Farm groups disagree on proposals, Glauber says they will be amber box
Correction
The commodity groups pushing for higher target prices do not include cotton. The United States lost a World Trade Organization case involving cotton subsidies to Brazil, and there is an attempt within the development of the farm bill to change the cotton program so that it meets WTO standards.
By JERRY HAGSTROM
Coalitions of northern and southern growers issued competing statements today on the structure of new programs that farm leaders on Capitol Hill are considering, while a key Agriculture Department official said that the demise of direct payments and the creation of new commodity programs may mean that the United States will have to notify the World Trade Organization that more of its farm programs should be classified in the amber box of trade-distorting payments.
House Agriculture Committee ranking member Collin Peterson, D-Minn., told reporters today that the leaders had gotten a score from the Congressional Budget Office that was over the amount that can be spent.
There were conflicting reports on the status of the bill. A well-placed congressional aide told The Hagstrom Report today that the committee staffs are “still finalizing a few things,” but that the bill should be released this week, possibly Wednesday. But another key aide said he was unaware that the bill had moved that close to resolution, even though members are under intense deadline pressure.
The debt ceiling bill that created the super committee said the committee has to vote on a deficit reduction package by Nov. 23, and that if the committee produces a bill, both the House and Senate have to vote on it by Dec. 23. The agriculture committee leaders have told the super committee they would support a $23 billion cut in farm programs over 10 years, but want to include a new five-year farm program in the bill.
There were reports Monday that farm leaders have been considering one program for corn, soybean and wheat growers and separate programs for cotton, rice and peanuts.
Late today commodity groups representing cotton, rice, peanuts and grain sorghum growers issued a news release urging the development of a farm bill “that maintains equity among all of U.S. agriculture.” A spokesperson for the one of the groups said the bill’s programs appeared to still be in play.
The groups representing southern commodities jointly urged the farm leaders “to be mindful of the potential imbalance and disproportionate effects of payment limits.”
Linda Raun, USA Rice Producers Group chairman and a Texas rice producer, said, “In developing a choice of policies for producers there must be equity between the options so as to minimize any discrimination against certain crops or regions, and the equity should account for the current differences in crop insurance availability and impacts of payment limitations across different commodities.”
Groups representing soybean, wheat, barley, corn, sunflower, canola and dry pea and lentil growers sent congressional farm leaders a letter today that they are worried that a program to increase target prices being pushed by cotton growers will distort planting decisions.
“The space between crop insurance protection and when a farm business is no longer viable is individual to that particular operation. Therefore, any revenue program established should provide protection at the farm level,” the northern groups said.
“We understand and accept that some other commodities have determined that a revenue-based program may not provide adequate support or protection for producers of their commodities, and that they prefer a target price based system or a STAX program in the case of cotton,” the northern groups continued in their letter to the agriculture committees.
“We do not object to a target price or STAX program being offered to only those commodities so long as the support offered is rational and does not distort planting decisions or crop production,” the northern groups wrote.
“However, as we have emphasized to your staff in recent days, we have grave concerns that the target price program being contemplated will do exactly that. If target prices are raised as proposed and farmers are not limited to receiving target price protection for a specific crop to that crop’s historical base acreage and program yield, the program certainly will distort market signals for basic commodities and disincentivize rotational practices that are essential to proper land stewardship. We strongly urge you to correct these deficiencies and remove the target price option for our commodities before submitting a proposal to the Joint Committee. “
The groups added, “We will not support a farm policy that distorts planting decisions and incentivizes producers to plant for a farm program rather than the marketplace. We know this is bad policy – costly, ineffective and simply unacceptable to our members and the American public.”
Meanwhile, USDA Chief Economist Joe Glauber said today that most of the programs under consideration would be likely to be categorized as trade-distorting under WTO rules.
The “shallow loss” revenue program would probably be categorized as a product-specific trade distorting subsidy in the amber box, disaster aid would be non-product specific in the amber box, direct payments linked to the cost of production would be amber box and the new dairy program could be categorized as green or amber or put in the mid-distorting blue box depending on how it is finally constructed, Glauber said.
He spoke at a seminar comparing current U.S. and European farm program proposals. It was sponsored by the International Food & Agricultural Trade Policy Council and held at the Johns Hopkins School of Advanced International Studies.
Commodity prices have been so high and price-related subsidy payments have been so low that the United States is way below its allowed level of $19.6 billion per year in trade-distorting subsidies, Glauber said. Tying program payments to actual losses would raise the potential for higher outlays under trade distorting payments in the future, he said, but he also noted that agriculture committee staffers working on the new bill have been very conscious of the WTO implications of the proposals and have frequently sought his opinion on them.
Glauber joked that direct payments, which academics praised when they were instituted in 1996 because they did not affect production decisions, have become so unpopular in the United States that he has taken to calling the two periods of farm bill development as “The Reformation” and “The Counter Reformation.” But he added that he has become careful about that phrasing because it has been pointed out to him that the Counter Reformation involved the Inquisition.
Tassos Haniotis, a former agriculture counselor in the European Commission office in Washington who now works in the directorate of agriculture in Brussels, noted that the Europeans intend to maintain the single-payment scheme that is similar to the U.S. direct payments, but only much bigger and going to more farmers. Haniotis also presented a wide range of changes the commission has proposed beginning in 2014.
