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February 16, 2005   Email to Friend 

Jeff Helms
(334) 613-4212
February 16, 2005

WASHINGTON, D.C.-- With President Bush and Congress considering agriculture budget cuts and other changes that could re-open the 2002 Farm Bill, the Alabama Farmers Federation is encouraging its members to contact their senators and congressmen and urge continued support for the Farm Bill and farm programs.

The Federation has prepared the following talking points that emphasize the relative low cost of farm programs as well as their benefits:

• Farm programs make up just 0.5 percent of the $2.3 trillion federal budget.

• The 2002 Farm bill has cost $17 billion less than Congressional Budget Office projections.

• President Bush's budget proposed to save $15 billion over 10 years by cutting farm bill program payments to producers from $360,000 to $250,000.

• His proposal would eliminate the "triple entity" rule that cotton producers use in marketing loans and marketing certificates. Virtually all cotton is redeemed using certificates because it is more convenient and doesn't require the redeemers or USDA to keep track of an individual's payment-limit status. There is a large volume of redemptions with certificates that could be accomplished with cash because the producer is not in danger of exceeding the limit, but certificate redemptions are simply more convenient and efficient. Certificates also are widely used to redeem rice, grain and oilseed loans.

• If certificates are eliminated, USDA will have to track each individual producer's payment-limit status--many with multiple crops. We know that USDA can't track the status of an individual producer's payment limit in real time, especially producers who have multiple crops and who do business in multiple counties. Merchants and co-ops will have to check the status of each of their member's/customer's payment limits before redeeming cotton when prices are below the loan rate. The result will be a nightmare of record keeping requirements, increased administrative costs, a potential slow down in sales transactions and when redemptions are made after a producer's limit is exceeded, the producer will have to repay the Marketing Loan Gain.

• The amount of the marketing loans for producers above the $250,000 payment cap would become a recourse loan and would be based on historical production This would be particularly harmful to new producers who have no historical production and especially peanut producers who have only had the marketing loan since 2002. In Alabama, for example, Baldwin County has gone from little peanut acreage to the second largest peanut-producing county in the state. Tying marketing loans to historical production would harm producers and the peanut industry who have made long-term investment decisions based on the contract the federal government made in 2002.

• Production agriculture involves 2 million farmers that contribute 15 percent of the gross domestic product. Agriculture employs 25 million people.

• Current farm programs enable the United States to export the production from almost two out of every three farm acres. Agricultural exports mean jobs and business for the American economy. More than 17 percent of the total American workforce produce, process and sell the nation's food and fiber. This is larger than the construction, transportation and utilities industries combined.

• Our federal farm law acts as a multi-year contract upon which thousands of farm families make their business and investment decisions. The stability provided by the 2002 farm program, written to last through 2007, has allowed unprecedented growth in farm investment.

• Any reduction or weakening of the safety net provided by the 2002 farm law will negatively impact the security of all Americans.

• As noted by President Bush at the farm bill signing, "[Farmers] livelihood depends on things they cannot control: the weather, crop disease, uncertain pricing. They need a farm bill that provides support and help when times are tough." The President's budget doesn't reflect this.

• The 2002 farm law introduced further tightening of benefit eligibility and formed a commission to study the distribution of benefits in 2002 farm law. The Payment Limit Commission clearly recommended that no change in benefit eligibility should be implemented in the middle of the current farm law.

• Reductions in U.S. agricultural support prior to the completion of the Doha round of international trade negotiations is the equivalent of unilateral disarmament. Substantial changes in U.S. commodity programs can weaken our negotiating position, undermine current proposals, and send the wrong signal to other World Trade Organization member countries.

Visit the Capitol Connection for email, addresses and phone numbers of Alabama's congressional delegation.

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