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News from the Minnesota Association of Wheat |
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THE CLINTON ADMINISTRATION'S PROPOSAL FOR IMPROVING THE FARM SAFETY NET February 2, 2000 When Congress passed the 1996 Farm Bill, the Administration noted serious reservations because the bill's failed to provide farmers adequate protection
when prices are low. The collapse in farm prices the past two years revealed serious problems with the farm income safety net, which resulted in the Federal government's providing over $15 billion in emergency
assistance. The farm financial picture would be much different had Congress not passed emergency aid legislation in 1998 and 1999. Without the added government payments, net cash income would have likely fallen below
$50 billion in 1999, the lowest level since the farm financial crisis of the mid-1980s. Rising crop surpluses, continued low prices and declining incomes will contribute to increasing farm financial stress in 2000,
indicating a need for further Federal assistance. However, added assistance should not be made in the form of emergency legislation with the bulk of the payments in the form of Agricultural Market Transition Act (AMTA)
payments. That approach, taken the past two years, is not in the best interests of farmers and taxpayers, as the assistance is ad hoc and ineffectively targeted. President Clinton's FY 2001 budget proposes a major
new initiative to strengthen the farm safety net. The initiative is designed to broaden Federal support to more producers of more commodities in more areas of the country. The initiative includes four complementary
proposals for new legislation that would: (1) enhance the farm income support provided by the 1996 Farm Bill with supplementary countercyclical income assistance, targeting payments to producers facing reduced revenues;
(2) increase environmental benefits and farm income through expanded conservation programs; (3) improve risk management by reforming the crop insurance program to provide better protection against natural disasters; and
(4) expand economic opportunities in farm and rural areas. These legislative proposals, coupled with new initiatives to be undertaken using current authorities, will provide more than $11 billion in additional
assistance to the rural economy during 2000-2002. Enhance farm income support through the Supplementary Income Assistance Program and other actions The 2001 budget proposes an income assistance program to provide
supplemental income assistance payments for the 2000 and 2001 crop years to eligible producers of wheat, feed grains, rice, upland cotton and oilseeds. Under the program, supplemental government payments would be
provided to eligible producers if projected gross income for the crop falls below 92 percent of the preceding 5-year average. Gross income would include gross market revenues for the crop plus government payments,
including AMTA payments, marketing loan gains and loan deficiency payments. Payments would be based on a farmer's current production, not historical crop base acres. The program addresses a major shortcoming of the 1996
Farm Bill through providing countercyclical support that reflects a farmer's current production and market conditions. The program payment rates would be determined at the beginning of each crop year, and payments would
be made to farmers when they establish production levels with the Farm Service Agency. Funding is expected to total $3.1 billion during FYs 2000 and 2001. To target the program to smaller farmers who typically have
lower farm income, payments would be subject to a separate $30,000 per person payment limitation. This payment limitation is adjusted downward to reflect the of amount of ATMA payments a person receives (e.g., a person
receiving more than $30,000 in AMTA payments is not eligible for payments, while a person receiving $10,000 in AMTA payments is eligible for up to $20,000 in program payments). Based on 1998 data, only about 2 percent
of those receiving AMTA payments would likely be ineligible for payments under the Supplementary Income Assistance Program. Additional initiatives to improve the farm income safety net include: A proposed extension
of the dairy price support program to 2002 to maintain price support for milk at $9.90 per cwt, costing an estimated $150 million in 2001 and 2002. Using existing authorities to maintain maximum marketing assistance
loan rates for the 2000 crop, costing more than $500 million. Loan rates for the 2000 crop year would be as follows: Wheat $2.58/bu. Corn $1.89/bu. (Other feed grains set in relation to their feed value relative
to corn.) Soybeans $5.26/bu. Rice $6.50/cwt. Upland cotton $0.5192/lb. Using existing authorities to implement a new on-farm storage loan program to facilitate farmers' marketing opportunities
Increase environmental benefits An additional $1.3 billion for a Farm Conservation Programs Initiative is proposed for FY 2001 as a key component of the Administration's Farm Safety Net Proposal to strengthen farm
family income while promoting environmentally sound land management. As part of that initiative, a new $600 million Conservation Security Program (CSP) is funded, to be administered by the Natural Resources Conservation
