Harkin releases commodity title draft

 

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August has flown by and Congress will be back in session before we know it. Senate Agriculture Committee Chairman Tom Harkin released his draft commodity title proposal recently, showing a glimpse into what to expect as the Senate begins its debate on the farm bill when they return in September.

In essence, Harkin's proposal continues direct payments at current levels, shifts countercyclical payments to a revenue base, adjusts the loan rates with provisions ensuring no loan rate will change more than 1% per year, continues the current crop insurance program with minor modifications and creates a crop insurance enhancement program designed to cover disaster-type losses.

Revenue assurance

The fact that Harkin's version includes a revenue countercyclical program again provides strong indications at least the option will find its way into a final version. The protection from both price and yield offers benefits for farmers in high crop variability years.

When the product of season average price and national average crop yield for the covered commodity is less than the target revenue for that commodity, participating producers would be eligible for a countercyclical payment.

The discussion draft sets national target revenue per acre for the 2008 crop year at:

Wheat

$160

Corn

$354

Grain sorghum

$192

Barley

$178

Oats

$120

Upland cotton

$498

Rice

$556

Soybeans

$231

Other oilseeds

$150

Peanuts

$638

The targets are based on national levels, unlike a Brown-Durbin legislative proposal based on state levels. The corn growers favor this approach.

Direct prices

Surprisingly Harkin didn't adjust direct payment limits lower. The program is leftover from the 1996 Freedom to Farm bill. In the past Harkin has criticized direct payments, saying it doles out money when it isn't needed. But just as the House lacked initiative to transition away from direct payments, Harkin isn't ready to eliminate those payments either.

Environmental Working Group President Ken Cook wrote in his blog The Mulch that despite ag groups saying they want their money from the market place, the lobby is loud and clear about taking direct payments away.

So do you really want your payments from the market place? If so, we shouldn't need direct payments, even when markets are high.

I'm not advocating one way or the other. It is important to know what those outside of agriculture are saying about the money you receive.

And here's a few words from Cook on the direct payments:

"They want their subsidy handouts permanently, even on top of record earnings, no matter what other needs go begging as a consequence, whether it's conservation, investments in organic farming, rural development, healthier food, you name it. Wait and see. Next year or the year after, if Congress faces a budget crunch and the agriculture committee has to cut spending, even if crop prices and incomes are in the stratosphere the subsidy lobby will push to make sure any cuts come from conservation, rural development, research, food stamps (if they dare), or other areas they consider superfluous by comparison."

Heading into the Senate debate, it looks nearly certain direct payments and revenue-based countercyclical payments will both find their way into a final farm bill signed by the President.

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