Iowa corn farmers joined with other farmer members from 26 states representing the National Corn Growers Association at the annual Commodity Classic meeting in early March to determine policies for their respective organizations in 2011 and beyond. Two key issues they debated and adopted resolutions for are the ethanol tax credit and the transitioning of USDA direct payment.s
NCGA delegates attending the meeting in Tampa, Fla., adopted ethanol policy that states "NCGA supports reforming existing ethanol tax policy. Ideas to replace existing tax law, in the following priority order, should be a variable ethanol tax credit followed by an ethanol tax credit at a reduced rate. Non-tax policies should include biofuels infrastructure, higher blends, corn starch ethanol as an advanced biofuel, or favorable flexible-fuel vehicle policy."
NCGA to look into shifting direct payments into other programs
Along with ethanol policy, representatives adopted a statement on farm bill policy that says "NCGA should investigate transitioning direct payments into programs that allow producers the ability to manage risk while assuring food security."
NCGA has resolved to look into shifting direct payments from the federal government into other USDA programs that provide a financial safety net for farmers. The new farm bill (which among other things has programs to cover disaster, conservation and direct payments to farmers) expires in 2012. Congress has held hearings and will begin the process of rewriting the farm bill in 2011.
Direct payments have become the most controversial and politically vulnerable segment of federal assistance to farmers. "We're trying to be flexible," says Dean Taylor, a Prairie City farmer who is president of ICGA. "We recognize that when corn prices are high, people are less willing to spend money on farm programs."
To help federal budget deficit, ag programs have already cut $4 billion
A major topic at the 2011 Commodity Classic was the current federal budget situation in Washington D.C. Agriculture represents less than one-half of 1% of the federal budget and farmers will do their part in strengthening the U.S. economy as shown already by cutting more than $4 billion in spending on agriculture programs this fiscal year. "Corn farmers are moving forward to shape our farm and ethanol policies to work with the current political and budget situation in Washington to continue our successes in providing food, fuel, feed and fiber to America and the world," says Taylor.
The Iowa Farm Bureau Federation last fall voted to recommend ending direct payments and shifting the money into stronger crop insurance and disaster insurance programs. But the Iowa resolution failed to be adopted at the American Farm Bureau convention earlier this year, primarily because of opposition by Southern cotton and rice farmers.
The Obama administration has recommended cutting off direct payments, which in 2009 amounted to about $500 million in Iowa, to farmers with more than $500,000 a year in farm income and $250,000 a year in off-farm income. The current levels are $750,000 for farm income and $500,000 for nonfarm income.
Policy gives NCGA flexibility as Congress starts to debate farm bill
Some NCGA delegates would like to use direct payment funds to strengthen the ACRE program, perhaps by having the revenue program based on losses at the crop reporting district level instead of the average for the entire state. But NCGA has stayed away from anything that specific. NCGA is investigating possibilities but there's still a lot of support for the direct payments among farmers, says North Dakota farmer and NCGA president Bart Schott.
The new NCGA policy gives the organization flexibility as Congress begins debate on the next farm bill. "We want to keep it open so we can have some latitude to move on it," says Schott. NCGA and other farm groups are aware of the risk of giving up direct payments too easily. The program, which currently costs over $5 billion a year, is a tempting amount of money for members of Congress looking for ways to reduce the federal deficit.
Recognizing that risk, NCGA and other groups meeting at the Commodity Classic issued a statement on deficit reduction: "We note that agriculture made a down payment in cutting spending when USDA directed $4 billion in savings under the Standard Reinsurance Agreement for federal crop insurance toward deficit reduction. We believe any further reduction in discretionary spending should recognize and reflect this contribution. We also note that ag-related programs represent less than one-half of 1% of the federal budget."
Federal debt and deficit reduction needs to take a balanced approach
The statement was issued by leaders of NCGA, American Soybean Association, National Association of Wheat Growers and the National Sorghum Producers. All four organizations "recognize that reducing the federal deficit and the national debt is critical to putting the American economy, including U.S. agriculture, on a sound course for future growth and prosperity."
The statement added, "Looking forward, we believe any meaningful approach to deficit and debt reduction in the fiscal year 2012 budget must encompass all entitlement programs and all discretionary spending. We look forward to working with Congress and the Administration to develop a budget that successfully addresses the need for federal deficit and debt reduction balanced with the need of ensuring a successful agricultural economy."