Committee Questions the Rice Industry

Mar 21, 2001

Committee Questions the Rice Industry

(March 21, 2001)

Rice producers today advocated a farm program that would keep many features of the current law, including fixed payments at $4 billion per year, and marketing loan rates set at current loan rates, but also advocated an additional counter-cyclical program based on gross revenue for each crop. The rice industry was the latest commodity group to answer Chairman Larry Combest's request for specific policy recommendations.

"Our producers have not been shy in expressing their concern over the dismal conditions facing the farm economy today," said Chairman Combest. "It is our responsibility to do all that we can to provide relief—which is exactly what I intend to do."

Testimony was presented on behalf of the rice industry by Mr. Nolan Canon, Chairman of the U.S. Rice Producers Association. He told the Committee that securing an increase in the CCC baseline for commodity programs was a priority for the rice industry. This increase is necessary, said Mr. Canon, so that farm programs will be able to respond to the economic strain facing American agriculture.

In addition to the need for a budget increase for agriculture, the rice industry set forth several recommendations, including:

· Maintain the planting flexibility provisions from the 1996 FAIR Act.

· In order to help rice farmers maintain their export competitiveness, the industry would like to see the marketing loan and loan deficiency payments (LDP) continued.

· The rice producers support maintaining the option for producers to redeem their loans with generic commodity certificates.

· Rice loan rates would be established at no less than $6.50 per hundredweight and other crops would be left at current rates. Additionally, the Secretary of Agriculture would be given discretionary authority to raise the loan rate above the base level.

· Oppose mandatory idled acreage programs.

· Decoupled PFC-type payments would be provided for the FY 2003-2007 period at the FY 2002 budgeted level of approximately $4.01 billion for the eight program crops. This payment would be in compliance with WTO green box provisions.

· A counter cyclical income support payment in addition to current program mechanisms would be provided to strengthen the income safety net for producers.

The rice industry proposed that the counter-cyclical program be comprised of a Gross Revenue Program (GRP) of payments formulated by:

1. Establishing a base gross revenue for each crop by averaging annual gross revenue for each of the years 1996-2001.

2. In years where national gross revenue for crop is less than base gross revenue for that crop, producers will receive gross revenue payment.

3. The per unit payment ($/cwt/bu./lb.) to producers is calculated by dividing the gross revenue shortfall for the year by current year production.

4. The producers establish GRP production based on average plantings and yield of each program commodity during the 1996-2000 base period.

5. The producers would receive payments equal to the per unit payment multiplied by the production base.

6. The GRP payments would be limited to base production but would be reduced if base acreage was not planted.

7. The GRP is in addition to the fixed decoupled payments and LDPs. No payment limitation would be applied to these payments.

8. Total budget costs for this program would be $650 million over five years for rice, and $2.06 billion over five years for the eight program crops.

· Payment limitations for income support and marketing loan/LDPs would be eliminated.