The 2002 farm legislation must include a counter-cyclical payment program that will protect producers' incomes during periods of depressed commodity prices, according to Louisiana Commissioner of Agriculture and Forestry Bob Odom.
Odom, who worked with other state agriculture commissioners to craft a farm policy proposal to present to Congress, says, “Saving the family farms of America is one of the most important issues facing the national right now. The majority of our farmers are at risk, and if we lose the ability to produce our own food, prices will go up at the grocery store, quality will go down and national defense will be compromised.”
“Federal farm policy should provide financial stability so producers can remain in business,” he says. “Farmers and ranchers are faced with many obstacles including weather, disease, domestic policy and foreign policy. They shouldn't lose their livelihood over circumstances that are beyond their control.”
The National Association of State Departments of Agriculture's Farm Income Safety Net Proposal for the 2002 Farm Bill, is based on four goals the group says must be addressed by future farm policy in order to return profitability to farming.
The four components that make up the backbone of the group's proposal include cost of production insurance, counter-cyclical payments, specialty crop support and block grants.
“It is imperative that the farm bill foster financial stability, maintain producer flexibility, contain a safety net that provides meaningful assistance and encourage environmental stewardship,” Odom says.
Central to the group's proposal are the counter-cyclical payments that would be made to producers of corn, cotton, rice, soybeans, wheat, sorghum, barley, oats and milk, when prices are low.
“A counter-cyclical payment will protect producers' incomes when prices are down and will decline as prices go up,” Odom says. “The farm bill should be designed to provide a safety net equal to 90 percent of the total cost of production split between fixed and counter-cyclical payments.”
For example, he says, if the average total cost of production for cotton is 90 cents per pound, 90 percent of the cost of production is 81 cents per pound. That means, a cotton producer would be assured 81 cents per pound with 73-cents counter-cyclical and 8-cents fixed.
An effective insurance program, the proposal says, is also necessary to the survival of farming. The group's proposed cost of production insurance program establishes a safety net for farmers, providing then with insurance coverage if their production cost losses exceed 10 percent loss in any one year.
Odom says the proposed insurance coverage will be available for all crops, feedstuffs, milk and livestock, and would serve as an additional crop insurance option. Producers could choose to purchase coverage through any of the other policies available.
The group of agriculture commissioners is also recommending that an additional $1 billion be spent on cost of product insurance to “expedite research and development for the program, and for premium subsidies for under-served commodities including specialty crops.”
Also included in the group's proposal is an annual allocation of $150 million for state departments of agriculture to administer farm viability block grants, an $8 billion for a new stewardship initiative.
“The stewardship initiative will recognize producers who incorporate practices that protect, land, water, air and wildlife. Payments would be based on the costs and benefits of conservation practices,” Odom says.
He adds, “This safety net proposal is one that everybody in agriculture can get behind and support. It's fair to the producer and the taxpayer, and it will help to insure that American farmers stay in business.”