Soybean growers abandon ARC, favor updated target prices
March 11, 2013 | 04:31 PM
In the first major development of the 2013 farm bill debate, the American Soybean Association board voted today to support extending the current Counter-Cyclical Program (CCP) with updated target prices and withdraw its support for the Agricultural Risk Coverage (ARC) program it championed in 2012.
The soybean growers said they also continue to support the Supplemental Coverage Option (SCO) included in both the House and Senate versions of last year’s farm bills as a complement to federal crop insurance.
ASA will also support offering a choice between “higher options” for these two programs, recognizing that producers in different growing regions have different priorities for protecting farm income, the group said in a news release after the vote at a meeting in Washington.
The decision to opt for the CCP with updated target prices is a concession to southern growers, but the soybean growers are insisting that the payments be made on the basis of historical rather than current production, and that may cause conflict with other farm groups.
Danny Murphy
ASA President Danny Murphy, a soybean farmer from Canton, Miss., said that the matter of keeping the payments decoupled from current production “is probably not negotiable for us.”
“Payments under the CCP are based on the underlying crop acreage bases on a farm rather than on current-year plantings,” the news release said.
“This is important in the event prices for commodities fall below their target prices, which would otherwise become a factor in planting decisions and could distort production. ASA’s support for a price-based program is contingent on decoupling program payments from current year production to avoid planting distortions.”
The soybean officials said that ASA dropped its support for ARC because of ARC’s higher than expected cost and the need to find additional savings in the farm bill.
“The decoupled CCP allows producers to respond to market signals rather than government programs in making their planting decisions, which has been a key priority for ASA during the farm bill debate. It also provides a safety net against several years of low prices, which has been important to supporters of the House bill.”
Murphy added that “the SCO will provide revenue protection at the county level and is more defensible because, like crop insurance, it requires farmers to pay part of the cost of the premium.”
Under its proposal, ASA would set target prices under the CCP at levels that reflect an Olympic average of recent market prices, but officials said today that they would be open to other options for determining the price.
They also said that they would expect the target price to be fixed for the duration of the farm bill, not change each year. And they said that the exact level of target prices would be determined by how much money there is to spend.
An Olympic average of the last five years would be much higher than the current target prices. The target price for soybeans is $6 per bushel, but when asked if the target price for soybeans should be set at $10 or higher, the officials declined to comment.
In addition to modifying its position on risk management policy, ASA continues to support extending the Marketing Loan Program, eliminating the Average Crop Revenue Election program known as ACRE, and reducing or eliminating direct payments, provisions which were included in last year’s Senate and House farm bills.
The group also supports the Senate version of the cotton STAX program.
ASA also urged the Agriculture Committees to “protect the current crop insurance program as the foundation of the farm safety net, and to adopt improvements that would make it a more viable risk management tool for producers of all commodities in all regions of the country.”
In a provision that the soybean leaders said recognizes differences between commodities and growing regions, and depending on cost, ASA will support allowing producers to choose between higher target prices under the decoupled CCP program if they forego eligibility for SCO, or a higher premium subsidy under SCO if they forego eligibility under the CCP.
“Providing options has been a priority for some producers, who prefer a choice of programs over a ‘one size fits all’ approach,” Murphy said.
Murphy said that while he does not grow rice or peanuts on his Mississippi farm, he knows that those growers are not as concerned about crop insurance as the growers of other crops, and that the ASA’s program of choices should give them a chance to participate in the farm program.
ASA officials said at the news conference today that they developed the CCP proposal after meetings with the corn, sorghum and wheat groups and House and Senate Agriculture committee aides at the recent Commodity Classic meeting in Florida, but that they have not presented the proposal to other groups.
The National Corn Growers Association developed the ARC program and so far is still supporting it.
At their own policy session at the Commodity Classic, ASA members adopted a resolution that said the group “recognizes that Title 1 funding may be insufficient to cover the cost of ARC or another acceptable revenue-based risk management program.”
