The Hagstrom Report

Agriculture News As It Happens


Conrad preparing to introduce commodity title crop revenue guarantee

Sen. Kent Conrad, D-N.D.
Sen. Kent Conrad, D-N.D.
Senate Budget Committee Chairman Kent Conrad, D-N.D., is preparing to introduce a farm bill commodity title that would guarantee farmers 90 percent of crop revenue on their individual operations, a top aide says.

The program would replace the ACRE average revenue crop election program and the SURE permanent disaster program, said Jim Miller, Conrad’s top agriculture aide on Budget and a former Agriculture undersecretary for farm and foreign agricultural services.

“This program is designed to build on the key component of the farm safety net-crop insurance by addressing shallow farm level losses that are typically not covered by the insurance program but which can undermine a family farming operation,” Miller said in an interview with the Hagstrom Report this week.

Miller said Conrad presented the proposal to North Dakota farm leaders last week, but is only now approaching other senators with it, and does not yet have any commitments of support.

Jim Miller

Jim Miller
“Our hope is that it can be introduced on a bipartisan basis,” Miller said, noting that the concept paper has been sent to the Congressional Budget Office for scoring. He said the Conrad proposal would include budget savings of between $12 billion and $19 billion and would include the elimination of the direct payments program as well as ACRE.

Miller said Conrad’s proposal would build on the “shallow loss” program developed by Sens. Sherrod Brown, D-Ohio, John Thune, R-S.D., and others that was included in the farm bill sent to the failed supercommittee on deficit reduction in December by Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and House Agriculture Committee Chairman Frank Lucas, R-Okla.

Miller declined to criticize the other proposals, but in December, Conrad said that a “shallow loss” program with payments based on county or crop reporting district statistics could lead to farmers not getting payments when they need them, or to getting payments even though they do not have individual losses.

With farm programs undergoing so much scrutiny, the public would not stand for farmers getting payments they do not need, Conrad said. The proposal to the supercommittee also would have given farmers the option to sign up for higher target prices, but some farm leaders have said the higher target prices would skew farmers’ decisions on what crops to plant and also lead to frequent payments.

Under Conrad’s proposal, farmers would be required to purchase a minimum catastrophic level of coverage or participate in the noninsured crop disaster assistance program to be eligible to participate in what the senator is calling the “Crop Revenue Guarantee Program.”

The marketing loan program would be extended. The countercyclical program would also be extended. Target price rates would be at the same level as for the 2012 crop year. The payment acreage percentage would be reduced from 85 percent of base acres to 75 percent. Payments would be based on the average price received for the first four months of the marketing year for the eligible crop rather than the 12-month marketing year.

Crop Revenue Guarantee Program Details

Conrad’s proposal would cover the so-called “program” crops: wheat, feed grains (corn, grain sorghum, barley, oats), rice, soybeans, upland cotton, minor oilseeds, peanuts and pulse crops (dry peas, lentils, chickpeas).

It would not cover specialty crops. If a farmer chose to plant a non-program crop, the farmer would not get coverage under the program, but would not lose base acreage, Miller said.

The revenue guarantee would be for 90 percent of a producer’s and/or landlord’s eligible acreage in all counties in which the farmer/landlord operate and be commodity specific, but would not exceed the total base acres in that operation as determined for the countercyclical program.

The revenue guarantee would be based on the higher of the actual production history yield as calculated for federal crop insurance, or the most recent five-year Olympic average of actual production history yields as calculated for federal crop insurance, or the producer’s countercyclical program yield for each crop, adjusted for irrigated and non-irrigated yields.

The commodity price guarantee would be equal to the higher of the 2012 crop year target price for each commodity or the immediately preceding five-year Olympic average of national average price received by producers as determined by the Agriculture secretary.

Total eligible acres could not exceed 100 percent of the sum of all eligible historical program crop base acres as determined for the counter-cyclical payment program.

If total planted and prevented planted acres exceed total program crop base acres, payment acreage for each crop would be reduced by a percentage proportionate to the total of each individual crop’s acreage compared to the total planted and prevented planted acreage.

Each producer’s revenue would be based on the total harvested acres (or a proportionately adjusted amount not to exceed base acres), the actual yield for each crop and the national average price received by producers for each commodity as determined by the Agriculture secretary for the first four months of the marketing year during which the crop would normally be expected to be harvested.

The national average price could not be less than the commodity marketing loan rate for each commodity in each county.

The national average price would be adjusted for average quality loss discounts as determined by the state Farm Service Agency committee.

To this revenue figure would be added any marketing loan benefits, crop insurance indemnities net of the producer paid premium, countercyclical payments or disaster payments received for the eligible crop for the same production year.

Any crop subsequently planted on land determined for federal crop insurance purposes to be prevented plant acreage would not be considered in calculating either the guaranteed revenue or actual production revenue for a farm, except in those instances where the farm has a history of “double-cropping” and is located in an area where double cropping is an acceptable farming practice for federal crop insurance purposes.

The payment to the eligible program participant — producer, landlord or both — would be equal to the lesser of 60 percent times the difference between the revenue guarantee and the sum of the actual production revenue plus other revenue or 9 percent times the revenue guarantee.

Payments for prevented planted acres would be paid at a rate equal to 40 percent times the difference between the revenue guarantee and the sum of the actual production revenue plus other revenue.

Payment limits

The program would include a payment limitation of $105,000 for all commodity program payments from the crop revenue guarantee program, the countercyclical payment program and marketing loan benefits. There would be a single non-farm and adjustment gross income limit of $999,000.

SURE extension and other disaster programs

Conrad’s proposal would extend the SURE program for all covered commodities and peanuts for fiscal year 2012 with some modifications, and also extend, with modifications, the other expired disaster programs for livestock indemnity, livestock forage, emergency assistance for livestock, honey bees and farm-raised fish and the tree assistance program from 2012 to 2021.

Risk Management Agency authorities

The Conrad proposal would eliminate authority for RMA to implement the “good performance refund program” and give it authority to make supplemental group area coverage available.

Miller noted that Rep. Randy Neugebauer, R-Texas, has already made a supplemental group insurance policy proposal.