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Commodity title in crosshairs

Commodity title in crosshairs

HOUSE and Senate farm bill leaders continued to work behind closed doors last week in hopes of ironing out differences in the farm bill, with reports indicating that the commodity title is where the greatest divide lies.

In recent months, Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) has said she believed the differences were minimal and was confident that a compromise could be reached. Now, though, months of inaction from the two chambers, closed-door discussions and no immediate breakthrough seem to highlight the contrasts that still exist.

Both chambers' versions of the farm bill propose to do away with direct payments, saving about $45 billion over 10 years. The Senate wants to redirect $29 billion of that money into a new shallow-loss revenue insurance option that's popular with corn and soybean producers in the Midwest. The House wants to offer two choices, estimating $9 billion for the shallow-loss program and $16 billion for more traditional price protection coverage if markets collapse.

Reports indicate that the Senate may be coming around to the idea of the revamped countercyclical program for rice, peanut and wheat growers that would add $2.6 billion to the Senate baseline.

People close to the matter said the Senate agreed to accept a payment to cover losses of 79-89% of average revenues from the previous five years, while the House wants 75-85%, insisting that deeper losses must be incurred before payments are made.

After members of the Senate panel met Dec. 13 and then spoke to reporters, House Agriculture Committee chair Frank Lucas (R., Okla.) and Rep. Collin Peterson (D., Minn.) fired back.

"When the Senate Agriculture Committee starts to negotiate in good faith with their House counterparts rather than through the press, we stand ready to work with them," Lucas and Peterson said in a joint statement. "Contrary to what they would have you believe, this is not a rice, peanut and wheat issue; rather, it's about making sure policy is defensible to taxpayers and works for all commodities in all regions of the country. Having made a reasonable offer, we continue to wait for a balanced offer from the Senate so we can sort out the details."

In a letter to House and Senate agriculture leaders, the American Soybean Assn. (ASA) said it strongly supports the Agricultural Risk Coverage program included in the Senate bill and has major concerns with the Price Loss Coverage (PLC) option in the House bill.

ASA's letter cited conclusions of an analysis by AgRisk Management LLC showing that, in the event that prices fall from current high levels, the PLC program would distort plantings, resulting in a drop in soybean acres and production. ASA is working to ensure that payments to producers will be decoupled from current-year production if the PLC option is included in the final farm bill.

In its letter, ASA noted that "planting flexibility has been the foundation of U.S. farm policy since the 1996 farm bill. By allowing producers to make planting decisions in response to the market rather than to government programs, they have been able to maximize their returns and maintain competitiveness in domestic and global markets."

Traditional farm programs in Title I technically expired with the 2008 farm bill on Sept. 30. If no new farm bill is approved by the first of the year, the U.S. Department of Agriculture will be forced to begin implementing underlying farm law, which dates back to 1949 and contains such regulatory anachronisms as parity pricing and planting quotas.

By Jan. 1, the existing milk support program will be off the books, and the dairy industry projects that milk prices could quickly rise to $6/gal.

Agriculture Secretary Tom Vilsack said last Thursday an extension of the 2008 farm bill is "unlikely" and suggested that congressional agriculture leaders should be meeting "24/7 until they get a resolution."

As farm bill talks continue, negotiations on a package to avert the fiscal cliff -- the combination of tax increases and federal spending reductions set to go into effect on Jan. 1 -- are being conducted chiefly by Speaker of the House John Boehner (R., Ohio) and President Barack Obama. Offers and counteroffers have been exchanged in two sets of talks, but no conclusions have yet been reached, and a compromise seems elusive.

Volume:84 Issue:52

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