Your Congressman this week will be debating the House version of the 2007 Farm Bill, as will every other member of the House of Representatives. Their constituents all have a stake in the Farm Bill, whether they farm, drive a car, eat, or pay taxes, and that is just about everyone. When the debate ends on Thursday, the Farm Bill will be half way home, only waiting for the Senate to do the same thing after Labor Day. Have you called your Member of Congress about the issues, or don’t you know what is proposed that will impact Cornbelt agriculture?

The House Agriculture Committee proposed 2007 Farm Bill begins with the 2008 crop and expires after the 2012 crop. The $299 billion cost averages about $60 billion per year, down from $90+ billion in the early years of the 2002 legislation. Beyond the $299 billion, there could be an additional $4 billion available for nutrition, $2.5 billion for energy, and $1.6 billion for specialty crop promotion. There is no funding for a permanent disaster aid program.

New farm program payment limits are proposed that were a trade off for the additional funding. If you have more than $1 million in adjusted gross income, you will not get any farm program payments, and 2/3 of your income must be from agriculture, or you will not get any payments if your adjusted gross income exceeds $500,000. Additionally, the three entity rule is eliminated, meaning payments will not be allowed to a person under additional family corporations or partnerships. Counter-cyclical payments are capped at $65,000, Direct payment caps rise from $40,000 to $60,000, generic certificates are eliminated, but there are no caps on LDP’s or marketing loans.

Something new is a choice that will be given for farmers to receive either a price triggered Counter-cyclical payment or a revenue Counter-cyclical payment, and the choice must last for the entire 5 years. A national per acre revenue target would be set at
$344.12 for corn, $231.87 for soybeans, and $149.92 for wheat. Payment per acre yields would be 114.4 bushels for corn, 34.1 bushels for soybeans, and 36.1 bushels for wheat. Additionally, target prices were rebalanced: Corn: $2.63 (unchanged), soybeans $6.10 (up 30¢), and wheat $4.15 (up 23¢). Loan rates are proposed at $1.95 for corn (unchanged), $5.00 for soybeans (unchanged), and $2.94 for wheat (up 19¢).

Conservation programs have some revisions. Conservation payments are capped at $60,000 for one program and $125,000 for multiple programs. The CRP continues with 39.2 million acres maximum, but contracts can be modified if a retiring landowner is transitioning to a beginning farmer. The WRP would extend through 2012, with maximum acreage at 3.6 million acres, and USDA must use fair market value for evaluating appraisals for payments. The CSP contracts will have more funding and is simplified with replacement of the 3-tiered program with an annual stewardship payment. Additionally, the CSP will be applied in more geographic areas. EQIP funding rises to $2 billion by 2012, but 60% remains for livestock production.

Energy funding includes $2 billion in loan guarantees for biorefineries and $500 million for rural energy improvements. Another $1.5 billion is allocated for incentives for biofuels production. Another program creates 5-year contracts for producers to encourage biomass production for biofuel refineries.

Other provisions:
1) Restrictions are developed against the use of arbitration in production contracts and the USDA is authorized to better control the dispute settlement process.
2) Biofuels plants receiving federal grants must pay prevailing wages for construction laborers.
3) An incentive program is created, but unfunded, for oilseed producers to grow low trans-fat oilseeds.
4) Subsidy checks under $25 would not be written, and anyone convicted of defrauding the USDA would be prevented from program participation.
5) FSA and NRCS offices could not close or relocate within a year after enactment of the legislation.
6) A non-binding attempt was made to protect manure from being declared a hazardous waste and subject to EPA superfund regulations.
7) There will be coordination of federally funded agricultural research, similar to the National Institutes of Health, with competitive grants for research.
8) Group crop insurance policies could be obtained in addition to individual crop and revenue policies.
9) Country of Origin Labeling (COOL) is established for implementation 10/1/08 and would label meat as being US raised and slaughtered, or completely of foreign origin, or a blend of domestic and foreign. Fruits and vegetables are not included.

Summary:
Cornbelt agriculture would still be productive under the proposed House Farm Bill, however, some farm operations would notice some financial impact as the result of payment limitations. Other operations would notice increased funding from some payments. Farm operators will need to study the ramifications of having to make a choice between a price-triggered counter-cyclical payment, and one that is triggered by revenue. Extension educators should be consulted for assistance, once program details are published, if the House provision becomes law. If farmers have problems with any of the proposals, Members of Congress should be contacted before this week's debate.