Get ready to remove agricultural quota systems from the endangered list. They will be extinct with the next farm bill.
"We can not pass another farm bill with a quota system," said Representative Terry Everett (R) Alabama. Everett, speaking recently at the third annual Southern Peanut Growers Conference in Panama City, Fla., said the quota system has too many enemies in congress and not enough supporters left to save it.
"We held it by only three votes in the last farm bill," he said. "We feel a lot of pressure to get rid of the quota system." Neither he nor other Washington observers believe they have enough votes to save the peanut program again.
"My goal is to preserve the peanut industry and to assure peanut farmers of profit opportunities," Everett said. "The best thing we can do is to craft peanut legislation that looks like all other commodities."
He said a market loan or target price option likely would be part of any new peanut legislation.
Everett said a priority will be a quota buyout that will reimburse peanut quota owners. The plan calls for a 10 cents per pound payment per year for five years.
Current proposals call for $3.4 billion to fund the new program.
"We’re going from a no-net-cost program to $3.4 billion," he said. "Many legislators do not like that but we believe they have to treat peanuts as they do other commodities. One legislator has already tried to strip $1 billion from the $3.4 billion set-aside for peanuts. We can’t afford to take that loss. We need that level of funding to (to preserve the peanut industry)."
Everett said the new legislation would develop a target price for peanuts. "Producers will no longer have to pay quota rent, which can be as high as 50 cents per pound, in some places. At that level, producers are spending a good portion of the support price for quota."
He said most farmers pay from nine to ten cents per pound. "At any rate, that cost will disappear."
Everett said a key to making new legislation work will be preventing over-production. With cotton selling at the lowest price in decades, the temptation would be to plant more peanuts than the market can absorb, especially if the target price is set at $500 or more.
"We simply can’t develop a program that promotes over-production," he said. "But we also have to create a system that keeps profit in the producer’s pocket."
Everett said farmers must produce the highest quality peanuts possible. "We may be able to capture the 100,000 ton import market with superior quality," he said.
Robert Redding, a Washington lobbyist who represents the Georgia Peanut Commission, said all peanut producing states need to get behind the market loan concept to preserve the $3.4 billion. He said the peanut industry is isolated from other commodities and outside the scope for AMPTA payments.
"We have to make extreme efforts to get emergency funds," he said.
Redding said current debates provide "a historical opportunity for peanut industry reform."
He agrees with Everett that the quota system probably will not survive. "We had a close call the last time and we have lost some friends in The House since then."
Redding said the debate now is to get as much for producers as possible. "That $3.4 billion is still on the table and others want to get a slice of it. We want to keep it all for peanuts. If we don’t maintain a high level of funding for the transition, producers will not be happy."
"At the end of the day, we want policy that allows a farmer to produce, harvest and take the crop to market," said Hunter Moorehead, a legislative aide to Senator Thad Cochran (R-Miss.)
He said the $3.4 billion transition program will allow peanuts to align with other commodities and "hold back some peanut critics."
"It’s been hard to generate support," said Everett," from districts that do not have peanuts. If they don’t have a dog in the fight, they’re not interested."