Waterloo Cedar Falls Courier, IA
11-25-07
Profitable crop prices soften Farm Bill delay
By MATTHEW WILDE, Courier Staff Writer
WATERLOO --- The 2007 Farm Bill may be hog tied by bureaucratic red tape, but local farm leaders say the absence of new legislation shouldn't impact farmers in the near term.
The 2002 Farm Bill, which many local producers and farm organizations hailed as a success, expired at the end of September. Congress, though, departed for Thanksgiving break last week without a new five-year version to take its place. Both political parties blame each other for the delay.
The House of Representatives passed its $286 billion version in July. The Senate, though, failed recently to do the same. Its bill is estimated at $288 billion.
Senate Democrats said Republicans tried to kill or delay the bill by offering numerous and irrelevant amendments, like immigration. Republicans countered by saying the opposition is trying to stifle the political process. More than 250 amendments were offered.
"Unfortunately the bill is caught up in the political process," said John Hoffman, a Waterloo farmer and president of the American Soybean Association. "Hopefully the Senate will get back to start debating amendments germane to the bill."
Some farm experts and local lawmakers speculate a new bill won't be finalized until sometime next year. There just isn't enough time for the Senate to pass a bill and reconcile it with the House version when Congress reunites after Thanksgiving and adjourns for Christmas, officials said.
Normally this would be of grave concern to farmers contemplating expensive land, machinery and seed purchases for next year. Most producers want an idea of how much government crop subsidy payments they could get and what type of income safety net is available prior to making these decisions.
Two Northeast Iowa farmers in charge of the national corn and soybean associations say finalizing a bill is important, but profitable commodity prices doesn't make it as urgent as other years when prices were low.
"I think farmers in Northeast Iowa would like to see a bill get passed. It's a good thing we have some high prices and the market (not government payments) will dictate planting decisions," Hoffman said.
Cash corn at East Central Iowa Cooperative in La Porte City closed at $3.57 per bushel when markets closed Tuesday, while soybeans were $10. March corn traded near $4 on the Chicago Board of Trade; soybeans topped $11.
Ron Litterer, who farms near Greene and is the president of the National Corn Growers Association, agreed black ink instead of red makes the delay more palatable. Farmers aren't relying on the government to earn living like in year's past.
"With the market where it's at for corn and soybeans, farmers will be able to make their planting decisions. Simply put, market prices are substantially above when the previous Farm Bill was debated," Litterer said.
In November 2001, cash corn in Iowa averaged $1.80 per bushel and soybeans were $4.14, according to the National Agricultural Statistics Service.
Senate Democrats attempted to limit debate on amendments to push the bill forward. The "cloture" motion failed last week by a 55-42 vote, 60 were needed.
Roger McEowen, director of the Iowa State University Center for Agriculture Law and Taxation, said Farm Bill delays aren't uncommon. The 1996 Farm Bill was slated to go into effect the year before.
"It became obvious right away they (senators) couldn't agree on amendments. Now (passage) could be as late as April or May," McEowen said, who's been discussing the farm bill with lawyers and accountants specializing in agriculture.
Supporters of the House bill say it maintains strong safety net programs established in 2002 with minor changes. Direct payments stay the same and marketing loan payments and counter-cyclical payments still kick in when prices dip below certain levels. Due to profitable prices during the past two years, counter-cyclical and marketing loan payments haven't been issued.
A new twist in the House commodity title is an option to enroll in a new revenue-based counter-cyclical program instead of the price-based version. Producers would receive payments for a commodity when the actual national revenue per acre doesn't meet specific targets.
Only 13 percent of the House Farm Bill is for the commodity title. The rest goes for food and nutrition funding, conservation and numerous other ag and food-related spending.
The ASA supports the House version because it's a good mix of old and new ideas. Even though prices are up, Hoffman said the cost of production has also risen by 33 percent in the past year due to increasing seed, fertilizer and diesel prices. Just because crop prices are high, that doesn't mean farming will be profitable in the future, so a revenue-based program is good, Hoffman said.
"This gives farmers an option," Hoffman said, referring to the two counter-cyclical programs. "With more capital and risk involved, we need to have some certainty to plan strategically for the future."
Farm programs were established in the 1930s to ensure a safe and plentiful food supply. Simply put, there are too many variables that impact farmers' income that are out of their control such as the weather, natural disasters and crop input costs. If producers can't make a living farming, they won't do it, the government surmised.
The same principle applies today.
"That's why there is justification for farm programs," Litterer said.
When writing farm legislation, the differences often occur on how to do it, how much to provide and who should receive payments.
The Senate proposes to extend the current farm safety net through the 2012 crop year. It wants to retain current base acres and adds newly-eligible crops.
However, it reduces direct payments and eliminate marketing loan payments in favor of a new Average Crop Revenue program. It would boost payments for some crops, officials said, and reduce them for others during the last three years of the bill. For corn and soybeans, it would provide about $15 per acre across the board.
President Bush has already issued a veto threat saying crop subsidies weren't cut enough during a time of relative prosperity for farmers.
"The ACR does address some reform, but it goes too far and eliminates LDPs (loan deficiency payments, otherwise known as marketing loans) and reduces direct payments," said Mark Salvador, national policy adviser for the Iowa Farm Bureau Federation.
Both legislative bodies want to extend the Milk Income Loss Contract program through the life of the Farm Bill and enhance conservation efforts. For example, the House wants to expand funding for the Environmental Quality Incentives Program each year through the end of the Farm Bill, up to $2 billion in 2012.
Iowa senators Chuck Grassley and Tom Harkin, chairman of the Senate Agriculture, Nutrition and Forestry Committee, have both said they aren't deterred by the president's threat and will write the best Farm Bill for the nation.
If the bill gets delayed too long, farm experts said their could be consequences. If the 2002 Farm Bill is extended a year or two, as proposed by some lawmakers, the amount of money allotted to agriculture could be reduced as budgets continue to tighten.
"I don't care (about a veto threat)," Grassley said. "He's (president) concerned about raising taxes. We didn't give money to the agriculture committee that isn't very helpful to agriculture and conservation."