Pomeroy Works Toward Price Protection for Family Farmers

Bismarck, ND -- At a press conference this morning, Congressman Earl Pomeroy discussed the draft farm bill that was proposed by the House Agriculture Committee last week, which rejects Freedom to Farm and takes the first step toward a new farm bill that Pomeroy hopes will serve the interests of family farmers. Pomeroy was joined by Agriculture Commissioner Roger Johnson and North Dakota Farmer's Union President Robert Carlson.

Since 19996, farmers have seen market prices collapse and there has been safety net to protect them. Last year, crop prices received by North Dakota producers were 40% lower than in 1996. Congress passed three ad hoc emergency assistance bills to shore up farm income, and we are on the brink of passing an economic assistance package worth $5.5 billion for this crop year.

"This ad hoc assistance made necessary by Freedom to Farm is inefficient and unreliable. Farmers have no idea of how much the government will support them when prices hit bottom," Pomeroy said. "Farmers need two things from us as we approach the harvest season: responsive price protection and quick enactment of the legislation so that farmers can finally put to rest the 1996 Farm Bill and take advantage of a farm bill that works."

The Agriculture Committee has allocated over two-thirds -- almost $50 billion over the ten year period -- of the available $73.5 billion to price support for the traditional program crops. The proposal maintains the fixed, decoupled payment along with the planting flexibility, but it also sets target prices for the program crops. What the farmer does not receive through the fixed payment and through the price they actually receive in the market, they will receive through a countercyclical payment.

"Countercyclical payments are a positive and major step in the right direction for farm policy," said Agriculture Commissioner Roger Johnson. "At the same time, the House bill retains the needed flexibility in planting and acreage decisions by individual producers."

The plan retains marketing loan rates and nonrecourse marketing loans. To rebalance the loan rates of other commodities against oilseeds, the Agriculture Committee, however, has chosen to reduce the soybean and oilseeds loan rates instead of raising the other loan rates.

"While I am pleased that the Committee is seeking to protect farmers rock-bottom prices we have seen recently, these low loan rate levels are inadequate. As production costs increase, shouldn't farmers' protection from price risk increase as well? I would like to see loan rates based on the cost of production, and this is an issue we must re-examine as we fine-tune this plan," Pomeroy said.

Right now, the loan rate for wheat is around 60% of the cost of production. Given this year's expected rise in input costs, farmers' total production expenses are expected to reach a record $179.5 billion, so the percentage of costs that the current loan rate covers will continue to decrease. Additionally, the proposal that came out of the House Agriculture Committee does not set an equitable marketing loan rate for barley; instead it continues to rely on its historical relationship to corn. This is a faulty relationship at best, since high quality malting barley receives a much higher premium.

With the proposed farm bill, producers will have the opportunity to update their base acreage to use either their AMTA acres or the average acres planted to a program crop during the period of 1998-2001. Using current production figures and supporting current producers should be an important part of any new farm bill.

"I am strongly advocating prompt enactment of a new farm bill. In addition to farmers needing the farm bill by next planting season, we have to face the reality that the money may not be in the budget next year for a proper rewrite," Pomeroy said. "The $73.5 billion that was provided in the budget resolution is technically reserve money only available for allocation this year and conditional on a sufficient amount of money being in the Medicare and Social Security trust funds."

The House Agriculture Committee Chairman, Larry Combest of Texas, has been one of the strongest proponents of getting a farm bill done this year. He plans to finish up hearings on the farm bill this week and conduct a mark-up by next week. If that happens, the House could vote on the Farm Bill in September.

"Our goal is to retain the positive price protection that this draft provides while increasing its responsiveness to increasing costs of production. Only when we do that will we create a farm bill that speaks to the needs of North Dakota farmers," Pomeroy concluded.

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