House subcommittee considers cut in base acres

House Agriculture Committee leaders are considering reducing the percentage of base acres on which farmers receive farm program payments to help lower spending for the 2007 farm bill.

Committee members could also vote to shift funds from direct payments to a permanent disaster program or other spending categories, Chairman Collin Peterson, D-Minn., told ag reporters during a weekly telephone conference call.

The House Subcommittee on Specialty Crops, Rural Development and Foreign Agriculture approved a proposal to amend the definition of payment acres for the 2008 through 2012 crops of peanuts as meaning 74 percent of the base acres assigned to a farm. Currently, farmers receive payments on 85 percent of base acres.

The subcommittee also voted in its mark-up session on June 6 to raise the marketing loan rate for peanuts from $355 to $375 per ton. The target price for peanuts set at $495 per ton in the 2002 farm bill was left unchanged.

“This is a product of the negotiations that went on between the opposites in the subcommittee,” Peterson said when asked about the vote on the percentage of peanut payment acres. “It’s fair to say none of them is happy with this, but that’s where they ended up.

“That could be where we end up with all the commodities,” he said. “We have some problems with several crops. Wheat, for example, is a problem. If I had extra money, we could fix it, but we don’t.”

Peterson said ag committee leaders haven’t made a final decision on payment acres for other crops. But they will have to act soon since its General Farm Commodities Subcommittee was scheduled to have its mark-up session on the commodity title June 19. The full committee will mark up all titles of the new farm bill June 26-28.

Peterson told reporters the committee is considering changes to direct payments and other aspects of the farm programs to provide funding for a permanent disaster assistance program that would avoid the nearly annual debates over finding money for disaster assistance bills that have marked the last two Congresses.

The budget “baseline” for the 2007 farm bill is about $41 billion lower than that for the 2002 law because the federal government spent less money on farm program payments than expected in the last three years.

“We’re looking at some innovative ideas that have not been considered before,” he said. “The Congressional Budget Office is struggling with figuring out how to score those because we’re thinking out of the box or in an area that no one has thought about before.”

One of those would be discontinuing payments to farms with crop bases of 10 acres or less. “In 2006, we had 255,000 farms that fit that category,” said Peterson. “These folks are not really farmers, and it would save $240 million over 10 years. We’re now going to have 20 acres scored and see how that does.”

Such a change could also relieve pressure on county Farm Service Agency office personnel by eliminating 255,000 operators who now must sign up for direct and counter-cyclical payments and for CCC loans or loan deficiency payments annually, he noted.

The chairman said committee members are also looking at the federal crop insurance program and how it is scored in relation to the disaster assistance program. “We’re also looking at the implications of the fact that a lot of farmers’ crop insurance premiums have doubled this year.”

The chairman said the committee hasn’t decided how much money it might shift from direct payments to a permanent disaster program. Senate Agriculture Committee Chairman Tom Harkin has also discussed transferring funds from direct payments to the conservation title of the farm bill.

Many of the farm groups that have met with Peterson one-on-one in recent weeks seemed to be giving at least tacit approval to the possibility of seeing their direct payments reduced by some percentage in the new law.

“I think it’s something that everybody seems to react favorably to, even the crops that are not necessarily helped by this, for example, rice,” he said. (Rice farmers, who irrigate their crops for weed control, rarely suffer yield losses due to drought.)

Peterson reiterated his position that the committee will write the new farm bill for farmers and not for World Trade Organization members who continue to call for the United States to make deeper cuts in its farm programs as a condition for lowering tariffs on ag imports.

Noting Agriculture Secretary Mike Johanns has continued to offer suggestions on farm bill language, including reductions in farm program benefits the administration says will be necessary to re-start the WTO’s Doha Round negotiations, Peterson said, “It’s a free country. He can discuss what he wants.”

Peterson said Johanns has “done some good work and offered some suggestions that will be useful to us. But we’re going to write the best bill we can for American agriculture and not for the WTO.”

Farm organizations have indicated a willingness to give some ground on direct payments, he said; not for the WTO negotiations but to re-direct funding to other programs such as disaster assistance.

“You may recall that in the fall of 2005, the U.S. trade office made an offer to give up 60 percent of U.S. price supports,” he said. “They did that without giving us any heads up they were going to do it. My perspective is that they’ve never received much back for that, so essentially we’ve been negotiating with ourselves ever since.”

While not going into specific proposals, Peterson said he believes the programs being considered by the House committee will still be within the amber box limits for the United States.

“I don’t hear a lot of interest within the committee in writing a farm bill for the WTO,” he said. “Besides that, I just don’t think we will get an agreement in the Doha Round anytime soon.”

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