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Farm bill floor debate likely

Like many other agricultural organization leaders, Chuck Conner will be watching closely this week if the U.S. Senate starts floor debate on a farm bill.

Conner, who is CEO of the National Council of Farmer Cooperatives (NCFC), knows the process from the inside out after almost two decades of experience in Washington. He worked on the staff of Senator Richard Lugar (R-IN) and was staff director of the Senate Agriculture Committee during the 1996 farm bill debate. He served as Deputy Secretary of Agriculture during the administration of President George W. Bush.

The committee reported out a farm bill in April and that bill is expected to come up for debate in the Senate early this month, possibly this week.

"This is the seventh farm bill I've worked on," Conner told recently.  "We're thrilled to see action coming out of the Senate (Agriculture) Committee."

"Having said that, there are a lot of obstacles to be overcome here," Conner said during an interview in Des Moines, Iowa, where he and other NCFC leaders were promoting their group's participation in the International Year of Cooperatives.

One of the biggest, Conner said, is that the Senate farm bill still isn't viewed as treating all regions of the country equitably.  At hearings before the House Agriculture Committee in May, farmers representing peanut and rice growers said they believe they'll benefit less than corn and soybean farmers from the Senate bill's revenue program.

Conner said that support from all regions of the country is vital to getting a farm bill passed in Congress.

"The Senate bill is still not quite there yet," Conner said.

Conner looks for a lot of amendments to be offered on the floor. In 1990, more than 110 amendments were made to that year's farm bill. Conner expects robust debate this time, too.

"I certainly think a week at a minimum,"  he said.

Some members of the Senate Agriculture Committee have told that they expect amendments that might limit USDA subsidies for farmer premiums for crop insurance.

Conner said that in his discussions with farmer members of co-ops, he hears support for crop insurance as the most common interest farmers have in the farm bill now being debated.

"We would hate to see Congress go down a path where you discourage producers from managing their own risk," Conner said.

One group that does support making large operations pay more for their insurance is the Center for Rural Affairs, based in Lyons, Nebraska.

Under the Senate's farm bill, crop insurance subsidies are expected to cost the federal government $9 billion a year. One way of lowering that cost, according to the Government Accountability Office (GAO) would be to apply a limit of $40,000 to subsidies for farmer premiums. That would save about $1 billion a year.

An analysis of that cap by the University of Illinois showed that in 2011,  a typical farm in that state would have hit the limit at 1,682 acres.  

"I think getting subsidized insurance on 1,600 acres when corn is $6 or $7 bucks [a bushel] is plenty," said Chuck Hassebrook, Center for Rural Affairs executive director on fellowship. "What rationale is there to help them control more acres at the expense of their neighbors and beginning farmers."

Hassebrook points out, too, that as prices fall, farmers would be able to insure more acres before hitting a $40,000 cap on premium subsidies. The University of Illinois study showed that in 2010, it would have taken more than 2,700 acres to hit the limit.

On acres above that amount, producers could still buy crop insurance, but with premiums that would be more than double those of the subsidized ones.

Crop insurance subsidies differ from older commodity support programs like marketing loans and counter-cyclical payments, which pay out more when prices are low and less, or not at all, when prices rise.

"Of all the forms of subsidies, this is the one that goes up as the need goes down," Hassebrook said of crop insurance premium subsidies.

As Hassebrook explained in a recent email message, "The reason farmers hit the limit at a modest size is because crop prices are so high right now, and thus crop insurance premiums are higher.  I think it is appropriate that the limit be lower at highly profitable times.  How much do farmers really need to be subsidized overall when prices and profitability are at heretofore unseen levels?"

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