Senate Agriculture Committee Chairwoman Debbie Stabenow is circulating some ideas for farm program reforms that include an increase in effective reference prices that would benefit all commodities, plus an unspecified improvement in marketing loans.
In a letter sent to Senate colleagues Wednesday and obtained by Agri-Pulse, the Michigan Democrat also reiterated her interest in increasing premium subsidies for area-based crop insurance policies along the lines of the Stacked Income Protection Plan, or STAX, that is currently available only to cotton growers.
Stabenow has so far said little about addressing the reference prices in the Price Loss Coverage program that many farm groups say are too low to protect them against revenue losses due to inflation in input costs.
PLC provides payments to growers when the average market price for a commodity falls below the reference price in any given year.
Without providing any detail, Stabenow signaled a willingness to address an escalator provision, added by the 2018 farm bill, that allows the reference price to rise as much as 15% above the statutory reference price in years after market prices have increased substantially. That increased reference price is known as the effective reference price.
In her letter, Stabenow noted that “under existing law half of the program crops and more than 90 percent of the program acres are going to see an automatic 10-15% increase in their reference price over the next few years.”
But she added, without elaborating, “I am open to proposals that would make sure every covered commodity receives an increase under an ‘effective reference price.’”
Similarly, she said lawmakers could address challenges facing farmers by “improving marketing assistance loans, which provide timely assistance through a price floor, and ensure access to affordable credit and other financing tools to help farms facing high interest rates.”
She said that “instead of spreading taxpayer dollars to investors and absentee landlords, who often capture benefits under the existing programs, the new Farm Bill should use the tools that directly target assistance to the farmers bearing these risks.”
Farmers can use USDA marketing loans to avoid selling a crop until they think market prices will improve, or if prices are very low they can claim a “loan deficiency payment” for the difference between the market price for their crop and the loan rate.
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The loan rates are far too low for most commodities for farmers to claim LDPs. The current loan rate for corn is $2.20 a bushel, well below the PLC reference price of $3.70. The loan rates for soybeans and wheat are $6.20 and $3.38 a bushel respectively.
Some economists are projecting that many farmers will be losing money this year even though commodity prices are likely to stay above the levels that trigger PLC payments.
Stabenow opened the letter by laying out her five principles for “modernizing” the farm safety net: “Programs must be targeted to active farmers; we need to provide farmers choices and flexibility; assistance should be timely; we need to expand the reach of programs to help more farmers; and we need to address the emerging risks farmers face.”
The STAX insurance policy that Stabenow wants to expand allows farmers to insure 75% to 90% of their county’s expected revenue, with the government picking up 80% of the premium.
“The next Farm Bill should give a similar option to all commodities,” Stabenow wrote.
She added, “The committee can also continue to expand crop insurance options to more specialty crop and livestock producers while making crop insurance more affordable for beginning farmers. This means improving and streamlining policies like the Whole Farm Revenue Protection and Micro Farm Insurance programs to help small and diversified farmers.
“But it also means making sure there are agents and companies marketing the improved options in the places and communities where there is unmet need. We need to make sure USDA has the right tools to step in if farmers or agents are being denied or discouraged from certain insurance products.”
She reiterated her opposition to cutting the Supplemental Nutrition Assistance Program or Inflation Reduction Act conservation spending to bolster other titles of the farm bill.
There won’t be bipartisan support for improvements to commodity programs or crop insurance “if they are paid for by taking money from nutrition programs which help more than 44 million Americans struggling with hunger, or from popular conservation programs, when the climate crisis is hitting farmers’ bottom lines every day,” she wrote.
Stabenow, who isn't running for re-election this year, closed the letter by saying, "This may be my last Farm Bill, but it’s not my first. If we’re going to get a Farm Bill done this spring to keep farmers farming, it’s time to get serious."
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