Des Moines Register
09-10-06
Corn growers pitch new subsidy program
The ISU-originated plan ties the aid to fluctuations in farmers' revenue, not just
crop prices.
BY PHILIP BRASHER
REGISTER WASHINGTON BUREAU
Washington, D.C. - The area where David Cleavinger farms in the Texas
panhandle once produced 60 to 70 bushels of wheat per acre.
This year, the crop was so poor he turned his cattle on it to graze. It's been that
way for several years because of a prolonged period of dry weather that has
plagued the Great Plains from Texas to Montana.
The problem is there has been little in the way of government payments to
compensate.
"When you don't have a crop, that's when you need" the payments, said
Cleavinger, who farms west of Amarillo.
Drought is a double whammy for farmers: They don't have a crop to sell and,
because of the poor harvest, market prices are so high that farmers are ineligible
for key government subsidies.
The price of wheat is expected to average $4.20 a bushel this year, more than $1
above the price, or loan rate, that triggers subsidies known as loan deficiency
payments.
So it makes sense that Cleavinger and other wheat growers have been taking a
look at a new subsidy program being shopped around farm groups by the
National Corn Growers Association.
The idea: Link subsidies to fluctuations in farmers' revenue, not just crop prices.
That way, farmers would get subsidies when production is poor, not just when
prices are low.
Proponents see a number of benefits to the idea, which was developed by
economists at Iowa State University:
- It could eliminate the need for emergency disaster aid, which is getting
increasingly hard for farmers to get out of Congress.
- Farmers would not reap the subsidy windfalls they sometimes get when bumper
crops or market disruptions push market prices down. Last year, corn growers
collected huge government checks when Hurricane Katrina caused a temporary
drop in prices.
- Loan deficiency payments could be eliminated. Those payments have drawn
the ire of farmers in Brazil and other poorer countries for encouraging U.S.
growers to overproduce and drive down world commodity prices.
The bottom line: When crops are poor, farmers would get bigger subsidies than
they do now. Subsidies would be lower than they are now when prices, but not
production, are down.
The plan wouldn't necessarily save taxpayers money. However, an analysis of
the original ISU plan, which has been modified by the corn growers, found it
would have paid $34 billion between 2000 and 2004 vs. $51 billion under the
current system. During some earlier periods, the new plan would have paid
farmers more.
Representatives of the National Association of Wheat Growers and other groups
were briefed on the proposal recently at a meeting in Des Moines.
"I don't think there's a commodity out there that doesn't have a version of this that
they're looking at somewhere," said Jon Doggett, the corn growers' vice
president of public policy.
"It might be locked away in a cabinet in the back room, but I have the feeling that
quite a few people are looking at this."
His group plans to bring up the plan at a House hearing this week and have
economists analyze it to see how it would work nationwide.
Doggett's group hasn't officially endorsed the plan, and it remains to be seen how
many other commodity groups it can sign up. Cotton growers, for example, love
the 2002 farm bill and want to see it extended rather than allowed to expire next
year as scheduled.
Other groups fear U.S. trade negotiators would give up valuable leverage if
Congress were to eliminate an existing subsidy program before other countries
agree to lower their barriers to U.S. agricultural exports.
"To do anything other than extending the current farm bill for at least a year
sends a message that we're soft in our position on trade," said Mark Salvador,
national policy adviser for the Iowa Farm Bureau.
Even the wheat growers aren't sure the revenue-protection plan is the answer.
That's because the payments would be based in part on farmers' recent yields,
and after several years of poor crops, those yields aren't very good, said
Cleavinger, second vice president of the National Association of Wheat Growers.
"There are still a lot of questions that have to be answered about it," he said.
*****
Reporter Philip Brasher can be reached at (202) 906-8138 or
pbrasherdmreg.com