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April 26, 2002   Email to Friend 

CONFEREES REACH PRELIMINARY AGREEMENT ON MAJOR FARM BILL ISSUES
Debra Davis
(334) 613-4686
April 26, 2002

Preliminary numbers for the farm bill were released Friday but the numbers may change slightly as the Congressional Budget Office adjusts its scoring. Keith Gray, director of National Affairs for the Alabama Farmers Federation, said conferees probably will sign off today and tomorrow and will work through the weekend to get a conference report to the floor sometime next week.

Listed below is an outline of some of the agreements reached by the conferees:

The six-year farm bill authorizing $73.5 billion would apply to 2002 crop, except new payment limits which start in 2003.

There will be a base update option for the producer for 1998-2001 crop years, and if he updates his base, he has the option to update his yield as well.

The yield would be either 70 percent of the difference between 1980-1985 yield and 1998-2001 yield (added to old yield) or it would be 93.5 percent of the four-year average of 1998-2001 crop years.

Payment limits

* $360,000 for husband and wife

* $40,000 in fixed payments

* $65,000 in counter cyclical payments

* $75,000 in marketing loans/LDP's

Generic certificates and three-entity rule are retained.

Ban on packer ownership is dropped from the bill, and country-of-origin labeling for fruits, vegetables and beef would be mandatory after two years.

PEANUTS

* $355 marketing loan plus storage

* $495 target price

* $0.55 quota buyout

* $36/ton decoupled payment

* 3 year yield plug (helps when you have drought years in 98-01) separate but equal payment limits

LOAN RATES (subject to change slightly depending upon scoring)

* wheat: 2002-2003 ($2.80/bu) 2004-2008 ($2.75)

* corn : 2002-2003 ($1.98/bu) 2004-2008 ($1.95)

* beans: 2002-2003 ($5.03/bu) 2004-2008 ($4.96)

* cotton: 2002 onward ($0.52/lb)

DAIRY

* The Dairy Price Support Program at $9.90/cwt included for the life of the bill

* A dairy countercyclical payment program with payments of 45 percent of the difference between a target price of $16.94/cwt and the Class I price in Boston, on 2.4 million pounds of milk annually through Sept. 30, 2005.

It is thought that some money may be shifted from decoupled payments to higher target prices since a cost-savings would be scored by CBO, Gray said. EQIP is funded at $9 billion (House version had almost $12 billion) and Conservation Security Act is funded at $2 billion, and it is unclear how large the cap is for livestock operators that are eligible for EQIP funding under the compromise. The House provision is $50,000 per producer and Senate is $30,000 per producer, according to Gray.

"Many of the Federation policies are reflected in the final compromise," Gray said. "Although lower payment limits were retained, for instance, generic certificates were retained and the peanut marketing loan provisions were adopted as well. In addition, country-of-origin labeling provisions were adopted that the Federation strongly supports, and a direct payment for dairy producers was adopted that does not discriminate or favor one region over another."

Other priorities in the conference included successfully increasing agriculture baseline spending by over 70 percent, and increasing conservation spending for cost-share assistance available for producers to meet increased environmental regulatory burdens, according to Gray. Planting flexibility was retained in the final bill as is the option for producers to update their 1980-1985 bases that are more reflective of current planting and yield trends.

"The infrastructure for cotton and peanuts in the Southeast would have been severely threatened if the more punitive Senate payment limits had been adopted," Gray said. "This was a concern because producers of cotton and peanuts, which are capital-intensive crops, switched to lower production cost crops such as corn and soybeans.

"For instance, it was estimated that for the mid-South area under Senate proposed payment limits, an estimated 1.1 million acres planted to cotton and rice alone would be ineligible for loan benefits. As a result, these producers would have switched to corn and soybeans further depressing prices for these crops. The fact that the conference recognized this led to the adoption of more liberal payment limits more in line with the House version of the bill. "


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