The Latest on the Farm Bill
Southern Regional
Outlook Conference
Atlanta, Georgia
September 24, 2001
Dr. Edward G. Smith
Extension Economist
Marketing and Policy
http://afpc.tamu.edu
979-845-5913
Agricultural and Food Policy Center
Texas A&M University
Presentation Outline
Current Situation
Issue in the Debate
Timetable
Current Situation
Chronic Liquidity Problem
Pro forma cash flow severe for crop producers
Not as bad for livestock and dairy
Solvency issues not as bad due to ad hoc
emergency spending and lower debt
service
US House Ag Committee Strategy
Bipartisan: Combest/Stenholm
Ask the stakeholders
Encourage buy in by special interest
Develop a bill based on what was said
What the US House Ag
Committee Heard
Maintain flexibility
Maintain export competitiveness
Maintain WTO commitment
Incorporate a better safety net that
reduces the need for ad hoc assistance
What does H.R. 2646 Do?
Maintains flexibility
Same rules
Maintain export competitiveness
Marketing loans retained
Maintains fixed payments
Allows base update
Adds counter-cyclical target price program for
income support
Extends thru 2011
How Much Money?
Budget Resolution
$5.5B 2001
$7.35B 2002
$66.1B 2003-2011 if
Surplus greater than SS/MC surplus
SS lockbox opened due to war
Who Gets the Money?
(AP) Lubbock Avalanche Journal 9-102001
“Congress has touted the checks as a way to help
small –and medium- size farms cover losses
associated with natural disasters and prop up the
price of certain low paying crops”
But
“AP’s analysis…showed that 63% of the money
went to the top 10% of recipients”
Who Gets the Money?
Per unit of production
Per farmer
Can new players join the game?
Can old players return?
Could the Money be Spent Better?
August 22,2001 Des Moines Register
“a rare chance to stop financing environmental
harms and start financing environmental
benefits”
“fundamentally flawed because the cropping of
fragile and marginal lands is reinforced by grain
subsidies that stimulate production and reduce
NCFI”
More Issues
Flexibility vs Inventory management
Remain Export Competitive
TPA/WTO
Value of the dollar
Marketing loan
What color are the payments?
Timetable
This year or next?
Congress adjourn in Oct/Nov
Terrorist Response
Budget impact
Senate using corn/soybeans as basis that ag is
not together
February 2002 critical
1996 FAIR Act expires December 2002