Service (NRCS). The CSP would provide annual payments to farmers and ranchers who implement such conservation practices as nutrient management, prescribed grazing, and partial-field conservation practices such as
grassed waterways and windbreaks. Payment levels would be based on the comprehensiveness of farmers' conservation plans. Within the total, funds will be made available to NRCS to provide necessary technical assistance
to farmers. Increases are also proposed for five ongoing conservation programs: Wetland Reserve Program (WRP). The initiative would remove the current cumulative acreage cap of 975,000 acres and enroll an
additional 210,000 acres in the WRP in FY 2001 and an additional 250,000 acres in each subsequent year. Conservation Reserve Program (CRP). The President's Conservation Program Initiative would increase the
enrollment cap by 3.6 million acres to 40 million acres. Incentives totaling up to $100 million in FY 2000 and up to $125 million each year in FY 2001 and FY 2002 would also be offered to farmers who enroll land in the
CRP through continuous sign up provisions. These incentives are expected to encourage enrollment of acreage with high environmental benefits. Farmland Protection Program (FPP). Under the Farm Conservation Program
Initiative, the FPP would be funded at $65 million annually. This program, a key part of the President's Lands Legacy initiative, provides matching funds to state, local, and Tribal governments to purchase permanent
easements and thereby protect farmland that may otherwise be threatened by urban and suburban sprawl. Wildlife Habitat Incentives Program (WHIP). The Initiative proposes $50 million annually for WHIP, which offers
cost-share and technical assistance to farmers and landowners for habitat restoration. Environmental Quality Incentives Program (EQIP). Under the proposed Initiative, the annual authorized funding level for EQIP
would be increased from $200 million to $325 million. This program, part of the President's Clean Water Action Plan, provides financial, technical and educational assistance to farmers and ranchers who wish to implement
practices such as animal waste facilities, integrated pest management or habitat restoration. Improve risk management The 2001 budget would extend the premium discount available in 1999 and 2000 for farmers who
purchase buy-up coverage for crop insurance. Farmers have expressed concerns over the high cost of higher levels of insurance coverage. Premium discounts made available in 1999 resulted in an increase in acreage
enrolled in buy-up coverage of almost 20 percent over the previous year's levels. Early data for the 2000 crop year suggest similar levels of participation. It is anticipated that the extension of this discount to the
2001 crop year would result in higher participation levels at higher levels of coverage. The premium discount and the costs associated with higher participation are expected to total $640 million. The budget also
requests $100 million annually to develop a policy that covers multi-year losses. The Administration proposes to establish a pilot program for insuring livestock. Currently, there is no livestock coverage under the
crop insurance program; yet almost half of all farm receipts come from the sale of livestock or livestock products. The proposed program would offer $100 million annually to provide livestock producers with price
protection. The risk management proposal also includes a request for funds to undertake comprehensive risk management education and to increase funds for research and product development activities. The
Administration also proposes to replace the area-wide loss trigger on the non-insured assistance program with a disaster declaration. This change, funded at $110 million per year, would give farmers of crops that are
currently not covered under the crop insurance program individual yield coverage in the event of catastrophic crop losses. Expand economic opportunities for farms and rural areas The Administration proposes using
$130 million during FYs 2001 and 2002 to establish a new cooperative development program to provide equity capital for new livestock and other processing cooperatives. The proposal would address concerns about market
concentration by encouraging new entrants into the livestock processing market. It could also provide an additional source of income for farmers through the ownership of value-added processing. The Administration
would also use existing authorities to develop a new bioenergy program to encourage greater use of farm products for production of biofuels. The program would increase energy security by decreasing America's dependency
on foreign fossil fuels. It would provide payments on a portion of a processor's increased use of bioenergy feedstocks, with higher proportional payments for smaller bioenergy processors. By increasing the demand for
corn and other feedstocks, much of the direct costs of this program are expected to be offset by lower costs of the marketing assistance loan program. The budget proposal also includes $15 million funding for the
five rural Empowerment Zones (EZ) and 20 rural Enterprise Communities (EC) designated in January 1999. Unlike the initial round of Empowerment Zones/Enterprise Communities that received 10 years' funding in one grant,
the second round communities have been dependent on annual appropriations.
