Waterloo Cedar Falls Courier, IA
11-25-07
Profitable crop prices soften Farm Bill delay
By MATTHEW WILDE, Courier Staff Writer
WATERLOO --- The 2007 Farm Bill may be hog tied by bureaucratic red tape,
but local farm leaders say the absence of new legislation shouldn't impact
farmers in the near term.
The 2002 Farm Bill, which many local producers and farm organizations hailed
as a success, expired at the end of September. Congress, though, departed for
Thanksgiving break last week without a new five-year version to take its place.
Both political parties blame each other for the delay.
The House of Representatives passed its $286 billion version in July. The
Senate, though, failed recently to do the same. Its bill is estimated at $288 billion.
Senate Democrats said Republicans tried to kill or delay the bill by offering
numerous and irrelevant amendments, like immigration. Republicans countered
by saying the opposition is trying to stifle the political process. More than 250
amendments were offered.
"Unfortunately the bill is caught up in the political process," said John Hoffman, a
Waterloo farmer and president of the American Soybean Association. "Hopefully
the Senate will get back to start debating amendments germane to the bill."
Some farm experts and local lawmakers speculate a new bill won't be finalized
until sometime next year. There just isn't enough time for the Senate to pass a
bill and reconcile it with the House version when Congress reunites after
Thanksgiving and adjourns for Christmas, officials said.
Normally this would be of grave concern to farmers contemplating expensive
land, machinery and seed purchases for next year. Most producers want an idea
of how much government crop subsidy payments they could get and what type of
income safety net is available prior to making these decisions.
Two Northeast Iowa farmers in charge of the national corn and soybean
associations say finalizing a bill is important, but profitable commodity prices
doesn't make it as urgent as other years when prices were low.
"I think farmers in Northeast Iowa would like to see a bill get passed. It's a good
thing we have some high prices and the market (not government payments) will
dictate planting decisions," Hoffman said.
Cash corn at East Central Iowa Cooperative in La Porte City closed at $3.57 per
bushel when markets closed Tuesday, while soybeans were $10. March corn
traded near $4 on the Chicago Board of Trade; soybeans topped $11.
Ron Litterer, who farms near Greene and is the president of the National Corn
Growers Association, agreed black ink instead of red makes the delay more
palatable. Farmers aren't relying on the government to earn living like in year's
past.
"With the market where it's at for corn and soybeans, farmers will be able to
make their planting decisions. Simply put, market prices are substantially above
when the previous Farm Bill was debated," Litterer said.
In November 2001, cash corn in Iowa averaged $1.80 per bushel and soybeans
were $4.14, according to the National Agricultural Statistics Service.
Senate Democrats attempted to limit debate on amendments to push the bill
forward. The "cloture" motion failed last week by a 55-42 vote, 60 were needed.
Roger McEowen, director of the Iowa State University Center for
Agriculture Law and Taxation, said Farm Bill delays aren't uncommon. The
1996 Farm Bill was slated to go into effect the year before.
"It became obvious right away they (senators) couldn't agree on amendments.
Now (passage) could be as late as April or May," McEowen said, who's been
discussing the farm bill with lawyers and accountants specializing in agriculture.
Supporters of the House bill say it maintains strong safety net programs
established in 2002 with minor changes. Direct payments stay the same and
marketing loan payments and counter-cyclical payments still kick in when prices
dip below certain levels. Due to profitable prices during the past two years,
counter-cyclical and marketing loan payments haven't been issued.
A new twist in the House commodity title is an option to enroll in a new revenuebased counter-cyclical program instead of the price-based version. Producers
would receive payments for a commodity when the actual national revenue per
acre doesn't meet specific targets.
Only 13 percent of the House Farm Bill is for the commodity title. The rest goes
for food and nutrition funding, conservation and numerous other ag and foodrelated spending.
The ASA supports the House version because it's a good mix of old and new
ideas. Even though prices are up, Hoffman said the cost of production has also
risen by 33 percent in the past year due to increasing seed, fertilizer and diesel
prices. Just because crop prices are high, that doesn't mean farming will be
profitable in the future, so a revenue-based program is good, Hoffman said.
"This gives farmers an option," Hoffman said, referring to the two counter-cyclical
programs. "With more capital and risk involved, we need to have some certainty
to plan strategically for the future."
Farm programs were established in the 1930s to ensure a safe and plentiful food
supply. Simply put, there are too many variables that impact farmers' income that
are out of their control such as the weather, natural disasters and crop input
costs. If producers can't make a living farming, they won't do it, the government
surmised.
The same principle applies today.
"That's why there is justification for farm programs," Litterer said.
When writing farm legislation, the differences often occur on how to do it, how
much to provide and who should receive payments.
The Senate proposes to extend the current farm safety net through the 2012 crop
year. It wants to retain current base acres and adds newly-eligible crops.
However, it reduces direct payments and eliminate marketing loan payments in
favor of a new Average Crop Revenue program. It would boost payments for
some crops, officials said, and reduce them for others during the last three years
of the bill. For corn and soybeans, it would provide about $15 per acre across the
board.
President Bush has already issued a veto threat saying crop subsidies weren't
cut enough during a time of relative prosperity for farmers.
"The ACR does address some reform, but it goes too far and eliminates LDPs
(loan deficiency payments, otherwise known as marketing loans) and reduces
direct payments," said Mark Salvador, national policy adviser for the Iowa Farm
Bureau Federation.
Both legislative bodies want to extend the Milk Income Loss Contract program
through the life of the Farm Bill and enhance conservation efforts. For example,
the House wants to expand funding for the Environmental Quality Incentives
Program each year through the end of the Farm Bill, up to $2 billion in 2012.
Iowa senators Chuck Grassley and Tom Harkin, chairman of the Senate
Agriculture, Nutrition and Forestry Committee, have both said they aren't
deterred by the president's threat and will write the best Farm Bill for the nation.
If the bill gets delayed too long, farm experts said their could be consequences. If
the 2002 Farm Bill is extended a year or two, as proposed by some lawmakers,
the amount of money allotted to agriculture could be reduced as budgets
continue to tighten.
"I don't care (about a veto threat)," Grassley said. "He's (president) concerned
about raising taxes. We didn't give money to the agriculture committee that isn't
very helpful to agriculture and conservation."