“Unfortunately, ACRE’s experience so far is clear evidence that a different safety net structure, revenue-based or otherwise, will have to demonstrate clear superiority over the current combination of programs before it could be considered a viable alternative for cotton and other commodities.”
Eight members of the U.S. House of Representatives Committee on Agriculture learned at a recent farm bill field hearing in Lubbock, Texas, what Southwest farmers and ranchers think of the ACRE and SURE programs created in the 2008 farm law.
Committee chairman Collin Peterson conceded that problems exist. “ACRE does not work for the entire country,” he said. “We will need differences in the program between different crops. This is why we’re starting field hearings early.”
(For an earlier report on comments made during the Lubbock meeting, click here).
Panelists representing the major Southwest commodities explained the problems.
“The ACRE program has not been very attractive for cotton producers as evidenced by the signup,” said Doyle Schniers, a cotton producer from San Angelo. “If a revenue-based approach is to gain support from cotton producers, it will need a more realistic revenue target.”
“From available data on the ACRE program it is clear that in its current form the program is not an attractive alternative for cotton farmers and many other crop producers across the nation,” said Brad Heffington, a Lamb County, Texas, farmer. He said the program does not provide an adequate safety net for cotton farmers compared to the marketing loan and DCP programs. He agrees that the target is too low to attract participation.
“Cotton is working to evaluate our concerns with ACRE so that a constructive dialogue on its future can be held at the appropriate time,” he said. “Unfortunately, ACRE’s experience so far is clear evidence that a different safety net structure, revenue-based or otherwise, will have to demonstrate clear superiority over the current combination of programs before it could be considered a viable alternative for cotton and other commodities.”
“ACRE has proven to be a very complicated program,” said Dee Vaughan, Dumas, Texas, corn grower. “It is difficult to explain to absentee land owners. In a state as large and diverse as Texas the statewide loss requirement trigger is a tremendous negative. The loss trigger for a geographic area must be localized, at least to the county level.”
He said ACRE is even less appealing to irrigated and diversified producers. “ACRE requires all crops on a FSA farm number be enrolled for the duration of the farm bill. Since ACRE does not work for cotton, this automatically precludes many producers from choosing this option.”
He said the season average market price for determining eligibility also poses problems. “Producers making the decision on whether to enroll in ACRE by June 1 of the current year are speculating on what the markets will do for the next 15 months.”
David Cleavinger, speaking for the Texas Wheat Producers Association, said ACRE is “complex and confusing. The complexity and paperwork involved with the program should be reduced and payments made to producers in a more timely manner.”
“For good reason, the ACRE program has not been well received in Texas,” said Billy Bob Brown, speaking for the Texas Farm Bureau. “Program provisions are simply too complicated and the reduction in program benefits are too great for many Texas producers to participate. The inability to opt out of the program in later years has also been criticized.”
ACRE has little appeal for rice producers, said L.G. Raun, an El Campo, Texas, rice farmer. “Only 8 rice farmers, representing less than 900 acres were enrolled in the program nationwide,” he said.
Ronnie Holt, a Muleshoe, Texas, cotton, corn and grain farmer and chairman of the Crop Insurance Professionals Association (CIPA), said ACRE comes with too big a gamble for “some of us here in the Bible Belt,” who “have a problem with gambling, especially with taxpayer money. But the whole concept seems wrong to me.”
He says inconsistencies in the program mean a farmer could suffer disastrous loss and get nothing from the program or make a good crop and still get paid. “Our farmers cannot afford to gamble like that.”
He said a potential fix being considered that would put the wager at the county or national level “is still not ideal,” especially at the county level. He prefers a program similar to one Representative Randy Neugebauer, R-Texas, has introduced, “which essentially allows producers to buy coverage — GRP or GRIP — as a wrap-around policy on top of coverage individualized to a (specific) farm.”
He said that kind of coverage could help farmers who are hit by a widespread weather event.
Panelists also expressed concern over the whole farm revenue disaster program — SURE. “The experience thus far with SURE indicates it cannot provide an effective level of assistance without modification,” said Heffington.
He said the programs needs more funding, unlikely without an increase in baseline spending authority. “We do not support reallocating limited, existing spending authority from current farm programs to fix its shortcomings,” he said.
“SURE does not have a good reputation in Texas,” Vaughan said. “It has been very slow in providing relief for some producers, with many still waiting.”
He said Farm Service Agency (FSA) personnel are often working without usable computer programs, necessitating that they do computations by hand.
Timing is a crucial issue. “Since one of the determinants of SURE is based on the average price of the marketing year, producers must wait a full year to see if they will even qualify,” Vaughan said. “Any help SURE provides may come too late.”
He said SURE does not work well for diversified or larger farms “because it requires aggregation of all farms. It does not work for most irrigated producers, those with a mix of irrigated and non-irrigated production, or those growing multiple crops.” That includes a lot of Southwest producers.
Delayed payments have been a critical issue for sorghum growers, said Plainview, Texas, cotton and grain producer Dan Smith, who represented the National Sorghum Producers at the hearing. “Some sorghum producers have suffered through two years of drought and are still waiting for payments,” he said.
“The program is complicated and FSA is having a difficult time distributing dollars to producers who need it the most. We encourage the committee to allow for immediate payments based on producers’ direct payments at some percentage to get money into the country. FSA can ‘square up’ when SURE is fully implemented.”
“We can’t wait a year to get payments,” said Cleavinger. “We’ll be out of business. We do recognize SURE as an improvement in terms of predictability over an ad hoc disaster program.”
Raun said SURE “provided little, if any, assistance to rice producers, including those in the Mid-South who last year suffered significant monetary losses due to heavy rains and flooding prior to and during harvest.”
Holt recommended changes to the SURE program, including:
• Base the SURE program guarantee calculation on the higher of the crop insurance election or the target price for the commodity.
• Strike the counting of 15 percent of direct payments received from the calculation of farm revenue.
• Change the definition of eligible producer on a farm when assessing losses on a farm-by-farm basis as has been done in the past with ad hoc disaster programs. This would address the single biggest problem with SURE — by the time you aggregate everything on a whole farm basis, the likelihood of receiving any assistance is very small.
• Direct USDA to provide producers more timely payments by either: (1) using an estimated national average market price instead of waiting until the end of the marketing year; or (2) direct the USDA to use the crop insurance price election for determining revenue instead of a national average market price.
He said changes would simplify the program and change it to address yield losses “without inviting the anomalies caused by bringing season average prices into the equation.”