Committee Examines Recommendations from the Wheat Industry

Mar 15, 2001

Committee Examines Recommendations from the Wheat Industry
Wheat producers believe farm policy will brighten producers future

(March 15, 2001)

Commodity and farm groups have been lining up to respond to the challenge issued by Chairman Larry Combest (R-Texas) to present the House Agriculture Committee with specific recommendations about the future of farm policy. Today, the Committee heard the proposal of the wheat industry.

"After a long, thoughtful examination of the relative strengths and weaknesses of current farm policy, it is my intention that this Committee will find the best answer for the problems facing U.S. agriculture today," said Chairman Combest.

Testimony was presented on behalf of the wheat industry by Mr. Dusty Tallman, president of the National Wheat Growers Association (NAWG). The wheat producers believe that farm policy should encompass four elements. Policy should be equitable, fiscally responsible, counter-cyclical, and WTO compliant. To that end, the wheat producers presented the committee with the following recommendations.
· Continued support of the market-oriented approach implemented in the 1996 FAIR Act. NAWG does not support any form of mandatory set asides, an expansion of CRP, the establishment of a Farmer Owned Reserve, or other proposals that would limit farmer flexibility.

· The NAWG plan calls for securing a guaranteed fixed payment, similar to the current AMTA system in order to safeguard the wheat producer's ability to secure operating capital. NAWG would continue fixed payments at the 1999 AMTA level. This plan would also be extended to oilseed producers.

· The plan recommends the elimination of all payment limitations.

· The cap on the wheat marketing loan would be raised and a floor would be established at $2.85. This plan raises most marketing loan levels while tying them to a market-based formula.

· In addition to current farm programs, a Market Loss Support program would be implemented to make annual emergency spending unnecessary. A Market Support Level would be established for each eligible crop and indexed by one percent each year. Support payments would be calculated by subtracting the fixed payment and the higher of either the national average marketing loan level or the national average yearly price from the Market Support Level. All counter-cyclical payments under this plan would be decoupled from current production.

· According to the wheat producers, immediate action should be taken on several issues. First, the USDA baseline should be increased. Next, remaining AMTA payments should be frozen at 1999 levels, making the payment in lieu of an LDP on grazed-out acres permanent. An $0.81 Market Loss Assistance payment should be authorized for the current crop year. Finally, presidential trade negotiating authority should be secured, sanctions policy reformed, and tax relief provided.

NAWG recommends focusing federal spending in these four areas:
· Fixed payments: $5.885 billion a year would be dedicated to fixed payments. This is $2.361 billion more than the current budget estimates. Producers would receive a payment equal to the 1999 AMTA and a payment for oilseeds producers would be added.

· Commodity marketing loans: An average of $727 million would be saved each year over the current budget estimates.

· Counter-cyclical payments: An average of $3.497 billion each year would be spent on counter-cyclical payments.

· Equity among commodities: Equity would be restored among commodities by spending additional funds to support each program crop. On an annual average, CCC outlays would raise for wheat by $1.477 million, corn by $1,169 million, grain sorghum by $235 million, barley by $147 million, oats by $23 million, upland cotton by $811 million, rice by $469 million and soybeans by $808 million.

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