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April 30, 2002   Email to Friend 

PRELIMINARY NUMBERS RELEASED ON FARM BILL
Debra Davis
(334) 613-4686
April 30, 2002

Preliminary numbers for the farm bill were released last Friday, but the final 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 intend to file the conference report by mid-week, and the House should vote on the final bill by Friday. It is hoped that the Senate would vote on the conference report by early next week, and send the bill to the president where he is expected to sign it, Gray added. 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 that start in 2003.

There will be two options for a producer to update his BASE:

1) Current AMTA base plus oilseeds

2) 85 percent of the 1998-2001 crop years for planted and considered planted acres, and if the farmer updates his base, he has the option to update his yield as well.

The producers had three options for YIELD updates:

1) 70 percent of the difference between 1980-1985 yield and 1998-2001 yield (added to old yield)

2) 90 percent of the four-year average of 1998-2001 crop years.

3) 1current AMTA yield

* For any year that actual yield is less, producer may use a plug of 75 percent of the county average. The choice may be exercised on a crop-by-crop basis.

Non-production AMTA acres for 2001 crop are covered for LDP's and beneficial interest is waived for 2001 crop.

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

• $2.5 million Adjusted Gross Income Means Test (averaged over last three years) for farm program participation

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

• Three-year yield plug (helps when you had drought years in 98-01) and 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) • Soybeans: 2002-2003 ($5.00/bu) 2004-2008 ($5.00)

• Cotton: 2002 onward ($0.52/lb)

• Barley: 2002-2003 ($1.88/bu) 2004-2008 ($1.85)

• Oats: 2002-2003 ($1.35/bu) 2004-2008 ($1.33)

• Grain sorghum 2002-2003 ($1.98/bu) 2004-2008 ($1.95)

• Honey: 2002 onward ($0.60/lb)

• Mohair: 2002 onward ($4.20/lb)

• Graded Wool: 2002 onward ($1.00/lb)

• Ungraded Wool: 2002 onward ($0.40/lb)

ADVANCE PAYMENTS

Secretary is authorized to release 35 percent of counter-cyclical payment available in October, followed by difference of payment and 70 percent of remainder in February of following year

FIXED PAYMENTS

• Wheat: $0.5200/bu

• Corn: $0.280/bu

• Beans: $0.4400/bu

• Cotton: $0.0667/lb

• Barley: $0.24/bu

• Oats: $0.024/bu

• Grain Sorghum: $0.35/bu

TARGET PRICE

• Corn: 2002-2003 ($2.60/bu) 2004-2008 ($2.63)

• Sorghum: 2002-2003 ($2.54/bu) 2004-2008 ($2.57)

• Wheat: 2002-2003 ($3.86/bu) 2004-2008 ($3.92)

• Beans: 2002 onward ($5.80/bu)

• Barley: 2002-2003 ($2.21/bu) 2004-2008 ($2.24)

• Oats: 2002-2003 ($1.40/bu) 2004-2008 ($1.44)

• Cotton: 2002 onward ($0.7240/lb)

COUNTER-CYCLICAL PAYMENTS:

For each of the 2002 through 2007 crop years for each covered commodity, the secretary of agriculture shall make counter-cyclical payments to producers on farms for which payment yields and base acres are established with respect to the covered commodity if the secretary determines that the effective price for the covered commodity is less than the target price for the covered commodity.

The effective price for a covered commodity is equal to the sum of the following:

(1) The higher of the following:

(A) The national average market price received by producers during the 12-month marketing year for the covered commodity, as determined by the secretary;

(B) The national average loan rate for a marketing assistance loan for the covered commodity in effect for the applicable period.

(2) The payment rate in effect for the covered commodity (direct payments).

Payment rate used to make counter-cyclical payments is equal to the difference between the target price for the covered commodity and the effective price.

Payment amount:

If counter-cyclical payments are required to be paid, the amount of the payment shall be equal to the product of the following:

(1) The payment rate previously specified

(2) The payment acres of the covered commodity

(3) The payment yield or updated payment yield for the farm, depending on the election of the owner of the farm.

DAIRY

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

A dairy counter cyclical 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.

Some money was 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 Program is funded at $2 billion with an individual payment cap for livestock producers of 450,000.

"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 80 percent of increased 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 was 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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