The Hagstrom Report

Agriculture News As It Happens


Decline in corn prices, RFS requirements affect commodity title debate

Lower prices for corn and other commodities and the Environmental Protection Agency’s decision to lower the volumetric requirements under the Renewable Fuel Standard appeared to be affecting the debate over the farm bill today.

Commodity groups have been divided over what kind of program should replace the direct payments that crop farmers have been getting whether prices are high or low, and whether those payments should be made on a farmer’s record of previous plantings or on current plantings. The type of program has implications for what farmers plant and also how much money goes to each state and region.

Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., said today that the commodity title would be a combination of the Senate and House titles.

House Agriculture Committee Chairman Frank Lucas, R-Okla., told reporters today that the decline in corn prices has changed all the dynamics in the farm bill.

“People who in good faith were told that the RFS would guarantee good prices forever” have learned “you can trick” the market for only a while, Lucas said. EPA should have “tweaked” the RFS two years ago — before the 2012 election — rather than waiting until there was a huge corn crop, he said.

The lower cash prices for corn, Lucas said, “might make people more realistic,” about what kind of farm program is needed, adding that until prices dropped the commodity groups had been divided into two camps.

The changes in weather, the dramatic improvements in yields and now the RFS announcement have led to wild price swings, and have created more of a “sense of urgency” about the farm bill, he said, adding that input and land prices have all risen during the years of high prices and that farmers “can’t go back to the way life was.”

“EPA has made the case for a safety net that works,” Lucas added.

He also said the changing price situation had increased resistance to the farm subsidy payment limit provisions in the bill.

Lucas declined to go into details but he seemed to be referring to the likelihood that, with low prices, farmers might get more government subsidies and go over the proposed payment limit caps.

Sen. Charles Grassley, R-Iowa, noted today that both the House and the Senate bills contain provisions tightening up the definition of who is “actively engaged” in farming and eligible for subsidies, but that debate over changing the definition is continuing.

“We have the two bills with the exact same language and a scathing report from the GAO,” Grassley said.

“There is no reason for these provisions to even be a part of the discussion,” he said. “We need to close loopholes that have allowed non-farmers to game the system. The longer we let this happen, the easier it will be for opponents of farm programs to argue for no farm bill.”

“And, quite honestly, I don’t understand how anyone can promote closing loopholes for food stamps if they don't also support closing the loopholes non-farmers, many of whom have other significant income, are using,” Grassley said.