Leaders of the major U.S. farm organizations told the House Agriculture Committee they support the 2002 farm bill and favor extending the law as is until a final WTO agreement is in place.
Some farm group presidents, meanwhile, said they would like to “build on the farm bill’s strengths” by adjusting various provisions of the law. And the National Corn Growers Association asked for consideration of a new revenue assurance proposal its public policy team has been developing.
But Farm Bureau President Bob Stallman told the committee that simply extending the current farm bill would “provide U.S. trade representatives the strongest negotiating leverage” if the WTO’s Doha Round talks are resumed later this year.
“The outcome of the negotiations, particularly as they relate to domestic support commitments, must be known and taken into account before we begin crafting a new farm bill,” Stallman said in remarks prepared for the committee, which was conducting a review of U.S. farm policy.
If Congress reduces domestic supports — as the Bush administration has proposed — “we have less leverage to use to convince other countries to reduce their tariffs and export subsidies,” he said. “Our strongest negotiating leverage is to maintain our current programs until we agree to a WTO round that is beneficial for agriculture.”
“The 2002 farm bill enjoys considerable support among cotton producers,” said Allen Helms, chairman of the National Cotton Council and a cotton producer and ginner from Clarkedale, Ark. “Over the past six years, no farm organization has called for major modification of current law nor has Congress approved any major changes.”
The current farm bill provides “a stable and effective national farm policy,” Helms said. “The combination of direct and counter-cyclical payments provide an effective means of income support, especially when prices are low, without distorting planting decisions.”
“The farm safety net provided in the commodity title of the 2002 farm bill is considered a critical component of most producers’ risk management plans,” said Gerald Tumbleson, president of the National Corn Growers Association. “The changes in farm support programs adopted in May 2002 have proven to be more effective in delivering assistance to farmers when it is most needed.”
But Tumbleson said the NCGA has noted a serious flaw or “hole” in the safety net provided by the Farm Security and Rural Investment Act of 2002.
“For producers who have sustained large crop losses or repetitive years of shallow losses during the recent years of record harvests and low prices, the combined support of direct payments, marketing loan deficiency payments and counter-cyclical payments have provided insufficient income protection,” even with crop insurance coverage, he said.
“Secondly, growers who have found themselves in isolated areas of drought or other adverse weather conditions and unable to fully benefit from higher market prices cannot look to counter-cyclical payments to lessen the impact of lost income and the drain on their financial assets.”
He said corn growers also remain concerned about the traditional formula of crop disaster assistance in current and past legislation “which does little to fill these gaps in today’s farm safety net.”
The American Soybean Association’s John Hoffman said ASA supports the basic structure of farm programs under the 2002 farm bill, but believes adjustments are needed in oilseed support levels in the event these programs are reauthorized.
“Global demand for protein meal for animal feed and for vegetable oil is growing rapidly, and we are seeing a sharp increase in the use of vegetable oils for production of biodiesel,” said Hoffman, a farmer from Waterloo, Iowa. “U.S. oilseed producers need to be able to respond to these market signals.”
Paul T. Combs, chairman of the U.S. Rice Producers Group and a farmer from Kennett, Mo., said writing a new farm bill before the signing of a new Doha Round trade agreement could be counter-productive.
“Any unilateral reduction of the current programs and spending levels of the farm bill will result in the effect of unilateral disarmament by the United States and ultimately weaken our negotiating position,” he said.
“But writing a new and different farm bill in advance of a final WTO agreement could result in a short-term bill that must be rewritten should the WTO negotiations be concluded and new trade rules put in place. Multiple farm bill authorizations in a short timeframe will weaken the predictability and stability that are key components of any effective farm safety net.”
Both Combs and Tom Buis, president of the National Farmers Union, reminded the committee members that the current farm programs have been a “fiscally responsible” approach to farm policy that has provided a safety net when needed, as Combs put it.
“Our members overwhelmingly believe the 2002 farm bill was a significant improvement over the previous law,” said Buis. “They also believe that writing a new farm bill at this time would not result in an improvement, but most likely a farm bill that would be a step back.
“The federal budget is a sea of red ink, and there are many who want to blame the federal deficit on farm programs — while, in reality, if all federal programs were as fiscally responsible as the 2002 farm bill, we would have a budget surplus.”
Referring to the dispute over tariffs — the issue which led to the collapse of the Doha Round in July — Stallman noted that U.S. agricultural exports face an average foreign tariff of 62 percent in the world’s markets. The figure is more than five times higher than the average U.S.-imposed agriculture tariff of 12 percent.
Additionally, the European Union uses 87 percent of the world’s export subsidies, which severely disadvantages U.S. exports. The United States utilizes only 3 percent and the rest of the world uses the remaining 10 percent.
“Farmers and ranchers are willing to lower farm program payments via WTO negotiations if — and only if — they can secure increased opportunities to sell their products overseas,” said Stallman. “However, we are not willing to unilaterally disarm.”
Beyond the international trade implications and the loss of negotiating leverage, Stallman said farmers have other reasons to seek an extension of the current farm bill.
“The 2002 farm bill was carefully constructed to provide support for commodity, conservation, nutrition and export promotion programs. Congress struck a balance in funding each of those programs and it works,” he said.
Stallman encouraged the House Agriculture Committee members to take into account production expenses, such as fuel and fertilizer, which are expected to be much higher for the upcoming farm bill period. “With a significantly higher cost structure, and at a time when farmers are making investments to help secure our nation’s energy future, changing the farm bill would be detrimental,” he said.
“There is no question the existing farm bill is popular with farmers and ranchers throughout the country,” said Stallman. “Continued maintenance of its structure and funding is a high priority for Farm Bureau.”