(September 17, 2010) - As talk at the elevator and at various farm organization meetings turn to a discussion of the 2012 Farm Bill, one of the questions relates to which programs are likely to make it into the new bill and which are vulnerable. The answer as to the vulnerability of various programs depends upon who is talking and what part of the country they live in. The list of programs under discussion are fairly constant: crop/revenue insurance, direct payments, ACRE, the marketing loan program, and the counter-cyclical payment program.
The marketing loan program—including loan deficiency payments and marketing loan gains—and the counter-cyclical payment program may remain in the legislation out of inertia. But, they are seen to be largely ineffective because the trigger levels for both are now well below the cost of production and prices are significantly above levels where payments would be made.
Despite the hoopla surrounding the ACRE program, for whatever reason the sign-up levels have been well below expectations. Even among corn growers where the support was the greatest during the last farm bill debate, sign-ups have been weak.
(February 17, 2009) - Major changes in crop programs are usually accompanied by uncertainty on the part of farmers. The late passage of the 1996 Farm Bill and its radically new provisions had farmers scratching their heads as they struggled to understand AMTA payments (Agricultural Market Transition Act) and the Marketing Loan Program with its Loan Deficiency Payments and Marketing Loan Gain provisions.
By way of contrast, farm bills, like the 2002 legislation, that make only incremental changes are taken in stride. Farmers, along with their bankers and CPAs, know what to expect and the uncertainty is low.
The 2008 Farm Bill included a new program ACRE (Average Crop Revenue Election) that would reduce Direct Payments (by 20%), replace the Counter-Cyclical Payment program, and lower the rate for marketing loan payments (by 30%). Farmers must decide whether to switch to the ACRE program or continue to use the current set of payment programs.