Farm commodity representatives asked members of the U.S. House of Representatives Committee on Agriculture to do all they can to maintain the basic structure of the 2008 farm law, but suggested sweeping changes in a few new programs such as ACRE and SURE.
The representatives, speaking at a hearing in Lubbock, Texas, also asked committee members to increase crop insurance coverage while making premiums more affordable and to maintain direct payment and marketing loan options.
Testimony from 13 individuals representing commodity groups and the crop insurance industry was far-ranging, covering issues from dairy to sugar cane and included comments from cotton, corn, livestock, grain, peanut and rice producers. Eight members of the Agriculture Committee attended the hearing.
“We need to be sure the farm bill is meeting the needs of Texas farmers,” said Collin Peterson, D- Minn., chairman of the House Agriculture Committee.
Peterson said these hearings, seven so far, were designed to “get some ideas on paper for the ag industry to respond to. The next farm bill markup will begin about this time next year,” he said. “December 2010 is the target date to get it out of the House, in time for 2012 planting season.”
Peterson said the 2012 farm bill debate will occur with the committee knowing it has less money to work with.
Even with funding restrictions, producers insisted that investing in production agriculture remains sensible economy. “Sound farm policy is essential to protect the viability of the cotton industry and commercial agriculture in every part of the United States,” said Brad Heffington, a Lamb County, Texas, cotton and grain farmer. “In regard to cotton, we believe effective farm policy should adhere to a few clearly prescribed principles.”
Those principles include a market-oriented program that promotes quality, efficiency and domestic competition; full production to meet market demand; effective financial safety net, availability of competitively-priced U.S. cotton to domestic and international textile mills; and maximum participation without regard to size or business structure.
Heffington said the marketing loan is the center piece of the farm program. “It provides a safety net but does not harm the basic competitiveness of U.S, cotton.”
Doyle Schniers, a cotton and grain farmer from San Angelo, said stability has been the “core principal of farm programs in the United States since the Great Depression. To maintain that stability, he said, farmers need “a sound farm policy that will protect the viability of the cotton industry and American agriculture.”
He agrees that the marketing loan is crucial. He said new crop insurance products, “such as revenue coverage, enterprise policies and group risk coverage have given producers options for risk management,” but should “complement traditional commodity programs, not be used to replace them.”
Dan Smith, Lockney, Texas, representing sorghum producers, encouraged the committee to “invest in the Energy Title of the farm bill. Currently more than one quarter of the U.S. grain sorghum crop is processed through an ethanol plant,” Smith said. “Renewable fuels is the fastest growing value-added market for the sorghum industry.”
He also encouraged committee members to “consider programs that reward decreased use of water in the semi-arid sorghum belt.”
Jimbo Grissom, Seminole, Texas, president of the Western Peanut Growers Association, said the current farm program could be stronger and provide more financial support, “but (it) provides an understood and reliable basis upon which a lender can work with a farmer, even in bad times. If not successful in getting a satisfactory revenue insurance program through the administrative proceedings of RMA, we will seek legislation that makes a good revenue program a reality for peanut producers.”
Grissom and others, responding to a question from Rep. Mike Rogers of Alabama, said they would be reluctant to give up the direct payment program for a new insurance policy with higher yield coverage and more affordable premiums.
“The direct payment is a dependable security for our lenders, and it is the only part of our program that can be reliably protected from World Trade Organization sanctions,” Grissom said.
“Direct payments have been essential in insuring the vital support farmers need to meet the demands of the agriculture industry,” added David Cleavinger, Texas Wheat Producers Association. “The reliability of this program cannot be overlooked in meeting the needs of producers who are unable to utilize other federal safety net programs.”
The Texas cattle industry would like to see market promotion programs “meet current and future market trends and opportunities in worldwide beef trade,” according to Joe Parker, Texas Southwestern Cattle Raisers.
“It is essential to recognize that U.S. ranchers compete in a global marketplace. U.S ranchers compete with foreign producers who benefit from an incredibly complex mix of subsidies, tariffs, and state trading enterprises, as well as a broad range of other devices to deny market access to U.S. goods.
“In addition, many of these ranchers are not held to the same standards of regulatory compliance as U.S. ranchers and thus enjoy a significant cost advantage.”
He said any program with a substantial negative effect on cattlemen should “be opposed and prevented.” He said TSCR “will strongly oppose direct cash payments to any segment of the livestock industry for the purpose of offsetting low market prices.”
