Peterson, Pomeroy hear groups on farm bill hopes

AMENIA, N.D. -- The current farm bill doesn't expire until 2012, but House Agriculture Chairman Collin Peterson already is deeply into a consensus-making process to improve it in the face of federal budget woes.

Peterson says he wants the bill to pass "early in 2012" so there is time to make rules before the old bill expires and to avoid lingering rule-making delays.

He and Rep. Earl Pomeroy, D-N.D., hosted a farm bill forum July 7 in the farm shop of Bill Hejl of Amenia, N.D. Hejl is one of the region's prominent sugar beet leaders, a current member of the American Crystal Sugar Co. board of directors and former president of the World Association of Beet and Cane Growers.

Among other things, Peterson seems focused on finding ways to shift support away from direct pay-ments, a method that initially was designed to make payments neutral in world trade agreements because they separate payments from production. Now, however, the problem is the payments continued too strong during times of strong commodity prices, so that is a political lightning rod.

Program discussion

The forum featured three panels, representing corn, soybean, sugar beet, wheat and barley interests, as well as livestock and government operatives on agriculture.

Kevin Skunes, chairman of the checkoff committee for the North Dakota Corn Growers Association, gave some of the most specific advice to the lawmakers. Risk management improvements are the biggest object of the corn industry, he says.

"Farmers need to see continued improvements in new programs such as ACRE and SURE, he says, referring to the Average Crop Revenue Enhancement and Supplemental Revenue Assistance programs.

"Over the past 10 years, nitrogen and potassium have jumped an estimated 200 to 416 percent; diesel fuels 148 percent; biotech corn 113 percent; and land rents 41 percent," he says. "In spite of the attractive run-up in prices and yields, a significant amount of the implied wealth is flowing off the farm. The squeezing of profit margins requires each of these risk management tools."

Among the state corn group's recommendations to tweak ACRE:

- Calculate yields by crop reporting district (such as South Central, Red River Valley, North Central) to calculate ACRE revenue, instead of the entire state formula.

- Calculate the revenue target as a five-year moving average, rather than the five-year Olympic average.

- Eliminate the base acre cap of 85 percent (or 83.33 percent) and focus on 100 percent of planted acres.

- Use the same method to determine the farm and state benchmark revenues.

- Keep the "farm trigger" to justify a payment.

Peterson says he's having two economists, including Carl Zulauf, who he describes as the "godfather of ACRE," analyze the ACRE and SURE programs to determine whether the yields should be calculated in a different way than they are. He also says the program complexity is more difficult because it involves getting signatures and explaining it to absentee landowners who are two and three generations from the farm.

Skunes suggests that "one simple fix" for the SURE disaster program would be to "calculate the timeframe the same as crop insurance, from March to December.

"This would truly 'marry up' SURE and crop insurance and would make payments more timely as producers are just now getting paid for 2008 disaster," he says. "It would also eliminate any potential overlap between ACRE and SURE."

Skunes says crop insurance is the farmer's best form of protection, however.

"Consideration should be made for re-rating the high premiums on corn," he says. "The Risk Management Agency currently gives equal weight to production years going back into the 1980s when calculating premiums. RMA should consider the technology that has helped increase yields since the 1990s."

He says biotechnology has led corn to a loss ratio of 0.91 between 1990 and 1999.

"From 2000 to 2009, the corn loss ratios declined to 0.67. The total for all other crops was 1.15 and 0.99 for those same periods, yet corn pays 50 percent of all premiums nationwide."

Skunes says the Biotechnology Yield Endorsement should be encouraged in the future as producers prove less risky.

Recent criticisms have claimed that ACRE is too complex, but Skunes says "sometimes these programs can be viewed as complex, but they are all worth having to sustain producers in times of need."

Weighing in

Among other comments:

- Scott Hendrickson, Walcott, N.D., president of the North Dakota Soybean Growers Association, says his group praises Peterson and Pomeroy each for being "the right person at the right time" to work on passage of an acceptable farm bill. He especially wants an extension on biodiesel tax incentives, and says they're "just as important as ethanol."

- Steve Kramer, chairman of government relations for the Minnesota Corn Growers, says crop insurance improvements, and making them more individualized to producers, is a goal. His group is open to alternative ideas to the direct payment component of farm price supports, but the worry is about leaving the current programs for those that are "untested and provide less support." He praises Congress for expanding farm facility storage loans, as the Corn Belt has expanded and productivity has increased. He thanked Pomeroy for taking the lead on extending ethanol tax credits.

Separately, a west-central Minnesota corn grower in the audience agreed ACRE isn't helpful to his family because the statewide triggers include southern Minnesota yields, which are much higher. Peterson says he has economists looking at the ACRE and SURE programs, making sure it isn't duplicating payments. Pomeroy says the permanent disaster provisions that mean going away from ad hoc congressional disaster programs has been "one of the great accomplishments" of the last farm bill.

- Jim Broten, Dazey, N.D., representing barley, suggested a passage of a quality payment to make up the difference when "mediocre" barley quality doesn't make malting, but doesn't qualify for crop insurance. He envisions the program "for all small grains" to be similar to a program already in place for durum. He says this could head off declines in barley acreage, as farmers' grain too often is rejected for quality issues. He says variety development is an issue, as well as a need to apply biotechnology tools, to offset an acreage decline for a crop for which the region has been known.

n Woody Barth, vice president of the North Dakota Farmers Union, says the goal is to make a farm bill whose benefits are "targeted" and with "realistic and meaningful payment limitations." Peterson has said he'd like to do away with payment limitations, which are difficult to enforce and unpopular in the South.

- Kevin Paap, president of the Minnesota Farm Bureau, listed five key principles for his group, including a new federal farm bill that is "fiscally responsible" and that benefits all ag sectors; and that if changes are made, that they allow "transition periods" for farmers.

- Brad Thykeson, Portland, N.D., vice president of the North Dakota Grain Growers, says he has a hard time explaining to his 25- and 21-year-old sons how much better the current farm program is. He says farm programs are more important in an era when a farmer needs to gross $350 an acre just to break even, while the farm support program percentage has declined. Further, he says the Natural Resources Conservation Service has "turned into the IRS" because of its policing of rules. Peterson strongly took issue with this, saying NRCS officials at the top are aware of production agriculture's concerns.

Separately, Thykeson urged Peterson to simplify records handling among agencies, and claiming that there's none of us out here understand ACRE." Thykeson described a trial-and-error experience in which he participates on a limited basis because "if you don't play, you don't see how it works."

- Kevin Elliott of Clifford, N.D., representing the North Dakota Stockmen's Association, asked for trade-favorable policies and making sure the 2012 farm program doesn't provide a platform for "anti-meat and anti-agriculture" agendas.

- Mike Clemens, Wimbledon, N.D., representing the National Sunflower Association, asked for revenue insurance policies that reflect differential values of different kinds of sunflower, and is favorable to new producers in newer production regions. He says the direct payment part of the program needs to be "re-invented" if it's "going to be the lightning rod" in the political world.

Peterson says one problem is that urban legislators think the payments aren't necessary in years when prices are high.

"It's true: 2007 to 2008, prices spiked why farmers were getting a payment when they were doing pretty good," Peterson says.

He says to get disaster payments under control, crop insurance needs to be extended equally to all crops, and not just traditional program crops.