NCGA Gives Revenue Assurance Second Look

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The National Corn Growers Association brought light to a new farm bill approach and one that got play in Secretary of Agriculture Mike Johanns' proposal - a revenue-based assurance program. Within the last several weeks it has done more than "tweak" the association's farm bill proposal by significantly redefining the overall direction of how a revenue countercyclical program could play out, explained NCGA senior director of public policy Sam Willett.

At its annual meeting recently, 75% of Corn Congress delegates supported a resolution integrating a county revenue countercyclical program (RCCP) with crop insurance to provide a better safety net when low prices are accompanied by crop shortfalls.

Last month the group was pushing a base revenue protection at 70% of whole farm crop specific revenue coupled with a limited revenue countercyclical program. However, the cost of implementing that approach using a county trigger was $5.5 billion more than the Congressional Budget Office's January preliminary spending baseline for the 2002 Farm Bill commodity programs.

The initial idea of a revenue-based program was to create a green box compliant farm program. After extensive peer review, it was found the program is amber box, not green box in World Trade Organization circles.

To reduce the projected costs, NCGA wants to base its proposed program on 90 — 95% of expected county revenue. The RCCP is modeled after the Group Risk Income Protection policy. It would replace the current target price-triggered counter cyclical program and be based on planted acres, rather than base acres. Producers would receive payments when their actual county revenue (per acre) falls below the county's expected revenue (per acre).

Integration of the RCCP with federal crop insurance will reduce market and area production risk allowing insurance companies to offer higher levels of individual farm level coverage at a lower cost. To prevent duplicate payments for market risk, there will be times the RCCP payments will reduce a producer's indemnity payments. NCGA's integrated program will require a re-rating of the revenue insurance contract during the implementation period.

He added NCGA is still finalizing details of its proposal and hopes to have the final construction of its proposal prior to the next House farm bill hearing, tentatively scheduled for March 28.

Replacing disaster aid

USDA's farm bill proposal is based on national figures, while NCGA's is county-based. Steve Pigg, NCGA public policy action team chairman, is hopeful the idea can get traction on Capitol Hill, especially because it can act as a permanent solution to disaster aid. Using county figures better deals with isolated disaster concerns, NCGA leaders said.

House Agriculture Committee chairman Collin Peterson desires a permanent disaster package in the farm bill. Although NCGA's proposal is more costly than a tweaked 2002 Farm Bill, funding still falls under previous spending if disaster aid is included in the sum.(Currently the democratic leadership are proposing adding a disaster assistance program in excess of $4 billion dollars in the supplemental to the iraq war for the 2005 and 2006 crop years.)

Commodity support

NCGA is the only farm group actively pushing for a revenue-based approach. Many others have been included in ongoing consultations of the idea.

The American Soybean Association's main quip with the 2002 Farm Bill is price and loan rates. Their delegates voted to call for an adjusted target price of 130% of the 2000-2004 Olympic average market prices, and loan rates should be adjusted to a minimum of 95% of 2000-2004 Olympic average prices.

Pigg explained that although ASA's proposal is less costly, it still doesn't provide an answer to disaster assistance. Other groups, such as the American Farm Bureau Federation, at one point only wanted to look at extending the farm bill. Now Pigg said the organization is more open to a revenue plan.

The initial proposal was not as advantageous for wheat growers. Pigg explained the redefined proposal NCGA recently adopted may prove more beneficial for wheat growers than the original.

Leaders of NCGA, ASA and the National Association of Wheat Growers (NAWG) at last week's Commodity Classic held side discussions about moving policy forward. Each is moving with its own proposals, but ASA and NAWG haven't completely ruled out support for a revenue program, but will take a wait and see approach.

More will be known after the House Budget Committee completes its markup over the proposed budget resolution is marked up later this month, Willett said. And come July, commodity groups will have to make a decision to fight for their own plight, or join forces with the most palatable farm bill proposal.

NCGA Corn Board members will be talking farm programs and budget when they meet next week in Washington, D.C., with congressional leaders and staff. NCGA will also present its proposal in depth during a Farm Foundation event this week.

Key newly passed policy resolutions

National Corn Growers Association supports:

• A county revenue countercyclical program integrated with crop insurance that is market sensitive while providing a safety net.
• Expansion of the biofuels industry beyond the 7.5 billion RFS standard by increasing the RFS to 25 billion gallons by 2025 (of that 15 billion should be corn based by 2015), which should be considered only as the "floor.•bCrLf
• Extending the 51-cent tax credit for both cellulose and grain-based ethanol.
• Aggressive funding for DDG research to increase livestock feeding with a focus on swine and poultry.

American Soybean Association supports:

• The basic structure of the 2002 Farm Bill, but believes that target prices should be adjusted to a minimum of 130% of the 2000-2004 Olympic average market prices, and loan rates should be adjusted to a minimum of 95% of 2000-2004 Olympic average prices. ASA supports increased baseline funding for the 2007 Farm Bill.
• Creation of a Commodity Quality Incentive program (CQIP) and a Healthy Oil incentive that would pay producers an incentive payment to facilitate the introduction of traits that have a value to society as a whole greater than the value chain can initially support.
• Modifications of Section 1031 of the U.S. Tax Code to minimize non-agricultural inflation factors on rural land values.
• Authorization of a biodiesel incentive program in the 2007 Farm Bill to provide Commodity Credit Corporation (CCC) payments to domestic biodiesel producers to offset subsidized foreign biodiesel imports.

National Association of Wheat Growers/U.S. Wheat Associates:

• Supports the continuation of Trade Promotion Authority (TPA) to get a successful Doha Round, provided that U.S. negotiators protect domestic farm policies from being negotiated away. We would not support a Doha Round Proposal from the U.S. if it is less than the October 2005 U.S.  offer.
• Opposes any effort to re-direct a portion of direct payments to market development programs
• Supports government and private programs for crops with marketable characteristics beyond traditional markets that focus on achieving a critical mass by area.