The U.S. House Agriculture Committee recently began the long and arduous process of writing the 2012 farm bill by holding a series of hearings throughout the country, with the congressmen making stops in Alabama and Georgia in mid-May.
Fearing the repercussions of a huge federal deficit and its impact on the next farm bill, most producers and commodity group representatives appearing before the Committee stressed the importance of preserving and strengthening the safety nets provided by the current farm legislation.
In Morrow, Ga., nine members of Congress heard testimony from 11 witnesses on a variety of farm policy issues.
“Georgia’s diverse agricultural producers and the state’s great history of agricultural research and innovation provide important insights that will help the House Agriculture Committee as we prepare to write the next farm bill,” said Committee Chairman Collin Peterson (D-Minn.). “Understanding the challenges and opportunities facing Georgia farmers is important as we consider the future of U.S. agricultural policy.”
While peanut producers support the marketing loan program, the current program prices are set too low to be a safety net for producers, testified Armond Morris, farmer and chairman of the Georgia Peanut Commission, during the Georgia hearing. Morris was representing the Southern Peanut Farmers Federation, comprised of the Alabama Peanut Producers Association, the Georgia Peanut Commission, the Florida Peanut Producers Association and the Mississippi Peanut Growers Association.
The Georgia members of Congress in attendance included David Scott, D-Ga.; Jim Marshall, D-Ga.; and Sanford Bishop, D-Ga.
Obtaining a “legitimate” safety net is the No. 1 goal for the Georgia Peanut Commission, said Morris, adding, “We do not believe the current $355 per ton marketing loan is sufficient to be a real safety net for producers.”
Peanut program prices were reduced in the 2002 farm bill, he said, going from a supply-management program to a marketing loan peanut program, and the 2008 farm bill maintained the same prices as the 2002 farm bill. “Market prices for this year should hold above the marketing loan price, but this is no guarantee and certainly not a guarantee for the future,” said Morris.
(For other testimony at the Georgia hearing click here)
According to data from the University of Georgia’s National Center for Peanut Competitiveness, peanut variable costs have increased 52 percent per acre since 2002, testified Morris. “U.S. farmers are also competing with other countries like Argentina, China and India where environmental costs, other regulations and labor rates are much less than U.S. input costs,” he said.
While recognizing the fiscal and political limitations in drafting a successful farm bill, Morris said he wanted to stress to the Committee members that growers will work with them in developing the best possible legislation
“But the pricing structure in the 2008 farm bill is not sufficient and certainly won’t work for peanut producers if these same prices hold through the life of the 2012 farm bill. If budget variables require the Committee to look at alternatives to our current marketing loan program structure, the Federation will work with you to develop the best safety net possible for our producers. I do want to point out that the ACRE program, as included in the 2008 farm bill, is not a viable option for peanut producers.”
The loan repayment rate for peanuts has not functioned appropriately since the 2002 farm bill, said Morris, and the committee included language in the 2008 farm bill that has not been adhered to. “When setting the loan repayment rate, USDA has not taken into account the world market prices. Thus, the USDA posted price for peanuts set every Tuesday afternoon is too high.”
Also testifying at the Georgia hearing was Ronnie Lee, a cotton, peanut and grain producer from Bronwood, Ga., and a member of the Southern Cotton Growers board of directors. Lee said the 2008 farm bill met most of his organization’s principles and has worked well for the cotton industry.
“The centerpiece of the upland cotton program and traditional commodity programs has been without question an effective marketing loan program. It provides a safety net for producers, but does not harm the competitiveness of U.S. commodities. It is a program component that makes sense, that works, and that serves many critical purposes,” he said.
Lee acknowledged that the 2012 farm bill debate will take place with several new and increased points of pressure. “Record budget deficits will put intense pressure on funding. The WTO Brazil Case puts cotton’s marketing loan and counter-cyclical programs under special scrutiny even though the cotton program, as revised by the 2008 bill, has never been evaluated by a WTO Panel,” he said.
If circumstances arise that make it impossible to maintain a reasonable safety net using existing delivery mechanisms, said Lee, the cotton industry will look at alternatives.
“As evidenced by recent sign-ups, the ACRE program has not been a very attractive alternative for cotton farmers in our region or across the Cotton Belt. The support mechanisms within ACRE do not provide an adequate safety net for cotton farmers when compared to the traditional DCP program. If a revenue-based approach is to find support among cotton producers, a more reasonable revenue target would have to be established.”
Lee said the USDA over-stepped the intent of Congress in key payment eligibility provisions and issued regulations that are “overly complicated and restrictive.”
“Sound farm policy provisions are of little value if commercial-size farming operations are ineligible for benefits. The vast majority of these are true family farm operations that have expanded in size in an attempt to lower per unit cost of production (economy of scale). While we oppose any artificial payment limitations, we advocate administering the current provisions within the intent of Congress and strongly oppose any further restrictions,” he said.
At the House Agriculture Committee’s hearing in Troy, Ala., Carl Sanders, who is president of the Alabama Peanut Producers Association and a peanut, cotton, corn and cattle producer, agreed with the Georgia testimony that the current marketing loan program does not provide an adequate safety net for peanut producers.
In years of high production, said Sanders, USDA’s pricing generates an excessive carryover into the next year that weakens the contract offerings to growers.
There are additional considerations for any program changes in the next farm bill, he said.
“Making payment limits more restrictive than imposed by the 2008 farm bill will create even more problems for many peanut producers who may be impacted. We must maintain our separate payment limit for peanuts. This was agreed to when producers worked with the House and Senate Agriculture Committees in the 2002 farm bill establishing a marketing loan program for peanuts. The current program will not work without the separate payment limit,” he said.
Ricky Wiggins, partner in a row-crop family farming operation in south Alabama, told Committee members that the current three-part safety net of marketing loans, direct payments and counter-cyclical payments had worked “fairly well” for Southeastern farmers. “We do have some issues with USDA regulations on eligibility and see the need for Congress to be more specific on intent. Policy should encourage maximum participation without regard to farm size or structure,” he said.