NEW FARM SAFETY NET
HAS SOME HOLES, CRITICS SAY
LONG TERM PROJECTIONS FOR EU WHEAT PRODUCTION IS HIGHER Moreover, the report also took a look at the EU wheat balance sheet through 2006. EU wheat production in 2006 is expected to reach 113.5 MMT, compared to 95.5
MMT in 1999. Wheat consumption is pegged at 97.3 MMT in 2006, versus 86.9 MMT last year. Wheat imports in 2006 are expected to drop to 2.4 MMT, down from 3.2 MMT in 1999. EU wheat exports are forecast
at 18.4 MMT in 2006, up from 16.4 MMT last year. Beginning wheat stocks in 2006 are expected to fall to 11.4 MMT in 2006, versus 18.1 MMT in 1999. Likewise, EU wheat ending stocks are estimated
to drop to 11.5 MMT in 2006, down from last year's figure of 13.5 MMT. Furthermore, 2006 intervention wheat stocks are pegged at 0.2 MMT, versus 1999 intervention stocks of 2.8 MMT.
NDSU OFFERS THREE SMALL-FARM WORKSHOPS IN FEBRUARY The times, dates, locations and topics are as follows: *From 7 p.m. to 10 p.m. on Thursday, Feb. 10, at the Michigan Civic Center. Presenters include
Nels Peterson, NDSU extension agent in Nelson County, who will provide information relating to small-farm demographics. Terry Gregoire, NDSU extension agronomist, will talk about farming on fewer than 320 acres, and Ron
Smith, NDSU extension horticulturist, will discuss commercial vegetable production.
*From 7 p.m. to 10 p.m. on Thursday, Feb. 17, at the Larimore
American Legion. Ellen Dunlop, area extension human development specialist for NDSU, will discuss balancing work and family. Nels Peterson, NDSU extension agent in Nelson County, will talk about marketing small-farm
products. Rudy Radke, extension ag diversification and high-value crops specialist for NDSU, will discuss alternative enterprises. *From 7 p.m. to 10 p.m. on Thursday, Feb. 24, at the Tolna REC building. Roger Haugen,
extension animal scientist at NDSU, will talk about raising pasture poultry and small flocks. Brad Brummond, NDSU extension agent in Walsh County, will discus low-input intensive grazing. Kent Alderin, NDSU
extension agent in Sheridan County, will provide information about out-of-state markets for North Dakota products. Also speaking will be Zeke Saletan, a North Dakota poultry grower and processor. For more information
about any of these workshops, contact Peterson at (701) 247-2521 or Brummond at (701) 284-6248.
NAWG PRESSES FOR REVIEW OF FARM BILL
Association of Wheat Growers (NAWG) wrote to
Senate Agriculture Committee Chairman Richard Lugar (R-Indiana) urging him to hold hearings on possible revisions to the 1996 Farm Bill. "This letter reinforces NAWG's belief that we must re-examine all elements
of the current federal farm policy." Stonebrink continued, "Chairman Combest of the House Agriculture Committee, has already announced his intentions to hold hearings on this issue. Wheat producers would
also welcome the opportunity to share their thoughts with the Senate committee." Stonebrink's letter follows today's Senate Democratic Policy Committee (DPC) hearing on the Farm Bill. At the DPC hearing, chaired
by Senators Byron Dorgan (D-North Dakota) and Tom Harkin (D-Iowa), senators received testimony from farmers and rural leaders regarding the state of the farm economy. NAWG was especially pleased with Senate Minority
Leader Tom Daschle's (D-South Dakota) commitment to make farm policy the "number one priority for Senate Democrats" this year. "We will not give up until we get the job done right," said Daschle.
