Groups Share Farm Bill Thoughts

Eight farm organizations voice support for Senate's approach to the 2012 Farm Bill, but raise concerns about commodity and risk management programs.

Published on: Apr 20, 2012

A letter sent to Senate Ag Committee Chair Debbie Stabenow, D-Mich., and ranking member Pat Roberts, R-Kan., Thursday raised several issues related to commodity and risk management programs. Co-signed by eight prominent ag associations, the letter commends the committee for adhering to its original proposal of $23 billion in deficit reduction that came from the Joint Select Committee on Deficit Reduction last fall. And the groups spoke in favor of the committee move to not restructure federal crop insurance, or reduce its funding for deficit cutting purposes.

The eight groups include American Farm Bureau Federation, American Soybean Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Sunflower Association, U.S. Canola Association and USA Dry Pea & Lentil Council.

BUILD AWAY: Senates approach to a new farm bill pleases eight key groups, but there are cautions.
BUILD AWAY: Senate's approach to a new farm bill pleases eight key groups, but there are cautions.

In a release announcing the letter, AFBF President Bob Stallman says: " Even with the clear and real need to reduce our federal deficit, it remains in the best interest of our nation to help ensure a basic level of risk management for farmers and our food supply."

The groups say crop insurance "is the core risk management tool used by our producers, and the current program should serve as the foundation for providing additional protdection against loss."

In response to concerns from other commodity groups about a revenue-based approach, the groups advocate making changes in the crop insurance program to enhance its viability as a risk management tool, while maintaining the effectiveness of the existing program for other commodities. The groups do not, however, support program alternatives that tie current-year production to fixed price supports, which can distort planting decisions and production between commodities when market prices decline.

"NCGA strongly believes a farmer should be able to absorb a price or yield loss in any given year," said NCGA President Garry Niemeyer, a corn grower from Auburn, Ill. "However, we are trying to protect farmers, especially young farmers, when they are facing these types of losses multiple years in a row."

In addition to crop insurance, the groups advocated heavily for planting flexibility for farmers. "Our top policy priority for Title 1 in the 2012 Farm Bill is to maintain full planting flexibility and avoid potential planting distortions, so producers are encouraged to follow market signals rather than making planting decisions in anticipation of receiving payments under government programs," the groups say.

In the letter, the groups also advanced their concept for a new program to complement the risk protection provided under crop insurance. "Our organizations support an approach that partially compensates for current-year revenue losses on a crop-specific basis," the groups say. "We believe this approach would have an insignificant impact on planting decisions because of the percentage of risk covered. Also, revenue benchmarks would be adjusted annually to reflect recent average commodity prices, and certification of revenue loss would be required."

And the groups advocated continuation of the marketing loan program, urging the Committee to oppose any changes in the current law regarding payment limits or eligibility for farm programs based on Adjusted Gross Income. "Currently 98% of U.S. producers participate in the farm program and comply with their conservation requirements. It is important that farmers remain in the program so that our country can maintain conservation compliance on agricultural lands."

The complete text of the letter runs below:


April 19, 2012

The Honorable Debbie Stabenow
Committee on Agriculture, Nutrition and Forestry
United States Senate
328-A Russell Senate Office Building
Washington, D.C.  20510

The Honorable Pat Roberts
Committee on Agriculture, Nutrition and Forestry
United States Senate
328-A Russell Senate Office Building
Washington, D.C.  20510

Dear Chairwoman Stabenow and Ranking Member Roberts:

With mark-up of the 2012 Farm Bill by your Committee expected to begin next week, the undersigned farm organizations would like to provide you with our common views on issues related to commodity and risk management programs.

First, we commend you for affirming that the Committee will seek deficit reduction savings in the farm bill totaling $23 billion over ten years, the same amount you committed to make to the Joint Select Committee on Deficit Reduction last fall.  The balance of funds available will enable the Committee to provide an adequate safety net for American farmers as well as to fund other key priorities.

We also commend the Committee's decision during the Super Committee process to not restructure the federal crop insurance program or to reduce its funding for deficit reduction purposes.  Crop insurance is the core risk management tool used by our producers, and the current program should serve as the foundation for providing additional protection against loss. 

Our top policy priority for Title 1 in the 2012 Farm Bill is to maintain full planting flexibility and avoid potential planting distortions, so producers are encouraged to follow market signals rather than making planting decisions in anticipation of receiving payments under government programs.  This policy has been key to increasing farm profitability since enactment of the 1996 Farm Bill.  With the anticipated elimination of direct payments and possible restructuring or elimination of the counter-cyclical program, it is imperative that any alternative program included in the next farm bill be structured in a manner to not distort planting decisions and to provide full planting flexibility. 

With regard to development of a new program that complements the risk protection provided under crop insurance, our organizations support an approach that partially compensates for current-year revenue losses on a crop-specific basis.    We believe this approach would have an insignificant impact on planting decisions because of the percentage of risk covered.  Also, revenue benchmarks would be adjusted annually to reflect recent average commodity prices, and certification of revenue loss would be required.

We recognize that farm organizations representing producers of some commodities do not support a revenue-based approach.  We support efforts to address these concerns by making changes in the crop insurance program that enhance its viability as a risk management tool, while not reducing the effectiveness of the existing program for other commodities.  We do not support program alternatives that tie current-year production to fixed price supports, which can distort planting decisions and production between commodities when market prices decline.

Finally, we support continuation of the marketing loan program, and urge the Committee to oppose any changes in current law regarding payment limitations or eligibility for farm programs based on Adjusted Gross Income.  Currently, 98 percent of U.S. producers participate in the farm program and comply with their conservation requirements.  It is important that farmers remain in the program so that our country can maintain conservation compliance on agricultural lands.

Thank you very much for your consideration of our views.  We look forward to working with you as the Committee moves forward to complete a new farm bill in 2012.

Sincerely yours,

American Farm Bureau Federation
American Soybean Association
National Association of Wheat Growers
National Barley Growers Association
National Corn Growers Association
National Sunflower Association
U.S. Canola Association
USA Dry Pea & Lentil Council