A compromise agreement in Congress on a new Farm Bill should help stabilize the income "safety net" for crop producers, says an educator with the University of Minnesota Extension Service. Blue Earth County educator Kent Thiesse says the new legislation will govern U.S. Department of Agriculture farm programs for the next six years, from 2002 through 2007.
"As is usual with compromises, not everyone is totally satisfied," says Thiesse. "However, there does seem to be widespread, bi-partisan support for most commodity aspects of the new Farm Bill."
The USDA will now begin the difficult task of writing rules and procedures to implement the legislation, so that commodity provisions of the Farm Bill can take effect yet in 2002 through the Farm Service Agency. Thiesse says developing the rules and procedures is likely to take several months. No commodity payments to producers under the new legislation are scheduled until fall of this year.
The new Farm Bill is likely to provide producers of major crops such as corn, soybeans and wheat an enhanced income support safety net, says Thiesse. Commodity Credit Corporation marketing loans with posted county prices, as well as loan deficiency payments (LDPs), will continue.
The bill increases national crop loan rates for corn by nine cents per bushel, to $1.98. It lowers the national soybean rate from $5.26 to $5.00 per bushel. However, soybeans and other oilseed crops were added as "program crops." Producers of program crops are eligible for a fixed, direct payment each of the six years of the Farm Bill. The direct payment rates per bushel are 28 cents for corn, 44 cents for soybeans and 52 cents for wheat. The direct payments replace the current annual Agricultural Market Transition Act (AMTA) payments.
The new Farm Bill re-introduces the concept of target prices and establishes new counter-cyclical payments for all crops, says Thiesse. The new counter-cyclical payments are intended to eliminate the need for Congress to pass emergency farm legislation each year to supplement income for crop producers due to very low commodity prices. Any time the national average price for a commodity plus the direct payment is lower than the target price, there will be a counter-cyclical payment, says Thiesse. Maximum levels of counter-cyclical payments per bushel are 34 cents for corn, 36 cents for soybeans and 54 cents for wheat.
"Most crop producers are satisfied that almost total planting flexibility has been maintained in the new Farm Bill," says Thiesse. He adds that producers will have the option to keep current farm program base acres and yields, or to update base acres and yields based on 1998-2001 planted acres and harvested yields. Provisions will be made to add soybean base acres and yields. Both direct and counter-cyclical payments will be made on 85 percent of base acres for a given crop.
Thiesse has written an information sheet on commodity program provisions of the new Farm Bill, as well a Conference Committee summary of the bill. They are on the Blue Earth County Extension Web site, under "Farm Management," at www.extension.umn.edu/county/blueearth/