USA Rice Producers’ Group Chair Linda Raun welcomed new analysis written by Carl Zulauf of Ohio State University describing the benefits of a price-based countercyclical approach and applauded the endorsements and attention the analysis is now receiving.
See the analysis here.
“Dr. Zulauf's analysis, which touts a price-based countercyclical approach that offers protection against prolonged periods of low prices, confirms what we have been saying all along: farmers need the choice of a multiple year, low-price protection which the Senate bill’s revenue programs do not currently provide,” said Raun, a ricefarmer from El Campo, Texas. “We hope farmers and lawmakers will carefully read this report.”
Zulauf's analysis used the five-year Olympic average price at 89 percent to achieve a price-based countercyclical approach. Zulauf did not call for a narrow 10 percent revenue band as outlined in the Senate’s revenue program, Agriculture Risk Coverage (ARC), but assumed the safety net would be there to cover deep price losses.
If Zulauf had applied the Senate bill’s ARC limitations, including a 10 percent revenue band and a 65 percent or 80 percent factor, the price protection that Zulauf shows would almost completely disappear. For example, the maximum benefit for a rice farmer would have been approximately 24 cents per hundredweight in 2001 rather than $3.02 per hundredweight arrived at in the analysis -- a 1,150 percent difference between what Zulauf proposes and what the Senate bill provides.
“I am thrilled to see the Senate Agriculture Committee and the National Corn Growers Association embrace this approach,” Raun said. “Maybe the approach Dr. Zulauf calls for in his analysis could be part of the solution in correcting the inequities in the Senate bill and addressing the serious concerns we have that the Senate bill will not be there to help farmers if we ever see the kind of price collapse we saw in the late 1990s.”
Although Zulauf's price-based revenue approach is a dramatic improvement over ARC, there remain concerns as pointed out in his report: “The five-year moving Olympic average does move lower over time to reflect lower prices, so it provides assistance only for a limited period of time."
In fact, rice farmers would not have received a single payment after 2002 even under Zulauf's approach.
“Dr. Zulauf's approach is not perfect, but it is a vast improvement over the current ARC programs and we are thrilled with recent endorsements of a price-based countercyclical approach,” Raun noted. “Adopting this approach, with modifications to address the problem of using a five-year moving average, may be a pathway forward in the Senate that helps restore equity and fills the hole in the Senate bill’s safety net.”
“I hope producers and lawmakers also read the recently released FAPRI (Food and Agricultural Policy Research Institute) analysis,” Raun added. “I know some have cherry-picked that analysis to make it conform to their talking points that the ARC program is equitable to all crops and regions, but the analysis does not say that. In fact, it actually points out the disproportionate budget hit that wheat, rice and peanuts take.”
For more on the FAPRI report, see here.
USA Rice Federation has consistently advocated for a choice of farm policy options in the farm bill that includes both a revenue-based option and a price-based option so producers can select the risk management tools that will best fit their situation. Both of these options should include a fixed reference price so as to provide a true safety net in the event of multi-year price declines. USA Rice looks forward to continuing to work with lawmakers to enact a new farm bill this year that is equitable and workable for all crops and regions.