The boards of most major commodity groups are expected to discuss the farm bill within the next month, and a Senate Agriculture Committee mark up is likely to be held in April.
The soybean growers said they also continue to support the Supplemental Coverage Option (SCO) included in both the House and Senate versions of last year’s farm bills as a complement to federal crop insurance.
ASA will also support offering a choice between “higher options” for these two programs, recognizing that producers in different growing regions have different priorities for protecting farm income, the group said in a news release after the vote at a meeting in Washington.
The decision to opt for the CCP with updated target prices is a concession to southern growers, but the soybean growers are insisting that the payments be made on the basis of historical rather than current production, and that may cause conflict with other farm groups.
Danny Murphy
ASA President Danny Murphy, a soybean farmer from Canton, Miss., said that the matter of keeping the payments decoupled from current production “is probably not negotiable for us.”
“Payments under the CCP are based on the underlying crop acreage bases on a farm rather than on current-year plantings,” the news release said.
“This is important in the event prices for commodities fall below their target prices, which would otherwise become a factor in planting decisions and could distort production. ASA’s support for a price-based program is contingent on decoupling program payments from current year production to avoid planting distortions.”
The soybean officials said that ASA dropped its support for ARC because of ARC’s higher than expected cost and the need to find additional savings in the farm bill.
“The decoupled CCP allows producers to respond to market signals rather than government programs in making their planting decisions, which has been a key priority for ASA during the farm bill debate. It also provides a safety net against several years of low prices, which has been important to supporters of the House bill.”
Murphy added that “the SCO will provide revenue protection at the county level and is more defensible because, like crop insurance, it requires farmers to pay part of the cost of the premium.”
Under its proposal, ASA would set target prices under the CCP at levels that reflect an Olympic average of recent market prices, but officials said today that they would be open to other options for determining the price.
They also said that they would expect the target price to be fixed for the duration of the farm bill, not change each year. And they said that the exact level of target prices would be determined by how much money there is to spend.
An Olympic average of the last five years would be much higher than the current target prices. The target price for soybeans is $6 per bushel, but when asked if the target price for soybeans should be set at $10 or higher, the officials declined to comment.
In addition to modifying its position on risk management policy, ASA continues to support extending the Marketing Loan Program, eliminating the Average Crop Revenue Election program known as ACRE, and reducing or eliminating direct payments, provisions which were included in last year’s Senate and House farm bills.
The group also supports the Senate version of the cotton STAX program.
ASA also urged the Agriculture Committees to “protect the current crop insurance program as the foundation of the farm safety net, and to adopt improvements that would make it a more viable risk management tool for producers of all commodities in all regions of the country.”
In a provision that the soybean leaders said recognizes differences between commodities and growing regions, and depending on cost, ASA will support allowing producers to choose between higher target prices under the decoupled CCP program if they forego eligibility for SCO, or a higher premium subsidy under SCO if they forego eligibility under the CCP.
“Providing options has been a priority for some producers, who prefer a choice of programs over a ‘one size fits all’ approach,” Murphy said.
Murphy said that while he does not grow rice or peanuts on his Mississippi farm, he knows that those growers are not as concerned about crop insurance as the growers of other crops, and that the ASA’s program of choices should give them a chance to participate in the farm program.
ASA officials said at the news conference today that they developed the CCP proposal after meetings with the corn, sorghum and wheat groups and House and Senate Agriculture committee aides at the recent Commodity Classic meeting in Florida, but that they have not presented the proposal to other groups.
The National Corn Growers Association developed the ARC program and so far is still supporting it.
At their own policy session at the Commodity Classic, ASA members adopted a resolution that said the group “recognizes that Title 1 funding may be insufficient to cover the cost of ARC or another acceptable revenue-based risk management program.”
The boards of most major commodity groups are expected to discuss the farm bill within the next month, and a Senate Agriculture Committee mark up is likely to be held in April.
