UPDATE: New payment rules 'no windfall'

Speaking at a press conference, Berry said that, having lost their fight to drastically reduce payments to row crop farmers, the environmental groups have opened a new propaganda campaign to try to scuttle the farm bill.

Berry was responding to a question about comments by the Environmental Working Group’s Ken Cook following the announcement of the House-Senate conference committee’s framework agreement on April 26. The bill would provide an additional $73 billion in farm payments over six years.

“Any big cotton or rice operator or super-large corn or soybean operator will now have no restraints whatsoever” under the new farm bill language,” Cook, the EWG’s president, was quoted as saying at another press conference. The EWG is the organization that has provided listings of payments to farmers on the Internet.

“It’s not a new idea that Ken Cook and I wouldn’t agree,” said Berry, who represents Arkansas’s First Congressional District. “But I don’t know how he can conclude that.

“The one thing contained in this farm bill that’s never been in another that I know of is the $2.5 million gross income means test. The language says, ‘Individuals with adjusted gross income exceeding $2.5 million averaged over the most recent 3 years will be ineligible for programs and payments to entities reduced by the proportionate share held by the high-income individual.’ That’s a situation we’ve never had before.”

EWG officials said they were glad to see the $2.5 million AGI provision stay in the farm bill, but they called it the “Charles Schwab” provision because they contend it “only limits non-farm income so the wealthiest agribusinesses can still qualify for unlimited subsidies.”

Berry said the subsidy limit under current law is $460,000 per person. The new farm bill will reduce that to $360,000, a 21 percent reduction. The new rules would not take effect until 2003.

“Under the last farm bill, the limit was $40,000 for direct payments and $75,000 in loan deficiency payments or LDP’s,” he noted. “The $40,000 was absolute. If you went over the $75,000, then you could get the certificates. That’s something we had to deal with on an ad hoc basis from year to year.

For the last three years, Congress raised the limit on LDPs or marketing loan gains to $150,000 because Midwest farmers began exceeding that limit. But the actual limit under Freedom to Farm is $115,000 except for the use of generic certificates.

“This bill will be $40,000 for direct payment, $75,000 for LDPs, and $65,000 for counter-cyclical payments,” Berry said. “The counter-cyclical payment will be whichever is higher: the loan rate or the market price that will be subtracted from the target price.

“Also subtracted from the target price is the amount of the fixed payment for a specific crop with whatever’s left being the counter cyclical payment. If you have good prices, the government won’t have to spend any money. I think the limit is better than it was under the old bill.”

Berry gave an example for rice. Under the new law, the rice target price will be $10.65 per hundredweight. Market prices, as calculated by the government, have been around $3.50 and $4. The loan rate is $6.50. Subtracting the $6.50 loan rate from $10.65 would leave $4.15. Subtracting the fixed payment rate of $2.35 from $4.15 would mean a $1.80 counter cyclical payment.

But a spokesman for the Environmental Working Group claims the new payment limit provision ignores the use of generic certificates.

“Just one Arkansas example is Tyler Farms that received over $1.2 million - in just the last two years,” an EWG spokesman said. “That is above and beyond the $17 million Tyler Farms received during 2000 and 2001 from the subsidy programs actually covered by the conference payment limit.”

He said the new USDA data on certificates released by the EWG also shows that many “corporate producers” are starting to switch away from LDPs to solely receive certs payments since they don’t fall under the payment limit in certs. “The new payment limit, by leaving in the loophole for certs, will drive even more corporate producers to the certs program.”

The spokesman was referring to new information released by EWG that claims Arkansas’ two largest rice producer cooperatives received millions of dollars in certificates last year. A spokesman for Stuttgart-based Producers Rice Mill Inc., confirmed that the coop processed the certificates on behalf of its 2,500 members, but received none of the proceeds.

Riceland Foods Inc., also based in Stuttgart, said it refused to “dignify any more EWG propaganda statements with a response.”

EWG officials also complained that “while conferees were pretending to reduce the payment limit on commodity programs they raised the roof for EQIP (Environmental Quality Incentives Program), going from $150,000 in the Senate bill to $450,000 in the final package.”

The spokesman did not explain why EWG criticized increased limits for EQIP payments when it had been calling for more spending on conservation programs.

Berry said he believes the new farm bill will provide about the same amount of money farmers have been receiving, but it will be more certain than the ad hoc supplemental payments that Congress has appropriated the last four years.

“Part of the problem has been that no one knew whether they were going to get the supplemental payments until after the crop was made,” he said. “It’s hard to borrow or lend money based on that. This will give producers the opportunity to know what their income is going to be.

“This won’t be a huge windfall for farmers. There won’t be a bunch of profits. The comment from the EWG that this will allow people to farm thousands and thousands of acres without restrictions isn’t right. The smaller the operation, the more you’ll benefit from this bill.”

Berry said he had been asked which party or which region won the farm bill battle in the House-Senate conference committee.

“In truth, the real winners tonight are American farmers,” he noted. “We didn’t get everything we wanted in the final agreement, and this bill is certainly not a windfall for farmers. That being said, this bill will give Arkansas farmers the safety net they need to stay in business and continue providing the safest and most bountiful food supply the world has ever known.”

A week earlier, Berry was on the losing side of a House debate over a non-binding resolution asking the House conferees to adopt the Senate’s much more restrictive Grassley-Dorgan payment limits amendment. The resolution passed, but was rejected by conferees because it was not in the House-passed farm bill.

Although the House-Senate conference framework agreement reportedly retains the three-entity rule and the use of generic certificates, Senate conferees said they accomplished what they were seeking.

“We have come down on payment limits. Make no mistake about it,” said Sen. Tom Harkin, the Iowa Democrat who is chairman of the Senate Agriculture Committee. “But when you get into generic certificates, then you are talking about systems of marketing. In that regard, we did not feel that we had enough information and data to know what to do.”

Harkin said conference-committee members determined that the nation’s complex subsidy system should be simplified, and lawmakers will instruct the secretary of agriculture to set up a process that makes the system more “transparent,” “so that we will know down the road exactly who gets what from the payments.”

Berry praised the work of the House conferees.

“I can’t begin to say enough good things about House conferees on both sides of the aisle,” he noted. “Chairman Combest and ranking member Mr. Stenholm have both done outstanding jobs and have worked endlessly and tirelessly.

“Also, Sen. Thad Cochran of Mississippi did a tremendous job. Had it not been for his work, we would still be at the table and may never have gotten a bill.”

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