HAC Passage Of 2007 Farm Bill Sets Stage
For Floor Debate Of H.R. 2419 On July 26

Friday,July 20, 2007                               By Shawn Wade

      Completing their workas promised, the House Agriculture Committee unanimously passed its finalversion of the 2007 Farm Bill late in the evening July 19. Officiallydesignated H.R. 2419, the House version of the 2007 Farm Bill is slated forconsideration by the House of Representatives starting July 26.

      Following Committeepassage of the bill, Ag Committee Chairman Collin Peterson (D-MN) praised thebi-partisan effort that resulted in what he described as a bill that makeshistoric investments in conservation, nutrition and renewable energy, whilealso maintaining a strong safety net for America's farmers.

      Adding to the momentumprovided by the unanimous vote that passed the legislation out of the AgCommittee is a statement issued by House Speaker Nancy Pelosi (D-CA) supportingthe legislation as passed by the HAC. While Pelosi's statement strengthens thebill's credentials among Democrats, a significant challenge to the bill isstill expected from Rep. Ron Kind (D-WI) who has promised to renew his effortto do away with the current program and, by extension, the provisions put forthby the House Agriculture Committee.

      Fending off theseefforts will take the concerted efforts of the entire agriculture communityaccording to PCG Executive Vice President Steve Verett. "H.R. 2419 islegislation that, if given an opportunity, will successfully build upon thefoundation of the 2002 Farm Bill," concluded Verett.

      Verett, who spent theweek in Washington working with PCG leaders Barry Evans, Rickey Bearden andMark Williams calling on members of Congress, notes that a considerable amountof work remains to be done as the measure heads to the House floor forconsideration next week.

      Verett also praised theefforts and active participation of High Plains Representatives Mike Conawayand Randy Neugebauer during the full Committee mark-up. According to Veretttheir combined efforts were instrumental in carrying forward the key programsthat comprise the 2002 Farm Bill's safety net for cotton and other programcrops.

      "These gentlemen workedtirelessly to protect the safety net current law provides their cotton producerconstituents," said Verett. "We anticipate they will play an equally importantrole as we transition into the effort to secure passage of this bill by thefull House of Representatives."

      In a statement releasedfollowing the final Committee vote, Representative Randy Neugebauer said, "Directpayments, counter-cyclical payments, and the marketing loan program have allbeen key components of the 2002 Farm Bill and critical to the success ofAmerican agriculture in recent years. It is a win for agriculture that theCommittee voted to keep these programs largely in place in the 2007 Farm Bill."

      Verett notes that goinginto the mark-up session the cotton program was certainly feeling the heat fromreform-minded interests wanting to redirect commodity program funds to otherlegislative priorities. Efforts to significantly change the cotton program andother elements of the Commodity Title eventually proved unsuccessful thanks tothe efforts of Representatives Neugebauer and Conaway and the leadership ofChairman Peterson, said Verett.

      The following are briefdescriptions of some of the proposed changes put forth by the House AgricultureCommittee for the 2007 Farm Bill.

DirectProgram (DP). H.R. 2419 reauthorizesdirect payments for the 2008 through 2012 crop years at the same levelsestablished in the 2002 farm bill, including the DP payment rate for cotton of6.67-cents. Other significant changes proposed for the DP is the allowance forproducers to request a single 22 percent advance payment each year and theproposed elimination of advance direct payments in 2012.

Counter-cyclicalProgram (CCP). H.R. 2419reauthorizes counter-cyclical payments and establishes Target prices forcovered commodities for the 2008 through 2012 crop years. The proposalspecifies an Upland cotton Target price of $0.70 per pound, 2.4 cents below theTarget price established by the 2002 Farm Bill. Producers would also be allowedto request a single Advance CCP payment each year equal to 40 percent of theprojected payment rate. Advance CCP payments would also be eliminated beginningwith the 2012 crop year.

NewRevenue Based Counter-cyclical Program (RCCP). The bill authorizes the establishment of a newrevenue counter-cyclical program for the 2008 through 2012 crop years andprovides producers a one-time choice between participating in the currentcounter-cyclical program or the new RCCP on farms for which base acres andpayment yields are established. RCCP payments would be made when thecalculated national revenue per acre is less than the national target revenueper acre.

      Tocarry out this program the law would establish a national target revenue peracre for program crops (see table below) and a national payment yield per acrefor each commodity. These figures would then be used to calculate a NationalPayment Rate for RCCP payments as follows: (Nat. Target Rev/acre) minus (Calculated Nat. Rev/acre) divided by (Nat. Payment Yield)

      When triggered, RCCP payments would equal the National Payment Rate multipliedby a producers current CCP payment acres and payment yield.

NonrecourseMarketing Assistance Loans. H.R. 2419reauthorizes nonrecourse loans for loan commodities for the 2008 through 2012crop years. The proposal leaves the loan rate for base quality Upland cottonat $0.52 per pound.

UplandCotton Loan Provisions. In additionto the changes noted above, specific adjustments were also made in the Uplandcotton loan provisions. Among the changes to the cotton loan incorporated inthe proposed bill are adjustments to the calculation of the Adjusted WorldPrice (AWP) designed to make U.S. cotton more competitive in the world market,authorizing payments to domestic users of cotton, and the proposed eliminationof upland cotton storage credits in 2012.

PaymentLimits and Program Eligibility.

      When it came to calls for program reform, one of thebiggest targets for farm bill critics were rules regarding program eligibilityand payment limitations. In order to address these issues the Committee adoptedthe following proposed reforms:

AdjustedGross Income Cap for Farm Bill Benefit Eligibility.

