Cuts are coming | With billions on the chopping block, farmers try to protect crop insurance programs
The Commodity Classic is a gathering of the largest and most influential commodity based farm groups in the United States. Issues in the spotlight there often have wide-reaching implications for world markets and Canadian farmers.
Western Producer reporter Sean Pratt attended the event held March 1-3 in Nashville, Tenn., and filed these reports.
NASHVILLE, Tenn. — The U.S. agriculture secretary has one overwhelming priority for 2012.
“We need a farm bill and we need it now,” Tom Vilsack told some of the 6,000 people gathered for the 2012 Commodity Classic conference in Nashville.
American farm groups are bracing for deep cuts to their subsidies. The old farm bill will likely continue if Congress can’t agree on a new one this year, but Vilsack told reporters that’s not a preferable option.
He anticipates budgets will be even tighter in 2013 than they are in 2012.
“Kicking the can down the road does not make it any easier,” he said.
American commodity groups share Vilsack’s sense of urgency for getting a new subsidy program in place by Dec. 31. A new deal would provide certainty that a short-tem extension cannot.
“The one thing we all have in common is we want to see a farm bill in 2012,” said Garry Niemeyer, president of the National Corn Growers Association.
However, legislators need to know how much money they’re working with before they can craft a new bill, and that has been a moving target.
Leaders of the U.S. House and Senate agriculture committees drafted a farm bill in November that would have cut spending by $23 billion US over the next 10 years, including $5 billion in direct payments to American farmers.
The bill was included as part of a broader $1.5 trillion debt cutting proposal, but Congress couldn’t come to agreement on the legislation.
Since then, there has been a proposal by the chair of the House budget committee to reduce farm spending by $48 billion over 10 years and one by president Barack Obama to cut it by $32 billion.
“First we have to have the number and then the discussions can take place,” said Vilsack.
The top priority for all of the major commodity groups is to keep the existing federal crop insurance program intact.
“We do not want to see them touch crop insurance at all,” said Bart Schott, chair of the National Corn Growers Association.
Obama has proposed removing $8.3 billion from crop insurance, with the deepest cuts coming from the popular 60 to 75 percent coverage category. That doesn’t sit well with Steve Wellman, president of the American Soybean Association (ASA).
“Any cut in support for the federal crop insurance program is a potentially crushing one for our industry,” he said.
“The American Soybean Association will strongly oppose any cuts to crop insurance.”
The federal crop insurance program has paid out more than $30 billion to farmers over the last three years. Vilsack said 55 million acres of American farmland were struck by natural disaster last year.
Commodity groups want a revenue based system to fill in the gaps in the crop insurance program, such as when a grower experiences multiple years of losses in crop production and/or prices.
“We’re in a very vulnerable position where that could happen,” said Niemeyer.
There is appetite in Washington to revise or eliminate the renewable fuel standard (RFS), which establishes the federal mandates for ethanol and biodiesel use.
Niemeyer said the powerful corn lobby, which represents 300,000 farmers, won’t allow that to happen.
“We are going to defend the RFS at all cost,” he said.
Ethanol has already lost its tax credit and import tariffs, which kept Brazilian sugar cane ethanol out of the U.S. marketplace.
The $1 per gallon biodiesel tax credit expired Dec. 31, and the ASA is pushing to have it retroactively reimplemented. Wellman said there is support in Congress to do that.
The ASA would also like the new farm bill to address growing delays in deregulating genetically modified crops and provide more funding for crop research.
That is also a pet project for Vilsack.
“The one area we cannot afford to reduce our budget, in fact we should be increasing the budget, is in basic research,” he said.
He also wants to see an emphasis on programs that support exports. U.S. farmers shipped $137 billion of product to foreign markets in 2011.
The agriculture trade surplus has grown to $42 billion from $5 billion five years ago, but so have the obstacles to trade. The U.S. faced 1,500 trade barriers last year compared to 600 10 years ago.
He is also concerned about the barriers facing young farmers trying to enter the business.
The average age of U.S. farmers is approaching 60 and land prices and rents are so expensive that it is difficult for young people to start farming.
Vilsack said tax incentives and changes to the crop insurance program are needed to assist young farmers.