Battle Over Farm Bill
Chairman of the House Ag Committee Collin Peterson of Minnesota met with Bush Administration officials and crafted a proposal that was $6 billion over the Farm Bill baseline costs over 10 years. The proposal had the support of the Bush Administration eliminating the threat of a veto.
The Senate Ag Committee countered with a proposal $12.3 billion above baseline. The Senate has the backing of agricultural groups, including the peanut industry, who oppose the House bill.
Senator Charles Grassley of Iowa, a designated Senate negotiator, says he expects the Farm Bill to be settled before the expiration date. He says that Congress usually responds to such deadlines, and no one wants to see agricultural policy revert to the 1949 permanent law. Grassley thinks a $9 billion above the budget baseline would be feasible.
The Congressional Budget Office set the baseline at $280 billion over five years and $597 billion over 10 years for the Farm Bill.
Chairman-elect is Bill Brown, J. M. Smucker Company, and secretary-treasurer is Bob Parker, Golden Peanut Company. Sonny Deuell, Birdsong Peanuts, will serve as chairman of the Export Committee and Darlene Cowart, J. Leek Associates, Inc., is chairperson of the Peanut Foundation.
The domestic budget for fiscal year 2008 is $532,000, up slightly from last year’s $529,000.
Preliminary payments must be refunded if full-year price calculations result in a lower payment rate. The counter-cyclical payment is made when the “effective” price is less than the “target price.” This first payment cannot exceed 40 percent of the projected payment and was based on USDA’s February World Agricultural Supply and Demand estimates released Feb. 8, 2008.
The counter-cyclical payment for cotton was projected at $0.0309 per pound. Producers of wheat, barley, rice and oats had no payments, as average market price projections exceeded the level to trigger a payment. Partial payments for corn, grain sorghum and soybeans will be announced on or after March 1.
Coverage is 120 percent of the price selection or 20.5 cents per pound. That’s $410 per ton plus 20 percent for $492 per ton on runners. That is close to some option contracts offered this season, and a producer must have a contract to secure coverage. To qualify for a quality adjustment, losses must cause the farmer to be below 85 percent of the coverage or below $418 per ton.
Many cooperative growers have notified Risk Management officials that the insurance program requires a signed contract, which they do not have, thereby eliminating them from crop insurance coverage. Risk Management officials say the answer is to find a dependable price discovery mechanism that reflects the going contract price offered to growers.
Richard Robbins, past chairman, said, “It has been an honor for me to serve the great state of New Mexico as the board’s state delegate and as your chairman for 2007. Through this experience, I have been immersed in the world of promotions and advertising and now fully understand just how crucial they both are to increasing overall consumption of USA grown peanuts…and it’s working.”
Assessments for last year totaled $5.848 million, with a deficit of $113,000. For 2008, nearly $6 million is budgeted for promotions, research and education. Expenses for the year through Nov. 30, 2007, were $5,555,700.
Arthur said, “We feel that producers may have hurt themselves by opposing mandatory price reporting when it appeared in the initial version of the House legislation.”
A benefit of reporting full peanut option price is crop insurance. The price selection increased from 19 cents per pound to 20.5 cents per pound in 2008. Officials believe that if the full option payments had been reported, coverage could be higher.
Reporting the full peanut option price would also improve price transparency for producers and the entire industry, officials say. Further, it would reduce the likelihood of overpayment of counter-cyclical payments and marketing loan benefits.
Many producers argue that the option payment should not be counted as a price of the peanuts because shellers may or may not option to buy the peanuts under contract.
As Arthur said, “We know producers would like to increase their crop insurance coverage, but RMA can’t do much to help them until they have the data to support such a decision. Hopefully, when producers realize that they can gain from it, they will begin to pressure shellers to provide better price information to NASS.”
Darlene Cowart, Peanut Foundation Chairperson, says the goal of the initiative is to bring needed quality and production traits to peanuts.
The Peanut Foundation, with Howard Valentine as Executive Director, has built an industry consensus on a strategic research plan and funds projects critical to the industry.
In the 2006-2007 fiscal year, $192,000 was awarded on 14 projects. For 2007-2008, the goal is $163,000 on 12 projects, including a project titled, “Evaluation of Breeding Lines for Resistance to Leaf Spot and TSWV” and “Breeding for Early Maturing Runners and Virginias.”
Any producer or industry group or member interested in funding research and peanut genomics can send it to Peanut Foundation, 1500 King Street, Suite 301, Alexandria, Va. 22314 USA.