Theproposed rules regarding program eligibility say no person with an adjustedgross income of greater than $1 million per year may receive any commodity orconservation payment under the Farm Bill, period. Further, no person with anadjusted gross income of greater than $500,000 per year may receive anycommodity or conservation payment under the Farm Bill, unless 67% or more ofthe adjusted gross income is derived from farming, ranching, or forestry.

3-EntityRule to Direct Attribution. Totalbenefits paid to a person may not exceed the established limits (discussedbelow) and will be subject to complete transparency, with all payments to aperson tracked to his or her Social Security Number.

Capon Direct Payments and Countercyclical Payments. No person may receive more than $125,000 per year indirect and countercyclical payments. This includes no more than $60,000 peryear in direct payments and no more than $65,000 per year in countercyclicalpayments.

MarketingAssistance Loans/Loan Deficiency Payments. Repeals generic certificates and instead directly authorizes a personto receive a basic level of loan assistance on all of his or her crop.

ConservationPrograms

      Inthe area of Conservation the HAC proposed the following changes to meet theneeds of farmers and ranchers under the 2007 Farm Bill.

ConservationReserve Program (CRP). The CRP would be extended through 2012 with the currentacreage cap of 39.2 million acres maintained for the life of the bill.

WetlandReserve Program (WRP). The WRP wouldbe extended through 2012 with the maximum enrollment level increased to3,605,000 acres.

ConservationSecurity Program (CSP). The HACproposal would create a new CSP program for fiscal years 2012 through 2017 thatcollapses the current tier-based payment structure and replaces it with a newstewardship enhancement payment. The HAC language would allow no new contractsto be entered into under the current CSP program, but would allow for thecontinuation of payments and modifications to existing contracts until theyexpire.

GrasslandReserve Program (GRP). The GRP isextended through 2012 with the requirement that an additional 1,000,000 acresbe enrollment between fiscal years 2008 and 2012.

EnvironmentalQuality Incentives Program (EQIP). TheHAC proposal would extend the EQIP program and increase funding from thecurrent base line level of $1.3 billion to $2 billion by 2012.

 

H.R. 2419 Proposed Nonrecourse Loan Levels

 

Crop

Unit

H.R. 2419

($'s)

2002 Farm Bill

($'s)

Change

($'s)

 

Wheat

Bu.

2.94

2.75

+ 0.19

 

Corn

Bu.

1.95

1.95

No Change

 

Sorghum

Bu.

1.95

1.95

No Change

 

Malt Barley

Bu.

2.50

1.85

+ 0.65

 

Feed Barley

Bu.

1.95

1.85

+ 0.10

 

Oats

Bu.

1.39

1.33

+ 0.06

 

Upl. Cotton

Lb.

.52

0.52

No Change

 

ELS Cotton

Lb.

0.7977

0.7977

No Change

 

Lng. Grain Rice

Cwt.

6.50

6.50

No Change

M/S Grain Rice

Cwt.

6.50

6.50

No Change

 

 

Soybeans

Bu.

5.00

5.00

No Change

 

Peanuts

Ton

355

355

No Change

 

Minor Oilseeds

Lb.

0.1070

0.093

+ 0.014

 

Dry Peas

Cwt.

5.40

6.22

- 0.82

 

Lentils

Cwt.

11.28

11.72

- 0.44

 

Small Chickpeas

Cwt.

8.54

7.43

+ 1.11

 

Graded Wool

Lb.

1.10

1.00

+ 0.10

 

Nongraded Wool

Lb.

0.40

0.40

No Change

 

Honey

Lb.

0.60

0.60

No Change

 

Mohair

Lb.

4.20

4.20

No Change

 

Sugar Beets

Lb.

0.235

0.229

+ 0.006

 

Sugar Cane

Lb.

0.185

0.18

+ 0.005

 

H.R. 2419 Proposed Direct

Program Payment Rates ($'s per Unit)

Crop

Unit

H.R. 2419

Wheat

Bu.

0.52

Corn

Bu.

0.28

Sorghum

Bu.

0.35

Barley

Bu.

0.24

Oats

Bu.

0.024

Up. Cotton

Lb.

0.0667

Rice

Cwt.

2.35

Soybeans

Bu.

0.44

Peanuts

Ton

36

Minor Oilseeds

Lb.

0.008

 

H.R. 2419 Proposed Counter-cyclical Program

Payment Rates and Advance Payment Levels ($'s perUnit)

Crop

Unit

H.R. 2419

2002 Farm Bill

Change

Wheat

Bu.

4.15

3.92

0.23

Corn

Bu.

2.63

2.63

No Change

Sorghum

Bu.

2.57

2.57

No Change

Barley

Bu.

2.73

2.24

0.49

Oats

Bu.

1.50

1.14

0.06

Up. Cotton

Lb.

0.70

0.7240

(0.024)

Rice

Cwt.

10.50

10.50

No Change

Soybeans

Bu.

6.10

5.80

0.30

Peanuts

Ton

495

495

No Change

Minor Oilseeds

Lb.

0.1150

0.1010

0.014

 

H.R. 2419 Proposed Revenue Counter-cyclical Program

Target Revenues ($'s per Unit) and Payment Yields

 

Crop

 

Unit

National

Target Revenue

National

Payment Yield

Wheat

Bu.

149.92

36.1

Corn

Bu.

344.12

114.4

Sorghum

Bu.

131.28

58.2

Barley

Bu.

153.30

48.6

Oats

Bu.

92.10

49.8

Up. Cotton

Lb.

496.93

634

Rice

Cwt.

548.06

51.28

Soybeans

Bu.

231.87

34.1

Peanuts

Ton

683.83

1.496

Minor Oilseeds

Lb.

129.18

1167.6