bill proposal includes average crop revenue plan

Senator Tom Harkin, Chairman of the Senate Agriculture Committee announced Wednesday that he has reached an agreement with other key members of his committee, Senator Kent Conrad (D-ND) and Senator Saxby Chambliss (R-GA) to move the bill out of his committee, probably next week.

The Senate farm bill proposal increases spending for cellulosic ethanol, conservation and fruits and vegetables in schools as well as creating a new, optional farm program called average crop revenue or ACR. Harkin said the ACR is modeled on a proposal from the National Corn Growers Association for a revenue-based safety net.

"We believe the range of geographical and philosophical views and interests on our Committee are addressed in a balanced way by the understanding that we've come to," Harkin said.

The bill includes $4 billion over five years in new money for one of Harkin's top priorities, conservation, It restores the wetlands reserve program and grasslands reserve program and provides $1.28 billion for the conservation security program, which has been renamed the conservation stewardship program.

Harkin said the ACR program would be offered to farmers on a voluntary basis if they opt out of the current safety net -- the direct and counter-cyclical payments and marketing loan program. Instead, producers fixed $15 an acre payment for all crops each year as well as payments if yields and prices drop below expected revenue on a state level. Harkin said he believes the ACR will be a better safety net. It would not hurt the crop insurance industry, either, he said.

"I think people will actually buy more crop insurance," he said. Farmers would still need to purchase insurance to cover losses at the county or farm levels.

The Congressional Budget Office estimates that the ACR will save the federal government between $3 billion and $3.5 billion over the life of the farm bill, something that Harkin admitted was a surprise.

"When I first got the word on the savings, I told Mark, run this through again," he said, referring to his top ag staffer, Mark Halverson.

This farm bill proposal will provide 1.3 billion dollars in investments into farm-based energy by supporting programs to help farmers begin to establish biomass crops and offering resources for grants and loan guarantees for cellulosic biorefineries, Harkin said.

"Five years from now we're going to see cellulosic ethanol plants spring up like mushrooms all over the country," Harkin said.

The bill would not allow state-inspected meats to be sold in interstate commerce, which is part of the House farm bill passed last summer. Consumer and labor groups have mounted opposition the state-inspected meat sales, which is strongly supported by the National Association of State Departments of Agriculture.

Nor is the bill likely to have firm payment limits, our sources say.

"We expect there to be some form of payment limitations but that is being worked out now," Harkin's press aide, Kate Cyrul, said Wednesday.

Instead of a cap of $250,000 favored by Ag Committee member Senator Chuck Grassley (R-IA), many farm lobbyists expect the committee to approve some form of income test similar to the House bill's ban on payments to anyone with adjusted gross income over $1 million.

A press release from Senator Kent Conrad's office mentions no income test and says only that the bill would end the three-entity rule that has allowed multiple farms to get payments in the past.

Reaction to the bill was mixed. The National Association of Wheat Growers and crop insurance interests were opposing the ACR program.

In a letter to Harkin and Chambliss, the committee's ranking Republican, NAWG president John Thaemert said, "The Board of Directors, officers and staff of the National Association of Wheat Growers have spent a significant amount of time over the last two and half years reviewing proposals like this and, while we would agree that the revenue programs, in theory, sound good, we have come to the conclusion that, for wheat growers, they just will not work.

"Any program that is based on averages -- whether at the national, state or county level -- will always produce winners and losers," Thaemert wrote, urging that Congress instead consider improvement to crop insurance programs after finishing the farm bill. The ACR might also have "unintended consequences" under trade agreements, he added.

American Farmland Trust, which supported a revenue-based farm bill introduced by Senators Dick Durbin (D-IL) and Sherrod Brown (D-OH), likes parts of the bill.

"From what we can tell, it closely tracks the Durbin-Brown bill," Ralph Grossi, president of American Farmland Trust told Agriculture Online. "This is a very good move forward."

Grossi said that the $15 an acre fixed payment should be about what wheat producers now receive from direct payments and it would be more than the $8 an acre typical of direct payments on soybean ground.

And, he added, "by doing this, it should allow farmers to buy higher levels of crop insurance at lower cost."

The $4 billion increase in conservation spending is more than the $5 billion AFT and many conservation groups had wanted. "A few days ago, this was around $3 billion. We’re definitely moving in the right direction," Grossi said.

On payment limits, the Sustainable Agriculture Coalition and 17 other groups warned against using "a fake reform measure included in the House-passed version of the farm bill.

"The current strategy of the anti-reform proponents is to suddenly take on the rhetoric of reformers. Stressing 'transparency' they now say they support directly attributing payments to real people rather than hiding payments behind the corporate veil, something they have historically opposed" the group said in a statement. "Transparency is not new and not in and of itself reform."

Senator Tom Harkin, Chairman of the Senate Agriculture Committee announced Wednesday that he has reached an agreement with other key members of his committee, Senator Kent Conrad (D-ND) and Senator Saxby Chambliss (R-GA) to move the bill out of his committee, probably next week.

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