Farm Bill Debate Scheduled for Farm Science Review

Agricultural economists gathering for a panel discussion to help farmers interpret the language of the bill as it nears passage in Congress.

The U.S. House of Representatives has passed its Farm Bill, and the Senate is expected to address the issue once Congress reconvenes in September. Ohio State's Department of Agricultural, Environmental, and Development Economics will host a Farm Bill Debate from 10 a.m. to 11 a.m. on Sept. 18 in the Tobin Building during Farm Science Review. The purpose of the program is to discuss the highlights of the House Farm Bill, as well as provide insights on what to anticipate from the Senate.

Farm Science Review will take place Sept. 18-20 at the Molly Caren Agricultural Center in London, Ohio. The Tobin Building is located on Beef Street, across from the Vice President's tent.

Carl Zulauf, an agricultural economist, said that Title I of the Farm Bill is shaping up to be the hot item of discussion.

"Title I, which covers farm commodity programs, has clearly been the most contentious part of the Farm Bill, which is not surprising," says Zulauf, who will be participating in the Review's Farm Bill Debate. He said the debate centers around three main issues

One issue is rebalancing loan rates and target prices to achieve greater equity among program crops. Zulauf says that the issue stems from the historical fact that some program crops received little government payments under the 2002 Farm Bill while others received substantial payments. Payments from price support programs, principally the marketing loan and counter-cyclical programs, was less than 1% of the value of production for oats, soybean and wheat but over 10% of the value of production for corn, sorghum, rice and upland cotton.

"The House Farm Bill increases the marketing loan rates for barley, oats and wheat, as well as the target prices for barley, oats, soybean and wheat. It decreases the target price for cotton," says Zulauf. "The problem that policy makers face is that congressional budget rules limit the availability of new funds for Title 1 programs, and projected spending on Title 1 is limited because prices for most commodities are higher than current support rates. Thus, the increases in support rates have to come from decreases in other programs. It will be interesting to see if these changes remain in the final bill."

The second issue is payment limits.

"There is widespread belief among actors in the Farm Bill who are not farmers that the current payment limits are too generous, or in some cases they have been abused, and thus should be curtailed," says Zulauf. "The House Farm Bill made many changes in the payment limit rules, but it is not clear what is the net impact of these changes because many of them offset one another."

The third issue is the form of support, specifically, should the farm program attempt to protect farmers from low prices or from low revenue (yield times price).

"The Farm Bill passed by the House is providing farmers with a one-time option between traditional price protection and a revenue counter-cyclical program. The current price counter-cyclical program enables producers to receive a payment when the national price is below the target price," says Zulauf. "Similarly, a revenue program establishes a revenue target and pays if revenue is less than the revenue target. I think revenue programs are better because gross revenue is more closely related to a producer's financial risk since it includes both price and yield, not just price."

Among its other provisions, the House Farm Bill authorizes up to $1.6 billion of spending for a variety of programs for the fruit and vegetable industry; requires retailers (not restaurants) to provide Country of Origin Labeling for fresh meats, produce and peanuts by 2008; expands funding for the food stamp program and other feeding programs; expands funding and acreage caps for various conservation programs; and invests in a variety of programs for renewable energy.

The 2002 Farm Bill expires on Sept. 30, 2007.

TAGS: Soybean
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