Reports of the death of the National Corn Growers Association’s revenue counter-cyclical proposal may be somewhat exaggerated.
Although some have said the NCGA was backing away from the county RCCP for the 2007 farm bill, delegates to the association’s Corn Congress endorsed the proposal at the Commodity Classic.
NCGA leaders said they believe the revenue counter-cyclical proposal, which would add a county-level revenue counter-cyclical payment to complement the existing federal crop insurance program, is still an idea whose time has come.
“The agricultural landscape has changed, and we need a farm bill that reflects those changes and looks to the future,” said NCGA President Ken McCauley. “Our proposal was always a work in progress and has benefited from extensive input from the countryside, policymakers and economists.”
Bruce Babcock, professor and director of the Center for Agricultural and Rural Development at Iowa State University, says the proposal would bridge the gap between the current crop insurance program and farm programs that, in general, are not working for Midwest growers.
They say the farm bill’s price-based counter-cyclical program has not helped them because they’ve been shut out of those payments when prices rise, which usually happens when they have a short harvest.
Ohio State University economist Carl Zulauf, another proponent of a revenue-based approach, said the current set of farm programs does not appear to adequately help farmers manage their actual risk, judging from the “annual enactment of ad hoc disaster assistance.”
Agriculture Secretary Mike Johanns cited such complaints when he announced the administration’s own revenue-based RCCP. “Farmers have told us the current farm bill tends to overcompensate when it should not and under-compensate when assistance is needed.”
The administration proposal calls for payments when the national revenue per acre for the commodity is less than the national target revenue per acre, while the NCGA’s plan triggers payments when net farm revenue falls more than 30 percent below the previous five-year average per-acre net revenue.
The administration target revenue per acre would be based on the 2002 farm bill’s target price minus the direct payment rate multiplied by the national average yield for the 2002-06 crop years minus the high and low years. The national revenue per acre would equal the national average yield times the higher of the season-average market price and the loan rate for the commodity.
Babcock and others have said a revenue-based RCCP may cost as much as or more than the current commodity program, a factor that may be difficult to reconcile with the current budget deficit.
Moreover, experts such as Timothy J. Galvin, former head of USDA’s Foreign Agriculture Service, say portions of the NCGA proposal may not be viewed as a green box program and would be counted against the WTO’s amber box ceiling for U.S. farm subsidies.
Throw in House ag committee chair Collin Peterson’s recent comments that the 2002 farm bill should be extended unchanged, and the Corn Growers may have a tough row to hoe.