When Congress went home for the holidays without passing a new federal farm bill, the wind went out of the sails of farmers and their lobbyists who were hoping financial weathervanes would be pointing by now to where money to farm would come from in 2002.
Obviously there will be federal farm support because agriculture remains in the economic doldrums. How much money is the unanswered question.
It will come from either the last year of the infamous and failed Federal Agricultural Improvement Act of 1996 or a new farm bill that would provide a more definitive financial foundation for struggling American agriculture. The difference in dollars could mean the difference between getting a bank loan and not for some producers.
Earl Williams, president and CEO of the California Cotton Ginners and Growers Association in Fresno, believes a new farm bill could be written before spring that would be less costly than the last year of the FAIR Act and more supportive of Western agriculture.
It's late, and many farmers are well past the time when they should have a good idea of what federal farm support levels will be, but Williams said there's still time to replace badly flawed federal farm law.
“It will either be another bale-out under the old law or it will be a new farm bill,” said Williams. “The cost to the federal government of a bale-out would probably be more than a new farm bill with fixed payments geared to the differences in the loan and the actual price of cotton and other commodities. Fixed payments levels would be better for California.”
Right now Williams said the push in the cotton industry is to get a new farm bill passed that looks like what the House passed last fall. He believes similar elements are in a bill passed by the Senate Ag committee before the holiday recess that died before the Senate could take a pre-holiday vote. He is confident an acceptable bill could come out of conference committee based on what came out of the full House and the Senate ag panel.
That may be easier said than done in the political atmosphere in Washington today.
Turn to bale-out
“At some point if the process of getting a new farm bill drags on too long, we will have to change horses and start looking at an emergency bale-out package for this year under the old farm bill,” he said.
While Williams and others may be impatient now, the Far West cotton leader points out that the FAIR Act wasn't reported out of conference committee until March 22, 1996 and did not gain final congressional approval until March 28. The president did not sign the bill until April 4, and it was in place for 1996.
He hopes it does not take that long because those dates are well past the start of cotton planting season in the West. It begins March 1 in the San Joaquin Valley and even earlier than that in Arizona.
At stake in the farm bill debate is $73.5 billion dollars earmarked for a five-year federal farm program. With the cost of waging war against terrorism and a faltering economy creating fears of a budget deficit, there is an urgency to get federal farm law in place before that money evaporates.
Already administration financial watchdogs have said it is too much, but President Bush has overruled them and continues to support that level of spending for the new farm law.
A decision on what the federal farm program will be this year is but one element of the financial picture for 2002.
Hoped for program
Western producers had hoped to take a new cost of production crop insurance program to their bankers this year as an underpinning for production loans, but that will not happen.
Williams said advocates of such a program have been working for two years to put a package together that would clear all the regulatory hurdles.
“Unfortunately, it is a dead issue for 2002. There will be no cost of production crop insurance for this year. We were told last year we would have a pilot program in place for 2002, but a combination of things have sidelined it for this season. Basically the concept has become more complex and involved than we understood it would be early on,” he said.
“We are disappointed, but we have not given up because Western producers need an insurance program that focuses on cost of production rather than revenue,” said Williams.
“We have said all along that what is in place now is not workable and viable for the West,” he added.
Contrasted with the uncertainty about the level of federal support is the stark reality of continued low commodity prices, including cotton. Williams is predicting a sharp drop in short staple cotton acreage in the valley, down 25 percent from last season's 650,000 acres because of uncertainty and low prices. It would have been much higher had a new farm bill and new insurance program been in place.
That will put the short staple in the 500,000-acre range.
Pima last season accounted for 215,000 acres. With Pima loan levels in the 80-cent range, there will be an acreage increase. However, it won't be much, predicts Williams. Maybe 10 percent to 15 percent to a maximum of 250,000 acres. He does not predict a wild upward swing in ELS acreage. “I think the (annual) Pima acreage is pretty well settled within the valley,” he added.
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