Friday, December 06, 2013

Fight among commodity interests makes it more likely that farm law will need short-term extension

The Farm Bill continues to hit snags, as soybean and corn interest groups push congressional negotiators for measures favorable to them. That has the negotiators to test new options "for paying crop subsidies on some variation of a farm’s historic base acres — rather than what’s actually being planted each year," David Rogers reports for Politico. "The reversal dashes early hopes — shared by the House and Senate — to adopt a more transparent system of paying on planted acres. Indeed, a major criticism of the current direct cash payments to farmers is that the money goes out regardless of what is being planted, if anything at all."

"The rough goal now is to pay on 85 percent of base acres for both the new revenue and price loss programs in the proposed commodity title," Rogers writes. "But much depends on what scores come back from the Congressional Budget Office Monday. And at this stage it seems almost certain that the House will not vote before it goes home next Friday, Dec. 13." That has spurred talk of a short-term extension of current farm law to some date in January.

House Speaker John Boehner told reporters the House is ready to give farm-bill negotiators a short-term extension, and House Agriculture Committee Chairman Frank Lucas indicated on Farm Journal's "AgriTalk" this week that negotiations may run into next month, Chris Clayton reports for DTN/The Progressive Farmer

Rogers reports, "Midwest Republicans in the Senate, allied with corn and beans, were most adamant that base acres be used for a new target price program advocated by the House. But as corn prices have fallen over the summer, the Senate’s own revenue protection option — paid on planted acres —became vulnerable to the same complaint. Last week the National Corn Growers Association and American Soybean Association, which had supported planted acres themselves, warned they would oppose the bill unless all payments were decoupled from current production."

What this means is that "special accommodations will have to be made for millions of 'orphaned' cotton base acres, no longer qualifying for the commodity programs," Rogers writes. "At the same time, negotiators are testing what it will cost if farmers were to be allowed to reallocate plantings within their base. Such a reallocation seems almost certain for farms with a cotton base [that] have been planting other crops in recent years. But if done on a national scale, the costs could be high given the expansion of corn."

"Corn and soybeans’ victory in this case comes at the expense of those Midwest farmers who had been hoping that aid would be distributed according to average planted acres of recent years. In many cases that would be significantly higher than a farm’s base acres," Rogers writes. "The other side of the coin is that the drop in corn prices means that corn growers will very likely qualify for generous assistance under the new Agriculture Risk Coverage program, which is the mainstay of the Senate’s commodity title. So much so, that if corn were to reach $4 per bushel in 2014, a farmer could double what he now gets in direct cash payments—paid on base acres." (Read more)

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