After two years of lengthy hearings, testy floor fights and intense negotiating sessions, few would have blamed Reps. Larry Combest and Charlie Stenholm for indulging in a round of self-congratulations when they announced a tentative agreement for a new farm bill.

Instead, Combest, chairman of the House-Senate farm bill conference committee, gave another example of the low-key, self-effacing approach that finally prevailed over Senate efforts to turn the legislation into a political issue with this comment: “I'll tell you who wins — the American farmer.”

While details of the agreement were sketchy — House-Senate conferees were waiting for the Congressional Budget Office (CBO) scoring of the compromise provisions — it appears that farmers, and especially row crop farmers, were the winners in the battle of wills over the farm bill.

Farm organizations paid tribute to Combest, chairman of the conference committee and the House Agriculture Committee, and Stenholm, the ag committee's ranking minority member, for their patient, persistent guiding of the farm bill compromise.

“Mr. Combest and Mr. Stenholm are the ones who made this happen,” said a farm group executive when the agreement was announced April 26. “Many people would have thrown up their hands and walked out for good weeks ago.”

Cotton farmers, in particular, saw the inclusion of a mixture of fixed and counter-cyclical payments in the new farm bill that they could have only dreamed about when they first proposed the concept at a House Ag Committee hearing chaired by Combest more than a year ago.

“America's farmers and ranchers have been under the most severe economic pressure that I can remember in my 42 years of farming,” National Cotton Council Chairman Kenneth Hood said. “This agreement will provide a substantially improved level of income protection that certainly will be welcomed by all seven segments of the U.S. cotton industry. The U.S. cotton industry, from producer to textile manufacturer, would be helped by this bill, and there is not a segment of our industry that isn't in need of some help. I urge the House and Senate to approve the bill quickly so the uncertainty about policy for the 2002 crop can be removed and we move ahead with reasonable expectation for returns that will cover our costs.”

Cotton and rice growers also had to be cheered by the payment limit language that reportedly was agreed to in the compromise package.

According to conference committee sources, the compromise includes a fixed or Agricultural Market Transition Act payment of 6.67 cents per pound and a target price of 72 cents per pound for cotton and $2.35 and $10.35 per hundredweight for rice. The loan rates would remain at 52 cents per pound for cotton and $6.50 per hundredweight for rice.

For soybeans, the loan rate would be set at $5.03 per bushel in 2002 and 2003, but would drop to $4.96 per bushel in 2004 through 2007 — the remaining life of the new, six-year farm bill. Soybean growers would receive an AMTA payment of 45 cents per bushel and a target price of $5.82.

The corn loan rate, which proved to be one of the most contentious issues of the conference, would be set at $1.98 per bushel in 2002 and 2003 and $1.95 for the remaining four years. The fixed payment for corn would be 30 cents per bushel and the target price $2.64 per bushel.

The wheat loan rate would be $2.80 per bushel in 2002 and 2003 and $2.75 in the remaining years. The wheat fixed payment would be 53 cents per bushel and the target price $3.92 per bushel.

Midwest senators, led by Senate Majority Leader Tom Daschle and Sen. Tom Harkin of Iowa, the chairman of the Senate Agriculture Committee, had been pushing for a $2.02 corn loan rate. But, faced with the prospect of a collapse of the farm bill negotiations, they reportedly caved in to the pressure from House conferees for loan rates closer to House bill ($1.89 for corn and $4.92 for soybeans).

The compromise language on payment limits could produce the biggest sigh of relief for Southern farmers, some of whom faced having to liquidate or greatly reduce their operations if the more-restrictive Senate provisions had been adopted.

The conference agreement provision reportedly reduces the total limit on benefits to $360,000 per year, compared to $550,000 in the House bill and $275,000 in the Senate's Grassley-Dorgan amendment. But it also retains the three-entity rule and allows producers to continue the use of generic certificates when they exceed the new limit on marketing loan gains.

The new limits would be set at $40,000 per person for fixed payments, $65,000 per person for counter-cyclical payments, and $75,000 per person for marketing loan gains. It includes separate limits for peanuts.

The new language also imposes a $2.5 million adjusted gross income test. Supporters of the Grassley-Dorgan amendment were already criticizing the compromise before it was formally announced.

“The framework agreement reduces the benefits available to larger enterprises, but it appears to strike a reasonable balance between the calls that have been made for payment-limit reform and the need to insure that commercial-size farming operations can remain viable,” said the NCC's Hood.

“The means test will disqualify the pro athletes and media moguls that have been targeted,” Hood said, “but some higher-revenue, legitimate farm operators also will be affected by the means test. The reduced limits for payments and marketing loan gains could reduce benefits to a significant number of farmers, but, importantly, the three-entity rule and provisions for loan redemptions with certificates are being maintained.”

Hood said the latter will permit U.S. agricultural commodities to continue to move to market rather than be forfeited to the Commodity Credit Corp.

Besides Combest and Stenholm, the NCC also singled out Reps. Saxby Chambliss of Georgia, Richard Pombo and Cal Dooley of California, Frank Lucas of Oklahoma and Terry Everett of Alabama on the House side and Sens. Thad Cochran of Mississippi and Jesse Helms on the Senate side for their work on insuring that cotton's priorities were addressed in the conference committee.

Although they were not members of the conference, Sens. Blanche Lincoln of Arkansas, Zell Miller of Georgia, John Breaux and Mary Landrieu of Louisiana, John Edwards of North Carolina, Jean Carnahan of Missouri and Fritz Hollings of South Carolina also held key meetings with Majority Leader Daschle and others to focus attention on the problems of Southern growers.

At press time, conferees were still waiting for the CBO scoring of the last-minute changes in the compromise package. After the conferees finish work on their report, the legislation will go back to the House and Senate for final approval and to President Bush if it clears those hurdles. Among the farm bill provisions:

Base acres: Producers would have the choice of retaining current Agriculture Market Transition Act (AMTA) base and adding oilseeds or updating by using the 1998-01 planted and considered planted acreage for all crops; must be done on farm basis; payments on 85 percent of base.

Payment yields: For counter-cyclical payments, they would have the choice of (1) current AMTA payment yield, (2) 70 percent of increase between current payment yield and 1998-01 average yields with plug of 75 percent of county average yield in any year actual yield is less, or (3) 90 percent of 1998-01 average yields; choice may be exercised on crop-by-crop basis. Advance Payments: 75 percent of counter-cyclical available at end of first six months of marketing year.

LDPs and beneficial interest: 2001 crops produced on non-production flexibility contract farms eligible for LDP and beneficial interest waived for 2001 crop.

Payment limits: $40,000 per person fixed payment, $65,000 per person counter-cyclical payment, and $75,000 per person LDP/MLG; marketing certificates authorized; three-entity rule continued; individuals with adjusted gross income exceeding $2.5 million averaged over most recent three years ineligible for programs, with payments to entities reduced by proportionate share held by high-income individual(s); separate limits for peanuts.

Competitiveness provisions (upland): Three-step competitiveness provisions maintained and 1.25-cent Step 2 threshold eliminated through July 31, 2004.

Pima cotton: Competitiveness provisions extended and loan set at 79.65 cents per pound.


e-mail: flaws@primediabusiness.com.