Ag Policy Blog

Three major commodity groups would oppose a new farm bill and support extending the 2008 farm law for as much as two more years, as well as a cut in Direct Payments, rather than see target prices recoupled to planted acres.

The American Soybean Association, National Corn Growers Association and U.S. Canola Association sent their position letter to the four principal negotiators on the farm bill, all agriculture committee members in both chambers, and House and Senate majority and minority leadership.

"If such a resolution is not possible, we would support a two-year extension of the 2008 Farm Bill including, if necessary, a reduction in Direct Payments to achieve savings equivalent to the bills passed by both the Senate and the House," the groups wrote. "While difficult, this approach would leave sufficient funding in the commodities title to write a new farm program at such time as consensus can be achieved."

The groups stated in the letter that they realize time is short for negotiators trying to complete a farm bill this year.

"For the last two years, we have consistently opposed “recoupling” payments to planted acres under a price-based program. A similar program during the 1980’s caused major planting distortions when market prices fell below target prices. The resulting production surpluses for certain crops required supply controls, including acreage set-asides and the Farmer Owned Reserve, which undercut producer income and disadvantaged U.S. exports in world markets," the groups wrote.

Both the shallow-loss and target-price commodity programs in House version of the farm bill factors payments on up to 85% of planted acreage. The House bill does have a provision that payment acres cannot exceed a farm's base acres.

The Senate bill's target-price program is based on 85% of base acreage, though the Senate's shallow-loss program pays on 80% of planted acres under the countywide protection or 65% of planted acres under the farm-level protection.

The canola, corn and soybean groups stated they want to differences resolved on the commodity programs and even offered a compromise based on a rolling average of planted acres over the most recent five years. However, the groups won't accept what they see as the risk that farmers would dramatically shift crop acreage t because of a target-price guarantee.

"If agreement cannot be reached on this or some other approach that avoids tying payments to current-year planted acres, we would reluctantly oppose a new farm bill and support an extension of the 2008 Farm Bill," the groups wrote.

Commodity programs were decoupled from current-year crop plantings as part of the 1996 farm bill. "We strongly support continuing the current policy of providing planting flexibility to producers in a new five-year farm bill," the ASA, NCGA and USCA wrote.

The groups also noted the potential legal challenges under the World Trade Organization for distorting production and affecting world prices. The U.S. Chamber of Commerce has raised similar concerns about the prospective target-price programs.

Without a new farm bill, sequestration will reduce Direct Payments by $408 million a year until the program is replaced.

While gearing up their opposition to the acreage provisions, the soybean, corn and canola coalition still stated they did not want to see another extension.

"We very much hope this will not be the outcome of what has been a protracted and, unfortunately, divisive process."

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