The Enid News and Eagle, Enid, OK

National and world

June 14, 2012

Farm bill divides North and South

WASHINGTON — Senate passage of a half-trillion dollar farm and food bill depends in part on resolving a dispute over subsidies between Southern rice and peanut growers and Northern corn and soybean producers. But that regional divide was less in evidence Wednesday, as senators narrowly voted to maintain price supports and quotas for sugar producers ranging from Florida to Montana.

Senators traditionally put their partisanship aside on farm bills, and this year is no different. But the five-year farm policy bill also makes dramatic changes in how farmers are protected from financial and natural disasters and, as in all major changes, some see themselves as losers. In this case, it's the Southerners.

The bill ends $5 billion a year in direct payments to farmers whether or not they actually plant a crop and programs that reward farmers when prices fall below a targeted level.

Instead, the government would offer a new "shallow loss" program to aid farmers when revenues fall between 11 percent and 21 percent below five-year moving averages and would put greater emphasis on subsidized crop insurance. Farmers' regular crop insurance would pay for losses above 21 percent.

Corn and soybean growers, which are more subject to natural disasters and rely on crop insurance, welcome the change. Rice and peanut growers, more affected by price fluctuations, say that for them the new safety net is inadequate.

Senate Agriculture Committee chairman Debbie Stabenow, D-Mich., said she is talking to the Southern growers and was "confident that by the end of this process, we will come to the middle." But she said that might not come until the House and Senate meet to iron out differences on their bills.

The Congressional Budget Office estimates this new shallow loss program could save taxpayers some $8.5 billion over the next five years compared with the current subsidy system. The entire bill, which also covers conservation and research programs, would reduce spending by $23.6 billion over the coming decade.

More than 200 amendments have been proposed to the bill, and in the first vote Wednesday the split was between sugar growers — both beet growers in the north and sugar cane growers in the South — and food and beverage companies and consumer groups who object to the depression-era sugar program that supports prices and protects growers from foreign competition.

The growers won, on a 50-46 vote to defeat an amendment to repeal the program. The farm bill does not touch the program, but opponents said it artificially restricts supplies, forces businesses and consumers to pay more for sugar products and only benefits about 4,700 generally well-off growers. Defenders of the program said it creates a stable marketplace for producers, that U.S. sugar prices are below those of other developed countries and that the program runs at no cost to taxpayers.

Fifteen Republicans joined 35 Democrats in voting against the amendment.

The Senate also voted 65-33 to defeat an amendment by Sen. Rand Paul, R-Ky., that would have drastically cut spending for the Supplemental Nutrition Assistance Program, or food stamps, and turned funding authority for the program over to the states.

Food stamps make up about 80 percent of the cost in the $100 billion-a-year bill. The Senate bill would cut the program now serving about 46 million people by $4 billion over the next decade — largely by targeting abuses. The Republican-controlled House would like to see a far bigger cut, mainly by tightening eligibility for food stamps.

Republican Sen. John Boozman, whose state of Arkansas is the nation's largest rice grower, said the Senate bill "will have a devastating impact on Southern agriculture." Republican Sen. Saxby Chambliss of Georgia, the national leader in peanut production, complained it "shoehorns all producers into a one-size-fits-all policy" that would force farmers to switch to crops that enjoy better coverage for losses.

The bill's two main sponsors, Stabenow and Agriculture Committee ranking Republican Pat Roberts of Kansas, defended their approach.

"People can always disagree with economists," Stabenow said on C-SPAN's "Newsmakers." ''But I guess what I would say is what we have put in place ... it's fair for every commodity."

"This is a different year, this is a year we have to change," Roberts said in the same interview, adding that was made clear to all the commodity groups.

But rice and peanut farmers argue that the crop insurance and the new shallow loss or Agriculture Risk Coverage programs are better fitted to crops such as corn, where natural disasters such as floods and droughts can cause far greater fluctuations in yields. Many rice farmers, who irrigate their crops and have more consistent yields, don't have crop insurance to protect them from yield loss, but they do have to cope with large swings in prices and high production costs.

Linda Raun, who runs a 1,000-acre rice farm southwest of Houston and chairs the USA Rice Producers Group, said direct payments have been their only safety net in the past. Without price protection, banks won't lend them money, she said. "We've got to have a farm program that allows us to become bankable."

Raun said production costs amount to about $1,000 an acre for rice. Because of a reliance on foreign export markets, prices can change rapidly. Currently prices for southern rice are not that good, unlike the strong prices enjoyed by corn and soybean growers.

A recent study by the Food and Agriculture Policy Institute at the University of Missouri in Columbia does show that rice and peanut growers who are the main beneficiaries of direct payments would lose more than 60 percent of their government support over the next decade under the new system.

But the same report also found that the shallow loss program was generally equitable among the major crop groups.

Southern senators are seeking to negotiate changes to the bill that would allow a choice between the Senate's current crop insurance and revenue protection programs and some modified form of existing target price program that compensates farmers when prices dip below a certain level and which is preferred by the rice and peanut growers. The bill already has a separate revenue insurance program tailored to the needs of cotton farmers.

If that fails, House Agriculture Committee Chairman Frank Lucas, R-Okla., has made clear that the yet-unwritten House bill will include an alternative to meet the concerns of those Southern planters.

 

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