Where we stand on some key commodity title issues…
March 29, 2002

• Yield updating – strongly opposed. Yield updating is extremely expensive, and will result in reduced target prices for commodities. There are also serious questions about whether fixed payments with updated bases and yields will still qualify as “green box” supports at the WTO. NAWG believes that updating yields and bases provides an incentive for farmers to alter their planting decisions in hopes of future updating opportunities, and interferes in what should be purely a market-driven planting decision.
• Base updating – opposed (see above).
• Loan rates – given the choice, we prefer higher target prices for decoupled counter-cyclical supports to high loan rates. Counter-cyclical payments and fixed payments are based on fixed numbers that do not depend directly on production. Further, loan rates only offer protection for a crop that is actually produced; in the case of disaster, the loan program offers no support. NAWG does support flooring loan rates at the levels proposed in the House legislation, and recognizes the important risk management function provided by the loan program.
• Counter-cyclical supports – strongly in favor, and support the House construction of the program with a wheat target price no less than $4.04. This mechanism avoids the planting incentives of high loan rates, still provides support in event of crop loss, and is responsible from a budgetary and public policy viewpoint in that it only provides support when it is needed.
• Fixed payments – NAWG believes that a fixed payment foundation is a critical piece of the farm support system. This support is a reliable revenue source that agricultural lenders and input providers can count on. Assuming we avoid the problems caused by base and yield updates (see above), they are also considered “green box” payments at the WTO.
• Payment limits – NAWG supports payment limitations as proposed in the House legislation. The Senate provisions are too severe. Funding allocations – we support an allocation of $48.8 billion for the commodity title.
• Length of bill – NAWG supports a 10-year bill.