The Hagstrom Report

Agriculture News As It Happens


Stallman pleads for clear direction, Thatcher says ARC program likely to be challenged

HONOLULU — In a sign of the continuing splits among farm groups over the crop program in the next farm bill, American Farm Bureau Federation President Bob Stallman appealed to the delegates at the convention here to give him and the board “clear direction” in telling Congress what Farm Bureau members want in the next bill.

Stallman also encouraged the delegates to support the Farm Bureau board’s farm bill proposal, and later in the day Farm Bureau staff explained the proposal to members. Delegates will meet Tuesday to determine policies for the next year, but it is unclear whether they will back the proposal, which would create a program to provide farmers payments when they experience big losses.

Bob Stallman
Bob Stallman
“Have an open and spirited debate, but put this organization on solid farm bill footing,” Stallman told the group in his annual address. “Give us clear direction! ... Once all is said and done, let’s agree to get behind our policy and ride for the brand. … Farm Bureau must lead this discussion.”

Stallman’s statement reflected the fact that individual commodity groups rather than Farm Bureau — a general farm organization that tries to take into concern the needs of all producers — dominated the debate last year.

At the 2011 meeting in Atlanta, Stallman made the same appeal, but the delegates were unwilling to state that they were willing to give up any farm programs or even say which programs were their priorities. Instead they expressed support for the continuation of all programs, although they took a neutral stance on whether the disaster program called SURE should be continued. The SURE program has since expired.

In the past year, leaders of the House and Senate agriculture committees under pressure to cut the federal deficit have worked behind the scenes to develop a farm program that would provide protection to farmers, but cost less.

House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., submitted to the supercommittee in charge of deficit reduction a farm bill proposal that would phase out the direct payments that crop producers get whether prices are high or low, maintain crop insurance, create new options for producers and cost $23 billion less over 10 years.

The supercommittee effort failed, but the proposals that the agriculture committee leaders took from the commodity groups are believed to be the starting point for discussions this year.

Farm Bureau’s board opposed all the program options that the commodity groups proposed and that the agriculture committee leaders sent to the supercommittee, on the grounds that the policies would encourage farmers to plant to get government benefits rather than follow market incentives and not address farmers’ biggest needs.

The programs in the supercommittee proposal would have offered most crop producers the option of signing up for a “shallow loss” program called “Agricultural Risk Coverage” or ARC that would make payments to them for what crop insurance did not cover or signing up for payments that would be triggered by higher target prices. Cotton growers would get a separate program known as the “Stacked Income Protection Plan” or STAX.

The Farm Bureau board had a hard time deciding on policies last year. The board initially proposed keeping direct payments and cutting most programs on a percentage basis, but congressional leaders told them that there did not appear to be political support to continue the direct payments. The board then came up with another proposal, but it was too late for serious consideration in Congress.

Stallman told the group that Farm Bureau’s proposed “Systemic Risk Reduction Program,” or SYRRP and pronounced “syrup,” would protect them from their biggest challenges.

“This program is unique in that it will help protect America’s farmers from losses that truly endanger the very core of their farms, like catastrophic losses,” Stallman said. “While at the same time, it recognizes today’s new budget realities. It is also unique in that it can be applied to a broader range of commodities, like fruits and vegetables.”

Mary Kay Thatcher
Mary Kay Thatcher
In a separate program, Farm Bureau lobbyist and policy director Mary Kay Thatcher explained that, while the “shallow loss” program would make small payments frequently, the Farm Bureau proposal would make bigger payments for “deep losses” but in fewer years. SYRRP is a “catastrophic revenue loss program,” she said.

Farm Bureau economist John Anderson noted that SYRRP "keeps paying out the deeper the loss."

In addition to making the payments for deeper losses, the Farm Bureau proposal would lead to a rerating of farmers’ crop insurance policies that would lead to drops in premiums. The program would be delivered through the crop insurance industry, however.

Thatcher said that the Congressional Budget Office has not scored SYRRP, but that Lucas has asked CBO for a score on it.

Thatcher said she believes it is “very unlikely ARC survives” further scrutiny, but that it is likely another shallow loss program will be proposed.

Among the uncertainties about ARC, she noted, are whether the payments are made at the farm, crop district or county level, on what previous crop record — the last year, an Olympic average or other basis — the payments will be made, and whether there would be payments on acres that could not be planted for weather reasons.

She also noted that for budgetary reasons the final proposal that went to the supercommittee would have made the payments on only 60 percent of acreage.

In other comments, Thatcher noted that:
  • The principles on which Farm Bureau developed the policies (1) would not guarantee a profit, (2) would ensure compliance with the World Trade Organization standards and (3) would include a strong safety net.
  • Farm Bureau is willing to consider supporting a dairy safety net that is voluntary, but that some member want to take into consideration regional supply and demand for dairy products
  • The cost of crop insurance premium subsidies has risen to $7 billion in 2011, and crop insurance costs are likely to come under attack if they remain high.
  • The bill to impose stricter payment limits won support even from southern senators.
  • Conservation and environmental groups are generally pleased with the conservation title of the bill developed so far, and they are likely to focus on tying conservation compliance to the crop insurance program if direct payments are eliminated.
  • There is likely to be a big debate over cuts to the food stamp program, which is estimated to cost $80 billion in 2012, with one in seven Americans on the program.
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