WASHINGTON – The House Agriculture Committee held the fourth in a series of hearings on the future of American farm policy. Answering Chairman Larry Combest’s (R-Texas) challenge to present the committee with specific policy recommendations was the National Farmer’s Union.
“I recognize that this is not an easy process,” said Combest. “It is difficult for any organization to reach consensus about what should be the recommended course of action. But I firmly believe that if we are to produce the best possible policy for our farmers and ranchers, active participation on the part of all interested parties is essential.”
The NFU believes that the primary goal of commodity programs should be to provide economic stability and opportunity for producers over time consistent with a responsible view of market realities, resource sustainability and food security and safety issues. Leland Swenson, president of the NFU, explained how NFU would achieve that goal. The key recommendations of the NFU include:
Eliminate AMTA payments
* Producers should be allowed full planting flexibility.
Marketing Loan Program Improvements
* Commodity loan rates should be established at not less than 80 percent of the three year moving average of the full economic cost of production per unit as calculated by the Economic Research Service.
* Program benefits would be targeted, though NFU did not recommend specific rates.
Establish limited Government Owned Farm-stored Commodity Reserve Programs
* Renewable Energy Reserve: this would provide feedstock commodities to that sector when renewable fuels production is at risk of decline due to reduced feedstock supplies or significant commodity prices.
* Humanitarian Food Assistance Reserve: This reserve would ensure our capacity to fulfill our current and future commitments for nutrition assistance programs.
* Under both programs producers would receive estimated storage payments of $0.30 per bushel per year.
Establish a Farmer-Owned Reserve (FOR)
* The purpose of this reserve is to provide a realistic level of commercial buffer stocks that would be released when commodity prices achieve a specific level. The FOR should be limited to about 20 percent of the annual average production of each crop and provide for immediate entry at the prevailing commodity marketing loan rate for the county.
* NFU proposes allowing producers who participate in the crop insurance program to redeem and market reserve grain at a discount to the entry level price to offset a portion of actual insurable production losses not indemnified by multi-peril or other buy-up policies
Set Aside Authority
* This would provide the Secretary of Agriculture with discretionary authority to offer a voluntary set-aside program. Producers who voluntarily decide not to participate in the program should be subject to a percentage reduction in the marketing loan rates for their crops equal to the average national percentage incentive payment rate increase provided set-aside participants.
Dairy NFU presented two options for the dairy program:
* Option – Establish a price support mechanism with the support price set at $12.50 per cwt. Government purchases should be limited to no more than 3 percent of the higher of U.S. utilization or production. A producer-financed purchase system would then be utilized to remove any additional surplus product form the market in excess of the level procured by the government to stabilize dairy prices at or above the support level.
* Option 2 – As an alternative or supplement to the recommended support price program, NFU supports implementation of a target price deficiency program. A target price would be established at 80 percent of the moving, three-year average economic cost of milk production, as measured by USDA/ERS.
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