Copyright 2001 The Omaha World-Herald Company Omaha
World Herald (Nebraska)
April 25, 2001, Wednesday METRO EDITION
SECTION: BUSINESS; Pg. 25;
LENGTH: 630 words
HEADLINE:
Nebraskan: Farm Plan Innovative Counter-cyclical payments would increase when
income declines and decline when farm income increases
BYLINE: DAVID HENDEE
SOURCE:
WORLD-HERALD BUREAU
DATELINE: Washington
BODY: A Nebraska farmer unveiled
another version of one of agriculture's latest hot ideas for the new farm bill - counter-cyclical income supports - to Congress
Wednesday.
Lee Klein of Battle Creek, Neb., president
of the National Corn Growers Association, said the plan was bold, innovative and
in the best interests of the American public and rural communities.
Counter-cyclical payments from the federal government
increase when farmer income declines. Payments decline when farmer income
increases.
Several counter-cyclical payment ideas are
floating around Capitol Hill. A counter-cyclical payment generally would kick in
through a trigger mechanism based on variables such as net farm income, gross
revenue, U.S. farm exports, or the ratio of grain on hand to grain demand.
In testimony to the House Agriculture Committee, Klein
said the equation of continued higher yields at harvest and lagging demand is
causing the low prices farmers have been receiving for their corn. Agriculture
Department economists expect corn prices this year to average $ 1.80 to $ 1.90
per bushel. The price was $ 3.25 in 1995.
Klein said
the 1996 farm law, known as Freedom to Farm, allowed U.S. farmers to make
production decisions based on their own market and crop needs, and built global
demand for corn.
Domestic demand for U.S. corn
increased nearly 11 percent to a projected 7.75 billion bushels this marketing
year from nearly 7 billion bushels in 1996.
Corn
exports also have improved. The anticipated exporting of 1.95 billion bushels
this year will fall below the recent high of 1.98 billion bushels in the 1998
marketing year, but exceeds 1996 levels by 150 million bushels and 1997 levels
by nearly 450 million bushels, Klein said.
Despite
growth in domestic and export demand, Klein said, corn farmers, like producers
of all commodities, still face lackluster prices.
"The
reason is relatively obvious," he said. "Our production growth has outpaced the
demand growth."
During the past five years, U.S. corn
farmers have produced an average of more than 9.5 billion bushels per year. That
compares to an average 8.1 billion bushels a year during the life of the 1990
farm law, an increase of nearly 17 percent.
"Clearly,
U.S. farmers have been very productive on the land devoted to corn production,"
Klein said.
He said those who advocate controlling corn
supplies through acreage reduction programs do not understand the tremendous
effect of improved yields.
Klein said U.S. farm policy
should continue evolving, but should keep the hard-won freedom to make planting
decisions based on markets.
"We need a complete package
that provides farmers opportunities in the marketplace with minimal interference
in production decisions and that includes a safety net against those economic
forces that are beyond producers' control," he said. "We believe our proposal
can do that."
The association's proposal establishes an
annual, total target income for farmers who grow corn and other loan-eligible
commodities.
The target income is based on the average
crop value during 1996-2000 and incorporates farmer benefits from the marketing
loan program and the payments from market-loss assistance payments. The
base-period average income is then adjusted for each year of the farm law's life
by a factor that reflects projected production increases.
The association represents more than 31,000 direct members and 300,000
corn farmers across the country who support marketing and promotion programs
through an industry-imposed tax on each bushel sold.
Another Nebraskan, Keith Dittrich of Tilden, presented a plan on behalf
of the 14,000-member American Corn Growers Association.
Document 41 of 105. 