He said the cattle industry will continue to oppose energy policies that are not supported by market demand and “putting food and fuel in competition with each other.”
L.G. Raun, El Campo, Texas, rice producer, said the “existing safety net protection levels have simply not kept pace with the significant increases in production costs. Rice farmers believe strengthening the safety net would be helpful in ensuring producers have the ability to manage their risks and access needed credit,” he said.
Raun explained that Texas rice acreage has plummeted from a high of 600,000 acres to 185,000 this year. Part of the recent loss has been due to “the unintended consequences of decoupling farm program payments from production.” Decoupling resulted in significant acreage being idled while landowners collected direct payments.
Raun said trade policies also should be addressed and that rice producers “have seen nothing in the Doha Round negotiations that would change” the current situation in which the United States is “outgunned by foreign subsidies and tariffs. In many ways Doha would make matters worse.”
He said current policies give advantages to China, India and Brazil and market it as “trade liberalization or free trade in Washington or Geneva, but we in the countryside see it for what it really is: Picking winners and losers in the global economy based on politics.”
“Our challenge for the next farm bill is how to modify existing policy so it is functional in an age of highly variable costs of production and revenue,” said Dee Vaughan, a director for the Corn Producers Association of Texas and the Texas Corn Producers Board.
“We should move forward carefully so that policy is designed that works for all commodities. Perhaps a single policy is no longer realistic but we should make sure no segment is disadvantaged as resources are allocated. It makes no sense for me as a corn producer to seek policy that is not fair to someone else.”
He also cautioned the committee “not to rob the commodity title to enhance the conservation program. Producers and lenders will not be able to support additional investments in conservation cost sharing if the farm is not profitable.”
Billy Bob Brown, representing the Texas Farm Bureau, said risk management, “especially crop insurance, is critical to Texas producers generally and especially those in this region of the state. Over a 20 year average, Texas has a loss ratio of 126 percent while the United States experienced an 85 percent loss ratio. These numbers emphasize that any proposed changes in crop insurance must recognize the challenges producers face in Texas each year.”
Ronnie Holt, chairman of the Crop Insurance Professionals Association (CIPA), and a cotton, corn and grain sorghum farmer from Muleshoe, Texas, said crop insurance is a vital part of Texas farms. “Federal crop insurance is a lot more important to my operation than the commodity title today and given the challenge of doing business and on a playing field that is tilted against us in many ways, both the farm bill and federal crop insurance are justified.”
He said CIPA “strongly supports efforts to improve and expand access to quality coverage. There is no reason why every farmer in this room and every farmer in this country should not be able to buy an 85 percent revenue policy that is tailored to the risks unique to the crops they grow. There is no legal impediment.”
He said the committee should recognize that regions, crops and practices are different and that “cookie cutter policy will not work.”
“We urge you not to destroy the effectiveness of the crop insurance program,” said John Lackey, with Texas Citrus Mutual. “For Citrus, it is the only safety net we have.”
He also urged the committee to support the AgJobs bill, which has “bipartisan support. We need a guest worker program in place to meet our future needs or we will continue to see Texas based operations move to Mexico and to see our domestic produce industry shrink.”
Dale Murden, a sugar cane, citrus, grains, vegetable and soybean producer from Monte Alto, Texas, would like to see the Biomass Crop Assistance Program (BCAP) include payment options for sugar cane.
“He said Congress has developed a program that “is working for sugar,” the 2008 farm bill, “to the considerable benefit of consumers and at zero cost to taxpayers and is giving the remaining American sugar farmers a chance to survive. And it fully complies with the rules of the WTO. We strongly urge continuation of this successful, no-cost policy in the next farm bill,” he said.
Brad Bouma, Plainview, Texas, spoke on behalf of Select Milk Producers, Inc., and Continental Dairy Producers, Inc., and urged the committee not to adopt supply management programs and to put sustainability of dairy farming “at the forefront of policy changes.”
He also encouraged the committee to eliminate the price support program. “We must let market forces work,” he said. Less, not more, government involvement is needed to make the (U.S.) dairy industry the best in the world.”
Speakers also commented on the shortcomings of the ACRE and SURE programs, needed changes in crop insurance coverage and the ongoing discussions with Brazil on the WTO cotton case.