Kansas City, Mo. – Prairie farmers frustrated by the failings of the Canadian Agricultural Income Stabilization program might be surprised to hear that the U.S. Department of Agriculture is looking north for ideas about how to reform its expensive farm safety net system.
But at the National Pork Industry Forum in Kansas City held March 3-4, the present and a former agriculture secretary said a revenue insurance type program is being considered instead of today’s emphasis on direct payments to five farm commodities: corn, soybeans, cotton, wheat and rice.
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“There is a lot of very, very creative thinking going on about the next farm bill,” agriculture secretary Mike Johanns told the pork producers.
“Does it make some sense to look at this differently? Do we look at a revenue approach? Do we realign some of our (thinking) about the farm bill?”
Johanns said most U.S. farmers do not receive subsidies from the government, and they have begun to complain. They aren’t asking to have their commodities made a “program crop” like corn or soybeans, but they want some of the money in the next farm bill directed to programs that will help their industries.
“I think it’s going to be very, very difficult to pass a farm bill and leave important stakeholders behind. Two-thirds of American farmers don’t get any subsidy … because they don’t raise one of the program crops,” said Johanns.
Former agriculture secretary Clayton Yeutter said a revenue insurance approach is being seriously considered.
“It would be a heck of a lot simpler, probably a lot less expensive and could still provide a safety net that will be functional,” said Yeutter in an interview.”My view is that it will receive some serious attention by the Congress in the next year or so.”
Yeutter, who helped negotiate the Canada-U.S. free trade agreement, said Canada’s whole-farm safety net approach is being studied.
“There are several possibilities in that area. They can all be done in a kind of variety of different ways,” said Yeutter.
“Some of these are actually patterned on the Canadian experience. People have looked at those for their possible application to the United States.”
Yeutter said the advantage of a whole-farm approach to farm support is that it allows presently uncovered industries such as hog production to be covered. He said he likes the idea of a program that can achieve the same result as today’s array of programs that offer commodity price protection, emergency disaster relief and crop insurance.
“It’s not going to be simple, but it’s probably going to be simpler than the present system that we have, because we have a very complicated system today.”
Johanns said today’s system of loan deficiency payments for specific commodities, which provide a floor price for the main farm commodities, doesn’t work well, because farmers who suffer production problems receive less support than those who get big crops.
“This farm bill is based upon one word: produce,” said Johanns.
“You produce, we pay. You produce more, we pay more. You produce more and more, we pay more and more.”
Farmers in drought areas receive little benefit from loan deficiency payments, he said.
