WASHINGTON, April 19, 2012- In a letter to Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) and Ranking Member Pat Roberts (R-Kan.) this morning, a group of eight prominent agricultural associations voiced its support for the Senate’s approach to the 2012 Farm Bill, and raised several issues related to commodity and risk management programs.
Co-signed by the 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, the letter commended the committee for adhering to its original proposal of $23 billion in deficit reduction proposed to the Joint Select Committee on Deficit Reduction last fall. Additionally, the groups applauded the Committee’s decision not to restructure the federal crop insurance program or to reduce its funding for deficit reduction purposes.
“Crop insurance,” stated the groups, “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.”
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.
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,” stated the groups. “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.”
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,” said the groups. “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.”
Finally, the groups advocated the continuation of the marketing loan program, urging 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,” stated the groups in the letter. “It is important that farmers remain in the program so that our country can maintain conservation compliance on agricultural lands.”
The text of the entire letter is below:
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