WASHINGTON, D.C. — Farmers in the United States need a new farm program that offers higher crop supports, stores 20 percent of the crop and idles cropland to head off surpluses, says the National Farmers Union.
American NFU president Leland Swenson laid out the plan at a House of Representatives agriculture committee hearing on potential changes in the law that deregulated farming in 1996. He said farm income would be higher under the NFU plan and federal outlays lower because congressional bailouts would end.
Congress has spent more than $24 billion (US) in farm rescues since 1998 due to low grain prices, roughly doubling the expected cost.
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An additional $9 billion will be needed this year, Swenson said.
“We are recommending a new crop commodity program that is substantially different from the current program,” Swenson told the committee.
The NFU plan would end the annual $4 billion in subsidies that are guaranteed to farmers, and rely on higher crop supports in the form of marketing loans, which allow growers to pocket the difference between their selling price and federal price-support loans. Farmers would be allowed to forfeit their crops to the government and keep the loan money when prices are abnormally low, the NFU said.
The larger American Farm Bureau Federation said it would prefer to continue the annual payment and create a new “counter-cyclical” payment plan to automatically send more money to growers when prices fall.
Representative John Boehner, an Ohio Republican, said the NFU plan “looks like what we did from 1935 to 1995 … that didn’t work.”
Swenson said the plan was built of components that worked and were popular with farmers, such as the marketing loan and planting flexibility, which allows farmers to switch crops without jeopardizing federal supports.
Under the NFU plan, rates for the marketing loans would be at least 80 percent of the three-year average, “of the full economic cost of production per unit per acre as calculated by the Economic Research Service.”
Under the NFU plan, corn loans, now made at $1.89 a bushel, would rise to $2.34. Wheat would be $3.69 a bu. instead of the current $2.58 and soybeans would be $5.44 a bu. instead of $5.26.
Other parts of the NFU plan:
- A voluntary land set-aside program, to be offered by the government when needed to prevent surpluses, that provides a progressively higher marketing loan rate to growers for taking larger amounts of land, up to 20 percent, out of production. Support rates would be reduced for farmers who do not take part, perhaps by as much as 10 percent.
- Full planting flexibility for farmers, meaning they could grow any crop they want. At present, farmers are barred from planting fruits and vegetables on land traditionally sown with grains, cotton and rice.
- A limited farmer-owned reserve that would pay about 30 cents a bu. a year to farmers for holding grains, cotton or rice off the market. The reserve could hold up to 20 percent of a crop.
There also would be a reserve of up to one year’s supply of crops used in fuel production, or about 600 million bu. of corn and 50 million bu. of soybeans, and a humanitarian food reserve of 300 million bu. of wheat, 50 million bu. of oilseeds and 25 million bu. of rice.
- Expanding the long-term conservation reserve to 40 million acres. The ceiling now is 36.4 million acres.
- Creation of a short-term soil rehabilitation program of up to five million acres, “to address current productivity limitations and income losses caused by unusual weather events or pest infestations.”
- Pay farmers who incorporate soil and water-saving techniques into their operations. Conservation groups back a similar proposal to pay up to $50,000 a year to farmers who do so.
