Commodity price fluctuations following last year's flood and
depressed cash prices for grains this year have spurred genuine
concern and frustration among farmers, said National Farmers'
Union President Leland Swenson. He said during a Farmfest
meeting in Minnesota earlier this month that the 1995 farm bill
must create stable prices for commodity farmers.
The USDA is reportedly considering the following suggestions made
by county Agricultural Stabilization and Conservation Service offices
on how to improve net farm income: raise loan rates, expand and
improve the Farmer Owned Reserve, make government grain
storage payments for on-farm stored grain equal to payments for
commercial storage, provide more flexibility in how acreage basis
are used in determining crop plantings and continue the
Conservation Reserve Program.
Source: Amy Jo Brandel, "Farm Bill Talk Laced With Frustration,"
AGRI NEWS, August 11, 1994.
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Lugar Set to Steer Direction of Conservation Programs
Senator Richard Lugar (R-Indiana), who serves as the ranking
minority member of the Senate Agriculture Committee, is positioned
to play a major role in determining the future of the Conservation
Reserve Program (CRP) and other conservation provisions in the
new farm bill, according to the national farm group Communicating
for Agriculture.
Lugar was the main author of the 1985 legislation that created the
CRP and has already introduced new CRP legislation for the 1995
farm bill. His new proposal would not preserve all of the 36 million
acres currently enrolled in the CRP, but would ensure that acreage
with filter strips and other highly sensitive land will be protected.
The Senator predicts that a strong emphasis will be placed on
conservation practices in the 1995 farm bill, particularly those
impacting water quality improvement, but also noted: "That does
not mean that the 1995 Farm Bill is the only legislation in the
upcoming year that would have a significant impact on farmers and
the agricultural sector." He said the Safe Drinking Water Act, the
Clean Water Act reauthorization, and Endangered Species legislation
will significantly impact current agricultural practices.
Source: "Sen. Lugar: Key Player in 1995 Farm Bill," CA HIGHLIGHTS,
August, 1994.
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Espy Allegations Spark Political Concern Ahead of Farm Bill
Daily headlines questioning Agriculture Secretary Mike Espy's
acceptance of gifts from USDA-regulated meat and poultry
processors are making the Clinton administration politically nervous
ahead of the 1995 farm bill debate. "The president doesn't like
seeing Mike Espy's face on page one every morning," said a
Washington commodity group official.
Other observers confirm that a "respected and politically adroit
secretary" is needed to carry the debate over next year's farm bill,
which is one reason why a list of potential candidates to replace
Espy has recently emerged.
Possible Agriculture Secretary replacements include: Deputy
Secretary Richard Rominger; Under Secretary Gene Moos; Tom
Urban, head of Pioneer Hi-Bred International of Des Moines; and
August Shumacher Jr., a former Massachusetts agriculture
commissioner and World Bank official who recently was named
administrator of the USDA's Foreign Agriculture Service.
Sources: George Antham, "Espy's Problems Focus Attention on
Successor," August 14, 1994; DES MOINES REGISTER, "USDA's Espy
Concerned on Farm Bill, Allegations," REUTER, August 22, 1994.
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FAPRI Warns: Cuts in Traditional Commodity Programs Will Reduce
Impact of Conservation Efforts
The Food and Agriculture Policy Research Institute (FAPRI)
concluded after an analysis of potential commodity program cuts
that "budget cuts in the $5 billion range will reduce the
effectiveness of traditional farm programs."
In particular, cutting price support spending will reduce the
incentive for farmers to participate in farm programs and
commensurately reduce conservation steps taken by program
participants . Farmers must comply with federal conservation and
supply management provisions in order to qualify for commodity
payments.
Meanwhile, a study completed by Nebraska's Center for Rural
Affairs estimates that moderate-sized grain farms are losing 19 to
76 percent of their federal farm program benefits due in part to
deficiency payment changes made under the 1990 Budget Act.
"The big guys get off free, while the moderate-sized farms bear the
burden of deficit reduction," says Chuck Hassebrook, one of the
study's authors.
