The Hagstrom Report

Agriculture News As It Happens


Target price amendment could be key to Senate passage

Sen. Kent Conrad, D-S.D.

Sen. Kent Conrad


The target price program farm bill amendment that Senate Budget Committee Chairman Kent Conrad, D-N.D., Sen. Saxby Chambliss, R-Ga., Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. John Hoeven, R-N.D., introduced today may be the key that will get the farm bill through the Senate.

But if the House passes a bill, the two farm bills would be likely to be combined for higher target prices in conference, congressional aides and lobbyists said late today.

The commodity title of the farm bill that passed the Senate Agriculture Committee was based on a program to pay farmers for what are called the “shallow losses” that are not covered by crop insurance. That program pleases corn and soybean growers, but not rice and peanut producers.

In addition, the National Farmers Union and some other growers are concerned that the benchmark against which payments are made would decline if prices drop over several years and there are not fixed target prices to determine payments.

The Conrad proposal has been written as an add-on to the shallow-loss proposal. The amendment would raise target prices between 4 and 7 percent from their current levels, which would be lower than the prices in the proposal that was sent to the supercommittee on deficit reduction in December.

A lobbyist said the target price increases were moderate so that they could be offset. A Conrad spokesman said that the bill would be offset, but had not yet received a score from the Congressional Budget Office.

The Conrad spokesman said the offset was still under discussion, but lobbyists said the proposed offsets are the elimination of a provision under which farmers who have not grown a crop are allowed to insert “an actual production history plug” to be used as a basis for crop insurance and a cut in the new peanut revenue insurance program.

The program is expected to cost a little more than $1 billion over 10 years, with the APH plug contributing $800 million in budget savings.

Lobbyists who favor target prices and as well as those who oppose them described the Conrad bill as a “placeholder” that could get the bill through the Senate, but would not satisfy rice and peanut growers as a final piece of legislation.

If target prices are higher, then farmers would probably have to choose between the shallow loss program and the target price program. One congressional aide also suggested that another option would be to reduce the payments under the shallow loss program, known as the Agricultural Risk Coverage program. One lobbyist said that some groups would object to tying target prices to current rather than historical production because that could skew production toward some crops.

The amendment would pay farmers on 75 percent of acres planted or prevented from being planted, but not to exceed 75 percent of the total base acres for the covered commodity established for the 2012 crop year. It contains a separate payment limitation on countercyclical payments of $65,000 per year.

Conrad said, “This is one step in a process to achieve a bipartisan, multi-regional agreement on Title I provisions,” in a statement to National Journal.

“This is still a work in progress as we seek a responsible bipartisan, multi-regional approach to providing an adequate safety net for farmers and the fact that the senators from the upper plains are involved is a clear indication that other regions aren’t enamored with [shallow loss],” Chambliss said in a statement to National Journal.

Most lobbyists contacted by The Hagstrom Report today declined to comment on the Conrad amendment.

But National Farmers Union President Roger Johnson said in an email, "Based on the information we have, the amendment is a step in the right direction of providing deep price loss protection that can help farmers in all regions of the country in addition to shallow loss revenue protection."

Ferd Hoefner of the National Sustainable Agriculture Coalition, said, “This is an end-run around payment limit reform. We are not opposed to an option for price protection if it fits within the budget parameters, but we adamantly oppose any provision that weakens the payment limit reform adopted by the committee.”

One lobbyist said that the amendment proved that “Conrad and Chambliss are doing what they are known for — trying to find solutions to seemingly intractable problems.”

A list of the target prices may be found in the bill. (Link below)