The Hagstrom Report

Agriculture News As It Happens


Soy, corn, canola growers offer compromise while Grassley, Johanns comment

The American Soybean Association, the National Corn Growers Association and the U.S. Canola Association today proposed a compromise on the issue of making farm payments on planted versus base acres.

In a letter to congressional leaders, the three groups today proposed using the average of planted acres during the five years previous to the current year as the payment base for both the revenue and the price programs.

“The average would move forward, adding and dropping a year every year, in order to remain as current as possible without including the current year, which would serve as a deterrent to building base,” the groups wrote. “Consideration should be given to how effective revenue protection can be provided at both the farm and county levels under this approach.”

“We offer it as a solution which, while not the first choice of any of our organizations, is a compromise we can all support and which can help move the farm bill process to a successful conclusion,” the letter said.

Sen. Charles Grassley, R-Iowa, noted that House Agriculture Committee ranking member Collin Peterson, D-Minn., has said he wants a high target price for barley in order to encourage production and said this could lead to challenges in the World Trade Organization.

“Enacting the House commodity title will take us backwards to a time when farmers planted for the government instead of the market,” Grassley said.

“And, if anyone thinks we’re immune to World Trade Organization challenges, I would remind them that U.S. taxpayers have sent the citizens of Brazil $146 million for the last several years because our cotton program was considered too market distorting,” he said.

“Yet, even with the statement by ranking member Peterson, possible WTO challenges, and concerns with the government picking winners and losers in the commodity program, I’m hearing Chairman Lucas and his staff are trying to convince people that there is no reason to be troubled about any of these concerns with regard to planted acres. I want to get a farm bill done, but I also want to vote for a good bill that is defensible.”

House leaders and some farm groups have said, however, that making payments on historic acreage is not defensible to the American public.

Sen. Mike Johanns, R-Neb., said today that an extension of the farm bill would be preferable to passing the House commodity title.

“Some have argued that the Agricultural Risk Coverage (ARC) program in the Senate bill has some of the same flaws [as the House proposal] but the advantage of this program is that the payments run out — if prices stay low farmers are not guaranteed a payment forever,” Johanns wrote.

“Under PLC [Price Loss Coverage] those payments could continue indefinitely with no incentive for the farmer to switch crops or reduce production,” he said. “Farmers —wherever they live and whatever they grow — should make those decisions in response to demand.”

Lucas and Peterson have said, however, that they favor a target price-based program because they fear that under the Senate proposal a lengthy period of low prices would lead to a decline in the value of the safety net.