For the last two days, the U.S. House Agriculture Committee Subcommittee on General Farm Commodities and Risk Management has been holding hearings on the commodity title and crop insurance. These are the backbones of the ag part of the bill (separate from nutrition programs) and those that testified followed a similar theme: the farm bill needs an effective safety net.
In a statement released after the hearings ended, Rep. K. Michael Conaway, R-Texas, chairman of the Subcommittee remarked that there was a clear message from the hearings:
"The clear message from the hearing is that farmers need price protection. If prices collapse, we can't have policy that collapses right along with them creating a crisis in farm country and calls for expensive, unbudgeted bailouts in Washington," Conaway says. "I have concerns that the Senate bill fails to provide that kind of protection. The Senate bill also creates a complicated new program that is so lopsided it actually locks in profits for some while denying any safety net at all to others. In a few weeks, the House Agriculture Committee will begin crafting a farm bill that is both fair and fiscally responsible to all producers across all regions of the country. Our efforts will save money for the taxpayer while providing policy that farmers can depend on when they truly need it."
During testimony, the Subcommittee also heard that a clear end to direct payments may not be a great move, especially for some parts of the country where production prices differ from crop to crop. As Armond Morris, chairman, Southern Peanut Farmers Federation, explained to the Subcommittee: "I recognize that come organizations believe that a one-size-fits all revenue program will work for the U.S. agricultural economy. I do not agree. Our cost structure [as peanut farmers] and equipment needs alone are significantly different from the Midwest with our peanut producers requiring very specialized equipment."
Morris had turned to the University of Georgia's National Center for Peanut Competitiveness, which many peanut producers have relied on for policy economic analysis. The Center has 22 U.S. representative peanut farms which were used to model specific input as representative farms. Morris testified that a look at the different alternative or revenue programs showed that none worked for any of the model farms.
While some groups testifying stuck to their approach of eliminating direct payments, others made the case for keeping some form of direct or countercyclical payments in some crops or in some parts of the country. Joe Outlaw, professor and extension economist farm management, Texas A&M University, showed data to the committee demonstrating that for some crops "the [agricultural risk coverage] programs…enable some commodities to nearly lock in a profit (for at least a few years) because ARC uses market prices in the revenue benchmark that are near their all-time high." He also points out key crops including rice and cotton that show a consistent loss under ARC as it is constructed now.
Fairness and a revenue protection program that is more crop-aware is on the minds of many, giving the House plenty to deliberate.
Subcommittee ranking member Leonard Boswell, D-Iowa, adds: "Yesterday and today we were reminded that the details are critical when designing programs to provide farmers with assurance and a safety net. I am pleased that over the course of our two day hearing we heard from commodity groups, economists, and insurance agents that we must preserve crop insurance and other farm safety mechanisms that allow producers to feed America and the world. To no surprise, our farmers and ranchers have stepped up to the plate and are ready and willing to dig through the weeds with us to craft policy that will benefit all producers. We must continue to work together to move forward on a House Farm Bill so that we can go to conference and negotiate a final bill that will assist our farmers and feed our communities before further budget cuts place these important programs in jeopardy,"