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Conrad crop revenue guarantee program would combine ACRE, countercyclical and SURE

By JERRY HAGSTROM

Senate Budget Committee Chairman Kent Conrad, D-N.D., is developing a crop revenue guarantee program that would make payments to crop farmers who experience “shallow revenue losses” in their whole farm incomes due to reduced yields, quality and prices, top Conrad budget aide Jim Miller said in an exclusive interview with The Hagstrom Report.

The program would combine the programs and budget for the average crop revenue election program known as ACRE, the countercyclical program, and the disaster program known as SURE and assumes that direct payments would be reduced 50 percent, Miller said.

Miller said direct payments could be cut by halving either the acreage or the payment, but that replacing them “would require a transition.”

The new program would become effective for the 2013 crop year. SURE, a disaster program in the 2008 farm bill, expires today, but Miller said Conrad’s proposal would extend SURE for all crops for 2012 and extend the other four disaster programs in the 2008 farm bill from 2012 to 2021, but with some changes, and establish a disaster program for specialty crops.

The new Conrad proposal “results in less program and payment duplication, reduces program complexity, [and] is more defensible to the public [because] it pays only those who have suffered a loss,” said Miller, who served as Agriculture undersecretary for farm and foreign agricultural services until early this year when he rejoined Conrad’s staff.

Miller, who once farmed in eastern Washington state, had worked for Conrad on the 2008 farm bill and then worked for the National Farmers Union before joining the Obama administration.

Conrad has not received a score from the Congressional Budget Office, Miller said, but believes there will be an “adequate” amount of money for the new program from the cuts, and that agriculture would still be able to contribute to deficit reduction.

Conrad has said that President Barack Obama’s proposal to cut $33 billion from agriculture over 10 years is too high, but that he would not object to cutting $14 to $15 billion, the amount that congressional aides have estimated would be cut if the super committee in charge of deficit reduction cannot come up with a proposal that can pass Congress and the alternative of cutting $1.2 trillion over 10 years is imposed.

“I would not have complained if the proposal was for $14 or $15 billion, but $33 billion is just too much,” Conrad said.

Conrad told The Hagstrom Report on Sept. 20 that he believes the Senate Agriculture Committee should pass his proposal and send it to the super committee by Oct. 14, the deadline for authorizing committees to present proposals. Miller did not comment further on Conrad’s plans to move his proposal forward.

To be eligible for the payments, farmers would have to experience a 10 percent loss and buy crop insurance or enroll in the non-insured crop disaster assistance program (NAP). Payments would not be based on the level of insurance purchased.

For details on calculating the payments, see link below.

Farmers can get crop insurance on up to 75 percent of their crops, and the Conrad proposal would cover the next 15 percent of losses.

“Farmers can’t handle a loss of 25 percent,” Miller said, noting that Congress used to pass ad hoc disaster programs to cover those losses. Passing such disaster bills has become so difficult to pass that Conrad and Senate Finance Committee Chairman Max Baucus, D-Mont., insisted that the 2008 farm bill include what was called a “permanent” disaster program, but that ends today because there wasn’t enough money to fund it all the way to the expiration of the bill on Sept. 30, 2012.

The SURE program has been subject to criticism because benefits could not be calculated until the end of the marketing year, but Miller said that Conrad’s new proposal would use the national average price received by producers during the first four months of the marketing year as a basis, which would speed up payment for a full year.

Several commodity groups and a group of senators led by Sen. John Thune, R-S.D., and Sen. Sherrod Brown, D-Ohio, have put forward other somewhat similar proposals. The proposals differ over the triggers used, the geographic area — farm, county, reporting district or state — used to determine whether a loss occurred, and whether payments are made based on whole farm income or commodity by commodity losses.

Conrad’s crop revenue guarantee program would cover all the program crops — wheat, feed grains (corn, grain sorghum, barley and oats), rice, soybeans, upland cotton, minor oilseeds, peanuts and pulse crops (dry peas, lentils and chick peas).

The proposal would also:
  • Extend SURE for all crops for 2012, but use only the first four months of the marketing year for price calculations.
  • Extend the Livestock Indemnity Program through 2021, but reduce the payment rate from 75 percent of market value to 70 percent beginning in 2013.
  • Extend the Livestock Forage Disaster Program through 2021 and maintain current payment rates.
  • Extend the Emergency Assistance for Livestock, Honey-bees and Farm-raised Fish Program through 2021, but reduce the authorized funding from $50 million per year to $30 million per year beginning in 2013.
  • Extend the Tree Assistance Program through 2021 and maintain current payment rates.
  • Establish an “ELAP” emergency assistance program for specialty crops.

Sen. Kent Conrad – Crop Revenue Guarantee Program Concept