Criticism continues to mount for the Senate version of the 2002 farm bill as members of a House-Senate conference committee held their first official discussions on how to resolve the differences between it and the House-passed bill.
In recent days, the American Farm Bureau Federation, the nation's largest farm organization, and other farm groups have called for the conference committee to work from the provisions of the House bill and largely ignore the Daschle-Harkin bill passed by the Senate.
On March 12, the Washington-based National Grain and Feed Association asked the conference committee not to increase price support loan rates or expand the Conservation Reserve Program, two of the basic tenets of the Senate-passed bill.
The NGFA also asked the committee to delete provisions in the Senate bill that would interfere with the contracting rights of agricultural businesses and producers.
Regarding the Conservation Reserve Program, NGFA officials said they are urging conferees to resolve “serious questions about its implementation, management and rural economic impacts” before expanding the eligible acreage beyond the current 36.4-million-acre statutory limit.
The House version of the farm bill calls for increasing the CRP to 39.2 million acres, while the Senate bill would increase it to 41.1 million acres. The Senate bill does include a provision that would require USDA to perform a study on the economic impacts of the CRP on rural areas, but would not make such a study a precursor to expanding the CRP.
The NGFA said CRP enrollment is overly concentrated in a few regions and includes too many acres of productive and non-environmentally threatened farmland. “Far more emphasis needs to be placed on the enrollment of truly environmentally sensitive land, such as buffer strips adjacent to water bodies, that will maximize the environmental benefits of the program,” the NGFA said, noting that current enrollment still stands at approximately 33 million acres, less than the 36.4-million-acre cap.
“The economic effects of the CRP in areas where enrollment is high also need greater examination. Most important, the CRP should not be expanded as a backdoor attempt to re-impose supply controls — a failed policy of pre-1996 farm bills.”
On loan rates, the NGFA noted that increasing marketing assistance loan rates as called for in the Senate farm bill would encourage continued overproduction and prolong a period of depressed farm commodity prices, undermining prospects for market rallies.
Prefers House Version
The NGFA said it preferred the loan rates contained in the House bill, which are frozen at current levels except for a decrease in the soybean loan rate from $5.26 to $4.92 per bushel.
“To the extent that the downward adjustment in the soybean loan rate reduces the relative income position of soybean farmers, we recommend that direct payments compensate for the shortfall,” the NGFA said. “Further, because loan rates that are out of line with market prices can distort the relative supplies of various crops, we recommend a formula-driven loan rate policy to ensure that such rates do not exceed market-clearing levels for elongated periods.”
Concerning the Senate farm bill's restrictions on agricultural contracting practices, the NGFA is concerned primarily with two provisions found in the Senate bill, officials said in a press release.
The first would nullify mandatory arbitration clauses in livestock and poultry contracts, while the other would prohibit packer ownership or feeding of livestock (cattle, swine and lambs) 14 or more days prior to slaughter.
The arbitration restrictions would make it legal for livestock and poultry producers to pursue court litigation of production contracts even if the parties contractually agreed to mandatory arbitration of disputes. The NGFA said such restrictions would infringe upon the contractual rights of livestock and poultry producers and their customers to agree to settle potential disputes in a venue of their choosing, and increase the risk of costly litigation for all parties.
“Such a provision also would be a dangerous precedent for mandatory arbitration clauses in grain production contracts,” officials noted. “The NGFA has operated a highly respected arbitration system for more than a century to resolve disputes involving grain, feed and processed products, as well as barges and barge freight.”
Concerning the ban on packer ownership or control of livestock 14 days or more before slaughter, the NGFA noted that the restriction could impede producers and packers from sharing market risk, and would undermine the ability of producers and packers to provide consistent, high-quality branded meats that consumers demand.
“Neither of these provisions — the nullification of mandatory arbitration clauses in livestock and poultry contracts nor the ban on packer ownership of livestock — would help smaller-size producers, which is the stated goal of the sponsoring senators,” the NGFA said. “But they will reduce the competitiveness, cost-efficiency and profitability of the meat sector. These and other competition issues need further examination before such far-reaching, market-restructuring legislation is enacted.”
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