Why have a farm bill?

Arkansas

With the 2002 farm bill set to expire on Sept. 30 of this year Congress has been busy writing a new farm bill. The House of Representatives passed a new farm bill (H.R. 2419) on July 27 by a vote of 231-191.

But much remains undone as Congress works on a final product.

"The Senate Agriculture Committee must now draft their version of the farm bill, which should occur in the second half of September," said Dr. Bobby Coats, economist with the University of Arkansas Cooperative Extension Service. "If that timeline is achieved, then the Senate Ag Committee farm bill could move to the Senate floor for debate in October. The Senate and House farm bills would then move to conference committee to be reconciled, so much work lies ahead before the farm bill is sent to the President for his signature or veto."

Why is a farm bill important to America? Food is important, Coats said. "Just ask the head of any country, especially China and India. All countries protect their food and fiber industry to varying degrees; they always have and always will."

Coats said a farm bill ensures that the American consumer can continue to take nutritious, safe, plentiful and affordable food for granted. Our food may seem expensive, but compared to what percentage of a paycheck citizens of other countries pay, our food is a bargain. U.S. consumers in 2001 spent 10.0 percent of their disposable personal income on food. This figure compares with 11.6 percent in 1991, 13.0 percent in 1981 and 13.4 percent in 1971.

A farm bill also provides these benefits:

--It supports the food needs of low-income U.S. citizens and those in emerging and undeveloped countries of the world.

--It provides plant and animal inspection services to assure food safety.

--It assures sustainable farmland, promotes conservation of natural resources and encourages farmers to be good stewards of the environment.

--It maintains a sustainable farm economy.

Coats said traditional farm programs are declining in importance and being replaced.

"Traditional farm and commodity programs make up only 22 percent of budget outlays for 2007," the extension economist said. "The largest farm bill program is domestic food assistance, which accounts for 56 percent of budget outlays. The other programs are conservation and forestry programs with 11 percent of budget outlays, research, inspection and administration 6 percent, international aid programs 3 percent and rural development programs 2 percent."

Dr. Bobby Coats, economist with the University of Arkansas Cooperative Extension Service, said the recently-passed U.S. House of Representatives farm bill contains these provisions of interest to Arkansas row crop producers:

--Continues support for farmers through direct payments at the same levels as current law;

--Preserves the non-recourse marketing loan program;

--Continues the price-based counter-cyclical program and offers producers the option of enrolling in a new revenue-based counter-cyclical program;

--Continues current base acres with direct payment and counter-cyclical yields;

--Payment base continues at 85 percent for direct payment and counter-cyclical payments;

--Changes the calculation of the adjusted world price of cotton to reflect current market conditions;

--The loan rate remains the same for cotton, soybeans, corn, and sorghum. Re-establishes separate loan rates for long grain and medium/short grain rice at $6.50 per hundredweight. The loan rate for wheat is raised from $2.75 to $2.94 per bushel;

--The target price for rice, corn, and sorghum remains the same. The target price for cotton is lowered from $0.724 to $0.70 per pound. The target price of soybeans is raised from $5.80 cents to $6.10 cents per bushel and the target price of wheat is raised from $3.92 per bushel to $4.15 per bushel.

Payment Limits

--Imposes a hard cap of $1 million on average adjusted gross income for eligibility to receive farm program payments. AGI average is based on the three prior tax years.

--Requires that those with AGI of $500,000 or greater to receive two-thirds of their income from farm, ranch or forestry sources in order to receive farm program payments.

--Eliminates the three-entity rule that allows producers to collect as much as double the current limit on farm program payments and requires direct attribution of farm program payments to the individuals who receive them.

--Reduces the total payment cap for direct and counter-cyclical payments for a single farmer from $210,000 to $125,000.

8/27/07

article 2007- 34 - Whyhaveafarmbill.cfm

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