Western Producer reporter Sean Pratt attended the Commodity Classic, a gathering of 4,000 American wheat, corn and soybean growers in Florida last week, to see what Canadian farmers might expect from their southern neighbours.
TAMPA, Florida – The largest commodity group in the U.S. is proposing a radical shift in the way subsidy money is doled out, an approach it feels will be perceived as more trade friendly than the current program.
“We would like to make a farm bill that isn’t continually challenged,” said Ken McCauley, president of the National Corn Growers Association.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
His industry recently came under fire by the Canadian government, which has asked the World Trade Organization to look at corn subsidies it considers harmful to Canadian growers.
That challenge relates to the farm bill that came into effect in 2002. But McCauley thinks the issues raised by Canada and its supporters will be resolved in the 2007 farm bill if the corn industry’s recommendations are adopted by Congress.
United States farmers receive government support in four ways – direct payments, crop insurance payments, price-based counter cyclical payments and recourse marketing loans.
The corn industry is proposing a shift to a two-pronged system, where a revenue-based counter cyclical program is combined with a federal crop insurance program.
“We think that you can design a revenue-based program that can prepare us for the future and be even more (WTO) compliant than we are today,” said Steve Pigg, chair of the corn growers’ public policy action team.
A revenue-based program would protect growers against both price and yield declines. With strong corn prices forecast for the foreseeable future, corn growers are more concerned about being protected against crop failure than anything else.
What makes the proposal trade-friendly is dropping the marketing loan component, a program that even American farm groups admit is trade-distorting.
“That option would go away. In exchange (U.S. growers) would have much better protection across the board against yield losses,” said Pigg.
However, the corn proposal is at odds with the wheat and soybean agendas.
The wheat industry wants to increase direct payments. The group said counter cyclical payments and marketing loan support have been of little or no use to wheat farmers.
Dale Schuler, then president of the National Association of Wheat Growers, said wheat is grown in areas where production is highly variable. Counter cyclical payments and loan programs are useless for farmers who have no crop to market due to drought.
That is why NAWG is recommending a significant increase in what is unanimously viewed as the least trade distorting of the current package of U.S. subsidies.
The association also wants to move in that direction because half of the wheat grown in the U.S. is exported, which means that wheat prices are more influenced than are corn and soybeans by world markets.
“The National Association of Wheat Growers would like to see a farm bill that is not trade-distorting,” he said.
Soybean farmers want a system that encourages production because they are losing acres to corn. The soybean proposal calls for sticking with the current safety net package but increasing target prices and loan rates.
“We’ve never received a counter cyclical payment since the 2002 farm bill began because our target price is too low,” said Rick Ostlie, president of the American Soybean Association.
