Washington Farm bill divides Midwestern and Southern farmers Government would offer farmers new 'shallow loss' program

By Jim Abrams

Associated Press

WASHINGTON (AP) -- For once, it's not Democrats battling Republicans. The five-year farm and food stamps bill now being debated in the Senate is a regional fight, pitting rice and peanut growers in the South against corn producers and soybean farmers in the Midwest.

The half-trillion-dollar bill setting farm policy into the future outlines dramatic changes in how farmers are protected from financial and natural disasters. It would end $5 billion a year in direct payments to farmers whether or not they actually plant a crop and programs that reward farmers when prices fall below a targeted level.

Instead, the government would offer a new "shallow loss" program to aid farmers when revenues fall between 11 percent and 21 percent below five-year moving averages and would put greater emphasis on heavily subsidized crop insurance. Farmers' regular crop insurance would pay for losses above 21 percent.

The Congressional Budget Office estimates this new shallow loss program could save taxpayers some $8.5 billion over the next five years compared with the current subsidy system.

As with all big changes, there are winners and losers. Southern rice and peanut growers see themselves as the losers. This regional divide is one of the two major obstacles to getting a farm bill through Congress before the current law expires at the end of September.

Nutrition programs, primarily food stamps, are the other hurdle. They make up about 80 percent of the cost in the $100 billion-a-year bill. The Senate proposal would cut the food stamp program now serving about 46 million people by $4 billion over the next decade -- largely by targeting abuses. Some senators and the Republican-controlled House would like to see a far bigger cut, mainly by tightening eligibility for food stamps.

The entire bill, which also covers conservation and research programs, would reduce spending by $23.6 billion over the coming decade.

Republican Sen. John Boozman, whose state of Arkansas is the nation's largest rice grower, said the Senate bill "will have a devastating impact on Southern agriculture." Republican Sen. Saxby Chambliss of Georgia, the national leader in peanut production, complained it "shoehorns all producers into a one-size-fits-all policy" that would force farmers to switch to crops that enjoy better coverage for losses.

The bill's two main sponsors, Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and top Republican Pat Roberts of Kansas, defended their approach.

"People can always disagree with economists," Stabenow said on C-SPAN's "Newsmakers." "But I guess what I would say is what we have put in place ... it's fair for every commodity."

"This is a different year, this is a year we have to change," Roberts said in the same interview, adding that was made clear to all the commodity groups.

But rice and peanut farmers argue that the crop insurance and the new shallow loss or Agriculture Risk Coverage programs are better fitted to crops such as corn, where natural disasters such as floods and droughts can cause far greater fluctuations in yields. Many rice farmers, who irrigate their crops and have more consistent yields, don't have crop insurance to protect them from yield loss, but they do have to cope with large swings in prices and high production costs.

Linda Raun, who runs a 1,000-acre rice farm southwest of Houston and chairs the USA Rice Producers Group, said direct payments have been their only safety net in the past. Without price protection, banks won't lend them money, she said. "We've got to have a farm program that allows us to become bankable."

Without greater risk protection she said she will have to decrease production. Texas, unlike other rice-growing areas, does not have the climate and soil to switch to other crops, she added.

Raun said production costs amount to about $1,000 an acre for rice. Because of a reliance on foreign export markets, prices can change rapidly. Currently prices for Southern rice are not that good, unlike the strong prices enjoyed by corn and soybean growers.

Testifying last month before the House Agriculture Committee, Armand Morris, a peanut producer in Georgia and chairman of the Southern Peanut Farmers Federation, said the debate "is not whether farmers will take significant cuts in farm programs; we know this will take place."

Rather, he said, it's about "whether we will have a farm bill that works for one or two regions of the country, and one or two crops, or a national farm bill that works for all regions of the country and all crops."

A recent study by the Food and Agriculture Policy Institute at the University of Missouri in Columbia does show that rice and peanut growers who are the main beneficiaries of direct payments would lose more than 60 percent of their government support over the next decade under the new system.

But the same report also found that the shallow loss program was generally equitable among the major crop groups.

Southern senators are seeking to negotiate changes to the bill that would allow a choice between the Senate's current crop insurance and revenue protection programs and some modified form of existing target price program that compensates farmers when prices dip below a certain level and which is preferred by the rice and peanut growers. The bill already has a separate revenue insurance program tailored to the needs of cotton farmers.

If that fails, House Agriculture Committee Chairman Frank Lucas, R-Okla., has made clear that the yet-unwritten House bill will include an alternative to meet the concerns of those Southern planters. The safety net, he said, "has to exist for all regions and all crops, and it has to be written with bad times in mind. These programs should not guarantee that the good times are the best, but rather that the bad times are manageable."

Published: Thu, Jun 14, 2012