Few farmers or their association representatives expect Congress to enact the next farm bill without at least minor changes to the one currently in place. But change, most say, should not be radical.
“Farm policy changes should be evolutionary, not revolutionary,” says Steve Verett, executive vice president of Plains Cotton Growers, Inc., in Lubbock, Texas.
The Freedom to Farm Act back in the early 1990s was revolutionary; it stripped the farm program of an adequate safety net and resulted in no protection during times of low commodity prices.
“Farmers had no price protection in Freedom to Farm,” Verett says.
The Farm Security and Rural Investment Act of 2002 restored a safety net, including price protection through counter-cyclical payments. Verett says a misconception about the 2002 law was that farmers and associations accepted the condition that disaster assistance would not be necessary because of the positive provisions in the legislation.
“I don’t know anyone who said we would never need a disaster bill for physical crop losses,” he says. “Disaster programs in the years leading up to the 2002 farm bill included supplemental AMTA payments in addition to physical loss payments. The 2002 farm bill did address price protection but did nothing with physical losses due to natural causes.”
He and others believe permanent disaster assistance may become part of the next farm program discussion. Rep. Collin Peterson, D-Minn., chairman of the House Agriculture Committee, has “spoken over and over in forums about permanent disaster legislation. That will get more attention as the discussion moves forward.”
Verett says whether the proposal gains traction or not may depend on budget concerns. “Cost will be a factor.”
But he’s convinced that the next program needs to address the gap between insurance coverage and the potential losses farmers face from natural disasters. Currently, farmers can insure only 65 percent of proven yields, leaving them vulnerable for 35 percent of expected annual income.
“I don’t know of any farm that operates on a 35 percent profit margin,” Verett says. “And cotton producers cannot buy adequate crop insurance to cover a major part of their yield. A 65 percent coverage limit is inadequate.”
He says a combination of a permanent disaster title and crop insurance would provide better protection. Buying a set level of insurance could be mandatory to qualify for the government aid, Verett says. “Permanent disaster assistance would kick in to replace what insurance doesn’t cover. We see little difficulty in this area with required insurance. Lenders already require it on most farms.”
Mike Hughes, PCG president and a Lamesa, Texas, cotton and grain farmer, says higher production costs make better insurance coverage necessary. “We can’t pay $150 a bag for cottonseed and not know we can insure production,” he says.
A permanent disaster provision would help farmers with risk management.
“Currently, we can’t buy enough insurance to cover losses. If we had a permanent disaster provision we could at least make up the difference when we don’t make a crop. That’s going to be an important discussion.”
Neither Verett nor Hughes believes the change in congressional leadership will make a serious difference in farm policy debates. Many of the same legislators remain on both the House and the Senate agriculture committees, though roles might be reversed.
“Farm bill legislation has always been bi-partisan,” Verett says.
He says folks who say all changes will be just as expected following the November election will “not be totally correct. Those who say we’re going down the river are also wrong.”
He does expect to see a change in attitude when it comes to the WTO’s Doha Round of trade negotiations and trade promotion authority. “Both Doha and TPA are much more in doubt with Democrats in charge,” he says.
Verett says time may be a factor in enacting the next farm program.
“Remember, we’re working with a more condensed timetable then we had in 2002. Larry Combest and Charlie Stenholm started a year early. Our 2007 wheat crop is already in the ground and by August 2007, farmers will be making plans for the 2008 crop. Time will be tight to get a farm bill done by then.”
That time restriction could encourage legislators to extend the 2002 act “to allow more time for debate of the next farm bill. That may be especially true if they plan on significant changes. They just don’t have that many legislative days to work with.”
Hughes expects Secretary of Agriculture Mike Johanns and the Bush administration to “try to play a role” in crafting the next farm bill. That intention came through following the secretary’s series of “listening sessions” across the country.
“We had all of the listening sessions evaluated for content and comment by Texas Tech,” Hughes says. “It is our belief after looking at our analysis, that there was much more support for the current farm bill than the secretary has indicated in his reports.”
Hughes says the last discussions he had with ag committee members indicated they were not looking for a lot of changes. “They’re looking for improvements but we think they’ll come back to something similar to 2002.” He says Congress will try to create a policy that’s “fiscally responsible.”
Hughes says various farm groups have begun meeting to share thoughts on policy needs. “We want to present a united front.”
That front may include new participants. Verett says the fruit and vegetable industry, for instance, wants a seat at the table. Fruit and vegetable producers have opted out of direct farm payment programs in the past, preferring a market-oriented approach.
“They have benefited, however, from a fruit and vegetable planting restriction on program crop participants. We support those restrictions, but if they go away and the fruit and vegetable industry needs some program of its choosing to compensate for that, then Congress needs to consider increases to the budget for that and not look to the commodity title for those funds.”
Verett says he’s optimistic about the next farm bill. “We have to remain optimistic. We also have to continue to demonstrate to Congress the economic contributions agriculture makes to our country. “I’m optimistic that we’ll be able to show them (how important agriculture is). One in five jobs in the United States is tied to agriculture. That makes this debate important to more than just farmers.”