Commodity groups don’t always agree on the specifics they want or need in a farm bill.
What’s best for corn is not always best for livestock, and what’s best for cotton is not always what grain farmers prefer.
But Southwest commodity spokesmen agree they want a farm bill passed now, and that good crop insurance should be an integral part of it.
Reece Langley, vice-president, government affairs, USA Rice Federation; John Mages, president, Minnesota Corn Growers Association; Steve Pringle, legislative director, Texas Farm Bureau; Dee Vaughan, president, Southwest Council of Agribusiness; and Ross Wilson, president and CEO, Texas Cattle Feeders Association, expressed unique perspectives, but many common concerns during a panel discussion at the inaugural Southwest Ag Issues Conference in Austin.
(For complete, in-depth coverage of the 2012 farm bill developments, click here).
“Rice is a relatively small entity, but we still have a lot of differences within the industry,” Langley noted. Different types of rice and different markets “need different policies. We want choices, including traditional price protection and a shallow loss program — and good crop insurance.”
Crop insurance has “a lot of room for improvement,” he said. “The current bill proposals would help.”
Commodity organizations need to “respect the differences” between commodities, and “help to get a good farm bill.” He said the Farm Bill Now organization, currently pushing for rapid action on passing a new law, is supported by most commodity organizations.
Mages, located a bit north to be considered Southwest, says a partnership between Minnesota corn and the Southwest Council of Agribusiness, which is co-sponsor of the summit, “opens up new doors” for both organizations.
Minnesota corn growers want “choices in a new farm bill. And we would like to get it done this year.” He agrees crop insurance needs to be an integral part of any new policy. “It’s such a big safety net.”
Minnesota has “been fortunate to get rain this year,” but Mages noted that much of the Midwest corn crop has been devastated by drought.
He supports ethanol. “We have a long history of biofuels in Minnesota. It has been a boost for our rural economies. More than 40 percent of our corn is exported out of the state.”
Water quality, more than quantity, is an issue for Minnesota farmers, he said. The industry is working on water quality research to develop science-based numbers for runoff that “may differ from EPA.”
Texas Farm Bureau “wants to get a farm bill passed,” says Pringle. “We want a five-year bill this year, but we recognize that we will need an extension of the current law for at least a year while they write regulations for a new one. We are not interested in going through this process again next year.”
Vaughan said the concept of price protection is at risk with new policy. “The 1933 Agricultural Adjustment Act included price protection because of the market loss after World War I and the ongoing economic chaos (Great Depression). We kept price protection until 1996 when we got the Freedom to Farm Act, which a lot of folks referred to as ‘Freedom to Fail.’”
Conditions now may be similar to 1996 with the high commodity prices and budget hawks. “We have a massive deficit and incentives to cut budgets.”
High commodity prices, he said, may tempt legislators to assume that those prices will be sustained. “We hear complaints about the need for a farm bill and price protection.”
Of the two proposals, Senate and House, he, and others on the panel, say the House version offers the best options, including price loss coverage and a larger payment limitation, $125,000 per individual in the House compared to $50,000 in the Senate version.
The Senate bill also uses a five-year Olympic average that “could cause serious trouble,” Vaughan said, “and would not provide much protection.
“Price risk,” he said, “is our major risk. Crop insurance is adequate to cover production risk. The House bill provides the tools we need. Ad hoc (disaster relief spending) is not likely.”
Wilson says beef prefers not to have a livestock title in the next farm bill. “Historically, that (a livestock title) has been a problem.”
Drought, which has continued for three or four years in the Southwest, has been hard on the beef industry. “The 2011 drought was a killer blow to the Southwest. Now, the drought in the Midwest is affecting the Southwest feed industry.”
Demand has remained “okay, but shrinking production is troubling. We’re just waiting for moisture and the ability to rebuild the herd.”
Opposed to ethanol subsidies
Contrary to some notions, “livestock producers are not opposed to ethanol. But we are strongly opposed to ethanol subsidies.”
The renewable fuel standard (RFS) has put from 40 percent to 45 percent of the U.S. corn crop into ethanol production. “RFS has to go away,” he said. “We’re not holding our breath on the waiver (requested by several governors in light of the anticipated short corn crop and higher corn prices). We could see $12 corn, especially considering the positive basis in our area.”
The dried distillers grain (DDG) that comes out of the ethanol production process “is welcome but not the same as corn.”
Wilson is also concerned about livestock and other commodities sending the proper message and on a timely basis to consumers. He mentioned the furor over lean, finely textured beef, branded “pink slime” that damaged the industry. “We lost that message opportunity,” he said. “We need to make sure that society understands our message.”
Even though the beef industry does not want a title of its own in the next farm bill, “we appreciate the needs of the crop sector.”
The country of origin label (COOL) issue “needs some changes in the language included in the statute,” Wilson said.
He remains positive about agriculture. “We believe the future is bright for agriculture, animal and crop. We just need to make sure we handle message problems.”
Others commented on the RFS waiver issue. Pringle said he doesn’t expect the waiver to be granted. “Both presidential candidates have expressed support for the current standard.”
An audience member asked about the ACRE program, an unpopular option in the current farm program. “No one wants it,” he said. “Why is no one listening to farmers?”
Vaughan said producers voted on what kind of program they wanted when they signed up for the 2008 farm bill options.
“Now, (Congress) needs to provide price protection for producers. We want that built into the farm bill. We need options for risk protection. Producers will choose, and we will then see how it all falls out.”
The panelists represented a fairly broad spectrum of commodities and all brought unique outlooks to the discussion. A good crop insurance program was a common need as was a strong conviction that Congress needs to act quickly to pass a bill.
Other observers noted that time is running out for Congress to pass a bill before the election and that a lame duck session might be the next best opportunity.