After weeks of speculation about whether it would even write a new farm bill in 2001, the Senate Agriculture Committee has reported out a more “southern-friendly” version of the legislation to the Senate floor.

Committee Chairman Tom Harkin of Iowa dropped proposals that would have limited payments to $100,000 per year and capped target revenues at low levels and instead offered higher direct payments and “safety net” prices for cotton and rice to gain crucial southern support for the bill.

The concessions came at the expense of some of the increases he had sought in conservation programs, and critics said the legislation appeared to exceed the spending blueprint for agriculture in last spring's congressional budget agreement.

“This bill represents a sound farm, food and conservation policy for our nation over the next five years,” said Harkin. “It is a comprehensive, balanced approach, which is focused on meeting the needs of rural America.

“The Senate farm bill makes the necessary changes to Freedom to Farm, like establishing a strong safety net, while keeping aspects of the policy that have worked, like planting flexibility,” he said.

All 12 committee Democrats and Republican Sen. Tim Hutchinson of Arkansas voted for the bill. The remaining Republicans on the committee voted against it.

Harkin also hailed the committee's approval of his conservation title, which includes the Conservation Security Program (CSP) he introduced last year. That legislation appeared to be going nowhere until Democrats took control of the Senate following Vermont Sen. Jim Jeffords' defection from the Republican Party last summer.

House Agriculture Committee Chairman Larry Combest applauded the Senate committee's action, but said he was concerned the legislation exceeds the budget allocated agreed to by Congress for the budget years 2002-11 and “thus cannot move forward as written.”

For cotton producers, the Senate bill increases the rates for direct payments from the 4.6 cents per pound in Harkin's original proposal to 13 cents per pound in 2002 and 2003. In 2004 and 2005, the payment rate would drop to 6.5 cents per pound and in 2006, 3.25 cents.

The bill raises the marketing loan rate for cotton from 51.92 cents to 55 cents per pound and sets a “safety net” price of 68 cents per pound.

Harkin's initial chairman's mark would have increased the cotton loan rate to 54 cents and established a “target revenue” or counter-cyclical payment level for cotton at $360 per acre.

For rice, the bill increases direct payments from Harkin's initial 59 cents to $2.45 per hundredweight in 2002-03. The payment would decline to $1.22 per hundredweight for 2004-05 and 61.25 cents in 2006.

The marketing loan rate for rice is slightly lower under the Senate bill compared to Harkin's original proposal ($6.85 vs. $6.90 per hundredweight). The bill sets the safety net or counter-cyclical payment for rice at $9.30 per hundredweight compared to a target revenue amount of $475 per acre under the initial proposal.

For other crops:

Safety net price Loan rate Direct payment rate
2002/03 2004/05 2006
Corn* $2.35 $2.08 $0.27 $0.135 $0.068
Sorghum $2.35 $2.08 $0.31/0.27 $0.135 $0.068
Wheat $3.45 $3.00 $0.45 $0.225 $0.113
Soybeans $5.75 $5.20 $0.550 $0.275 $0.138
*per bushel

The payment rate for counter-cyclical or safety net payments would equal the difference between the income protection or safety net price minus the direct payment price minus the higher of the five-month average or the loan rate for the crop.

Under the Senate bill, farmers could choose between a new acreage base of the average of their actual plantings of a covered commodity in 1998, 1999, 2000 and 2001 or their current program base acres plus acres planted to oilseeds.

The bill also would allow farmers to update program yields using the greater of (1) average of the yield per harvested acre for covered commodities for the 1998 through 2001 crop years or (2) the program payment yield in effect for the 2002 crop year. (Farmers could exclude years in which they did not plant the crop or an additional year out of the four.)

The bill would leave the cotton marketing loan provisions in current law in tact except that the expansion of loan deficiency payments to “non-base” acres would be made permanent. The Three-Step Competitiveness provisions for cotton would be extended to July 31, 2007.

Harkin's original proposal put a limit on the amount of any commodity that would be eligible for marketing assistance loans per year (2.3 million pounds of cotton, for example.) That language was dropped from the bill approved by committee.

The Senate bill puts a limit of $100,000 per person for combined direct and counter-cyclical payments and keeps the limit of $150,000 on marketing loan gains in current law in place.

In the conservation title, the Senate bill establishes the Conservation Security Program, which would provide incentive payments to farmers and ranchers who voluntarily maintain and adopt conservation practices on working lands.

It would increase the acreage limit for the Conservation Reserve Program from 36.4 million to 40 million acres, double the acreage for the Wetlands Reserve Program by increasing the acreage cap to 1.25 million acres and increase the funding for the Environmental Quality Incentives Program up to $1.25 billion a year.

The Senate bill also establishes a title to promote farm-based renewable energy sources such as ethanol, biodiesel, wind energy, biomass fuels and other forms of alternative energy.

There was no immediate word on when the legislation will be voted on in the Senate, but Senate Majority Leader Tom Daschle reportedly had been pressuring Harkin to report out a bill that could be voted on before the end of the year.

If the Senate approves the bill, it must be sent to a conference committee to resolve differences between it and the Farm Security Act of 2001 passed by the House in October. Those differences are much smaller than they would have been under Harkin's original proposals.

USDA reaction to Senate bill… Page 23