ST. LOUIS, MISSOURI, U.S. — In an effort to resolve longstanding differences on new U.S. farm legislation and address higher projected costs, the American Soybean Association (ASA) announced on March 11 that it will support a 2013 Farm Bill, which includes updating and extending the current Counter-Cyclical Program (CCP).
ASA will continue to support the Supplemental Coverage Option (SCO) included in both the U.S. House and Senate versions of last year’s farm bills as a complement to federal crop insurance. ASA will also support offering a choice between "higher options" for these two programs, recognizing that producers in different growing regions have different priorities for protecting farm income.
ASA President Danny Murphy, a soybean farmer from Canton, Mississippi, U.S., stated that "ASA strongly supported the Agricultural Risk Coverage (ARC) program in the Senate bill last year as an effective risk management tool designed to work with crop insurance. However, because of ARC’s higher cost and the need to find additional savings in the farm bill, we have decided to support updating and extending the CCP program included in current law."
Murphy added that "the decoupled CCP allows producers to respond to market signals rather than government programs in making their planting decisions, which has been a key priority for ASA during the farm bill debate. It also provides a safety net against several years of low prices, which has been important to supporters of the House bill." Murphy added that "the SCO will provide revenue protection at the county level and is more defensible because, like crop insurance, it requires farmers to pay part of the cost of the premium."
Earlier this month, the Congressional Budget Office (CBO) found both the Senate and House bills to be more expensive than it estimated last year. While the savings required for deficit reduction under any Congressional budget agreement have yet to be determined, the Agriculture Committees would need to find an additional $8 to $10 billion to achieve the same level of savings provided under their original bills.
Under its proposal, ASA would set target prices under the CCP at levels that reflect an average of recent market prices. Payments under the CCP are based on the underlying crop acreage bases on a farm rather than on current-year plantings. This is important in the event prices for commodities fall below their target prices, which would otherwise become a factor in planting decisions and could distort production. ASA’s support for a price-based program is contingent on decoupling program payments from current year production to avoid planting distortions.
"Agriculture faces a major challenge in getting the various stakeholders to find common ground and finish a comprehensive, long-term farm bill," Murphy said. "This policy adjustment demonstrates that ASA is committed to working with other commodities as well as both the Senate and House Agriculture Committees to support a safety net that can work for all farmers. It also addresses the need to provide savings for deficit reduction and make farm programs more defensible, while ensuring that our farmers have the risk management and crop insurance safety net they need."
In addition to modifying its position on risk management policy, ASA continues to support extending the marketing loan program, eliminating the ACRE program, and reducing or eliminating direct payments, provisions which were included in last year’s Senate and House farm bills. ASA also supports the Senate version of the cotton STAX program. ASA urges the Agriculture Committees to protect the current crop insurance program as the foundation of the farm safety net, and to adopt improvements that would make it a more viable risk management tool for producers of all commodities in all regions of the country.
Recognizing differences between commodities and growing regions, and depending on cost, ASA will support allowing producers to choose between higher target prices under the decoupled CCP program if they forego eligibility for SCO, or a higher premium subsidy under SCO if they forego eligibility under the CCP.
"Providing options has been a priority for some producers, who prefer a choice of programs over a ‘one size fits all’ approach," Murphy said.
"We recognize that ASA is making a significant change in our policy recommendations" said ASA First Vice-President Ray Gaesser, a soybean farmer from Corning, Iowa, U.S. "But we must accept budget realities and the need to find additional savings if we are going to get a new farm bill done. Agriculture is the only sector that has been willing to reduce spending for deficit reduction. We’re prepared to make adjustments, provided we have policies that maintain a viable safety net for farm income and preserve planting flexibility."