The Budget Act eliminated payments on 15 percent of farmers' crop
acres, or flex acres, and made additional cuts by changing the
method for calculating deficiency payments. Large farms currently
have sufficient acreage to qualify for the maximum $100,000
payments, just as they did prior to the 1990 budget changes, while
smaller producers experienced cuts of up to 26 percent.
Sources: "Price Support Cuts Reduce Government Power Elsewhere,"
AG WEEK, July 25, 1994; "Study: Budget Cuts Favor Large Farms,"
CENTER FOR RURAL AFFAIRS PRESS RELEASE, August 17, 1994.
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Farm Bureau Supports 1990 Farm Bill Extension Under GATT
Legislation
The American Farm Bureau Federation said it supports an extension
of the 1990 farm bill as part of legislation to implement the
Uruguay Round of the General Agreement on Tariffs and Trade.
AFBF President Dean Kleckner said an extension would "establish a
baseline and help maintain the income support mechanisms in
place" when the trade pact was agreed to.
Source: "Extend Farm Bill as Part of GATT Plan -- Farm Bureau,"
REUTER, August 18, 1994.
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Mixed Reactions to Proposed FCS Expansion
A proposal to expand the Farm Credit System to off-farm borrowers
has elicited mixed reactions from lawmakers and the traditional
banking industry.
Representative Eva Clayton (D-North Carolina), who introduced
legislation to expand the system's lending authority, has found 60
co-sponsors for the bill, however almost none of them are members
of the House Agriculture subcommittee which oversees the FCS.
Traditional bankers complain that the FCS offers lower rates on
loans than small rural banks because of government backing.
But many rural residents in the South and other parts of the country
say traditional banks are not providing adequate financial resources.
"Despite what critics may tell you, there are not enough financial
resources available to revitalize rural America," said Myron
Edleman, a South Dakota farmer and member of the board of one of
the FCS' regional banks. FCS "is an existing, proven and committed
source to turn to for additional help in rural America."
FCS, which was created in 1916, comprises 14 regional banks and
250 related lending associations around the country that are owned
by their borrowers. The System currently has more than $50
billion in outstanding loans.
Source: "Farm Credit Sees Greener Pastures in Loan Expansion," AGRI
NEWS, August 4, 1994.
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USDA Weighing Changes to PL-480
The U.S. Department of Agriculture is expected to redirect the Public
Law-480 export program in the 1995 farm bill to meet "current
circumstances." USDA General Sales Manager Christopher
Goldthwait told a House Foreign Affairs Committee earlier this
month that since 1990 there has been a "near total" change in
countries that participate in the program from those who
traditionally participated in the PL-480 program. "After 40 years,
it is high time to take a look" at the PL-480, Goldthwait said.
Allan Mendolwitz, managing director of the General Accounting
Office's international trade, finance and competitiveness section,
agreed that the PL-480 program is in need of a major overhaul.
Mendolwitz said it is "difficult to transform the concessional market
share" established under the PL-480 program into a "commercial
market share." He said most countries tend to buy wheat from the
cheapest supplier, regardless of whether or not they are former food
aid recipients.
The PL-480 program was established under the 1954 Agricultural
Trade Development and Assistance Act to provide concessional sales
or donations of U.S. agricultural products to foreign countries.
Sources: "USDA Weighs Reform of Food Aid Program," JOURNAL OF
COMMERCE, August 5, 1994; Arthur R. Brown, "States Recommend
Ways for U.S. to Boost Ag Exports," FEEDSTUFFS, July 11, 1994.
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RESOURCES
Kelly O'Neill and Chuck Hassebrook, "Large Farms Continue to
Receive $100,000 in Deficiency Payments While Most Moderate-
Sized Farms Take Cuts," 1994. Contact: Center for Rural Affairs, Box
406, Walthill, NE 68067. $3.50.
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Produced by Gigi DiGiacomo, The Institute for Agriculture and Trade
Policy, 1313 5th Street SE, Suite 303, Minneapolis, MN 55414-1546.
(612) 379-5980. Fax: (612) 379-5982. E-Mail: iatp@igc.apc.org.
The Institute publishes news bulletins on a wide range of
environment, trade, agriculture and biotechnology issues. A copy of
any publication citing material from this bulletin is appreciated.
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