"NAWG deeply appreciate the efforts of Senator Daschle and his colleagues over the last few years," said Stonebrink. "Today's hearing illustrates the need for the full Senate Agriculture Committee to
conduct its own hearings. We must avoid making this a partisan issue. Farmers need Democrats and Republicans to work together to ensure that their needs are met." Senators participating at the DPC hearing
included: Dorgan (D-North Dakota), Harkin (D-Iowa), Daschle (D-South Dakota), Wellstone (D-Minnesota), Conrad (D-North Dakota), Baucus (D-Montana), Johnson (D-South Dakota) and Edwards (D-North Carolina). NAWG is a
nonprofit organization representing U.S. wheat growers whom, by combining their strengths, voices, and ideas are working to ensure a better wheat industry for today and tomorrow.
WHEAT GROWERS BRING AG CRISIS TO CAPITOL HILL At the DPC hearing, chaired by Senators Byron Dorgan (D-North Dakota) and Tom Harkin (D-Iowa), three wheat farmers testified on how the current ag crisis is affecting their farming operations and the farm
economy in their states. The first to testify was Aaron Krauter, a state Senator from North Dakota and a member of the National Association of Wheat Growers (NAWG) who participated at this year's Wheat Industry
Leaders of Tomorrow program (WILOT) - a leadership development program sponsored by the NAWG Foundation and Monsanto. In relaying the problems facing his farming operation, Krauter commented that despite his best
efforts, factors outside of his control have prevented his farm from realizing a profit. He specifically mentioned how federal farm policy such as the crop insurance program fail to meet his farming needs. Also
appearing before the committee was Rick Sampson, a wheat producer from Montana who formerly served as chairman for U.S. Wheat Associates. Sampson discussed how increasing debt burdens and other financial troubles have
created what he termed "desperation and hopelessness in rural America." The committee also heard from Pitner Sharp, who runs a diversified farming operation that includes wheat in North Carolina. Sharp's
family has been farming the same land for five generations. He testified that farm policy is a "national security issue" which affects all of America. Sharp also related how recent weather related disasters in
the South have impacted farmers in his area. NAWG thanks these wheat producers for taking time away from their farms to give lawmakers a personal perspective on the ag crisis. Senators participating at the DPC
hearing included: Dorgan (D-North Dakota), Harkin (D-Iowa), Daschle (D-South Dakota), Wellstone (D-Minnesota), Conrad (D-North Dakota), Baucus (D-Montana), Johnson (D-South Dakota) and Edwards (D-North Carolina). NAWG
is a nonprofit organization representing U.S. wheat growers whom, by combining their strengths, voices, and ideas are working to ensure a better wheat industry for today and tomorrow.
NEW PRODUCER CO-OP AIMS TO CONNECT FARMERS WITH MARKETPLACE: FARMCONNECT These ag leaders will develop FarmConnect as an accelerated effort to connect producers with market opportunities.
"As producers, we realize that we need to break out of the rut of producing undifferentiated commodities and being price takers," says Art Brandli, Warroad, MN farmer and chairman of FarmConnect. "FarmConnect is
designed to build a system that will simplify the process of locating market opportunities for farmers, while at the same time, simplify the food industry's need to identify farmers who can supply them with the products
they need." "What we ultimately want to see is a win-win situation for both producers, and end-users," says Brent Sorenson, FarmConnect CEO. "FarmConnect is a producer-owned, market-driven organization that will
work with buyers to find out exactly what they need, and will work with producers to provide information on crop or livestock production to meet those needs." Sorenson says FarmConnect benefits end users by
connecting them to significant numbers of producers capable of supplying the quantity and quality of products desired, and benefits producers by identifying market niches and opportunities to add value to their
production. Brandli says the strength of FarmConnect will be in its ability to bring together active, innovative producers of a diverse number of crops and livestock. "The cost to join FarmConnect, at $500 per
member, was purposely set at a very low level to encourage the widest possible participation of producers," says Brandli. Minnesota farmers can learn more about FarmConnect at a series of meetings being held across
the state beginning in mid-February, or by calling FarmConnect at 218-281-8449. To find out where meetings are being held in your area, visit the FarmConnect website at CONTACT: Art Brandli, Chairman –
218-386-2083 or Brent Sorenson – 218-281-8449 |
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