Assessing ARC and PLC

WASHINGTON (DTN) -- Farmers who lead commodity groups asked the House Agriculture General Farm Commodities and Risk Management Subcommittee on Tuesday to continue the commodity programs in the 2014 farm bill, but to make the benefits more generous to help counter commodity prices that are lower than when the last bill was written.

The complication for Congress in making these tweaks is that each commodity wants a slightly different fix, and all would cost more money.

The leaders of the corn, soybean, wheat, barley and sorghum growers said crop insurance remains their No. 1 priority, but that the commodity programs also are needed in times of economic difficulty.

Ron Moore, president of the American Soybean Association, said that in his view, the 2014 farm bill is not working, but in an interview afterward said he meant it is not working for the commodities dairy or cotton until those programs are tweaked and some changes are made to the way the Risk Management Agency handles data for crop insurance.

"We need to make those adjustments," Moore said. "We have no intention of starting over with a new farm bill. The foundation is there."

Rep. Rick Crawford, R-Ark., the chairman of the subcommittee, noted at the end of the hearing that the general consensus of the panel had been to make tweaks to the programs.

"We are not going to achieve perfection," Crawford said.

In his testimony, Moore emphasized that soybean growers maintain, as they did in 2014, that the "decoupling" of payments from current-year planting "is critical to encouraging farmers to base their planting decisions on market signals rather than on an expectation that a particular crop will receive a government payment."

Moore also said that requiring farmers to practice conservation in order to get crop insurance helps soybean farmers make a case to foreign buyers that U.S. soybeans are grown in a sustainable manner.

Wesley Spurlock, president of the National Association of Corn Growers, noted that 94% of corn farmers had signed up for the Agriculture Risk Coverage program, with the remaining 6% enrolled in the Price Loss Coverage. But if crop prices remain low, the value of the ARC payments will go down.

A provision in ARC using an Olympic average, which takes out the highest and lowest years, had worked, but now all the years will have low prices. There may be a need to "change the formula" for ARC, Spurlock said, but he declined to offer suggestions on how it should be changed.

Rep. Frank Lucas, R-Okla., who favored the PLC program when he chaired the committee in 2014, noted that proponents of ARC argued that it was "free-market" oriented and asked whether it would still be a free-market program if benefits are changed.

"That is an affectionate question," Lucas said with a smile.

He also asked whether it was worth putting more money into ARC or whether it would be better to emphasize PLC.

But Spurlock said farmers would still want a choice between the two programs.

House Agriculture Committee Chairman Michael Conaway, R-Texas, asked if the farm bill should be geared toward helping younger farmers who have not built up equity, but Spurlock said the bill should treat all growers equally, and that if the programs work for all farmers, the older generation "can bring the next generation in."

David Schemm, president of the National Association of Wheat Growers, said the wheat farmers believe that the ARC "formula" needs to be changed and that the PLC reference price needs to be set at a level that provides a sufficient safety net when prices are "perpetually low."

Dan Atkisson, chairman of the National Sorghum Producers Legislative Committee, testified that sorghum producers are calling for a long list of tweaks to the ARC, PLC and crop insurance programs.

Peter Friederichs, president of the National Barley Growers Association, said the countercyclical nature of the 2014 farm bill "is working as intended in barley's case, but that the late delivery of farm program payments is making it difficult to get operating loans."

In a day of detailed testimony on the commodity title programs, Friederichs ended his statements by noting that, after declines in barley production for most of the last two decades, barley growers have entered a partnership with the malting and beer industries -- both large and small craft brewers -- to ensure an adequate supply of good-quality malt barley is grown.

"As the brewers know very well -- without barley, you have no beer. No barley -- no beer."

When it was time for Rep. Jodey Arrington, R-Texas, he said, "I thought getting cotton back into the farm bill was the greatest challenge until I heard the 'no barley no beer' comments."

(CC/AG)

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