October 21, 2014

Farm Credit CEO talks drought, interest rates & land prices

This year’s drought has had some devastating consequences. But, Farm Credit Services of America President and Chief Executive Officer Doug Stark says there is a positive side when it comes to the safety net crop producers have through crop insurance. Stark says between the crop that farmers did produce, higher prices and a strong crop insurance program, most producers are coming through the drought in good financial shape.

Stark says that unfortunately though, crop insurance doesn’t cover all producers. For example, livestock producers have taken a hit because of the shorter crop with higher feed costs. But Stark says they are still coming through the situation financially well.


Another growing concern across farm country this year has been farmland prices. Stark says fortunately, on the farm side of things, producers have the equity and cash to put into land. Stark says producers are being very responsible, even though they are paying higher prices for land.


Also, Stark says that agriculture is benefiting from the feds pushing down interest rates to stimulate the economy.


With drought being a key issue in agriculture, Stark says locking in interest rates and reserving some working capital are important…


Stark says the Farm Credit system is in good shape and ready to help producers deal with the many situations coming their way.


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Senate processing 250+ amendments to farm bill

The Senate 2012 Farm Bill draft is still being negotiated, as leaders hope to gain approval to move forward with the bill very soon. More than 250 amendments have been filed for the bill to date, and Chairwoman Debbie Stabenow and Ag Committee Ranking Member Pat Roberts feel the pressure to find a way to process the amendments in a timely fashion.

Senate Majority Leader Harry Reid allowed Senators this week to begin debate on several controversial amendments, including on the sugar program, SNAP funding and conservation programs.

Meanwhile, agriculture, conservation and environmental groups have been keeping a close eye on the bill and its amendments, weighing in with their thoughts on each.

An amendment from Sen. Jim DeMint would convert all mandatory agricultural spending to discretionary spending subject to annual appropriations, which would have broad effects on crop insurance, conservation and food stamp programs.

An amendment from Sens. Tom Coburn and Dick Durbin threatens to weaken the crop insurance program by instituting the first-ever means test for participation through an adjusted gross income (AGI) limit.

A separate amendment, from Sens. Jeanne Shaheen and Patrick Toomey would limit crop insurance subsidy premiums to $40,000 per producer, which would dramatically reduce the number of row crop acres covered under the crop insurance program.

Some ag groups wrote Senators Thursday opposing any amendment that will limit producers’ participation in crop insurance, including efforts to impose means testing and limit premium support, as well as those that threaten efficient and effective private sector delivery.Source: CornCommentary.com

The groups said the proposed changes would threaten the program’s actuarial soundness and could render it ineffective as the primary safety net for most crop producers.

A separate amendment has been filed by Coburn to dramatically reduce funding and restrict activities under the Market Access Program (MAP), which is a farmer-government cost share program used by the wheat industry and other commodity groups to promote their products overseas.

A group of ag organizations also wrote Senators on Thursday to urge their opposition to any such amendment, noting that MAP supports U.S. ag exports, one of few areas of the economy that has shown growth in recent years. Studies show the program has repeatedly delivered strong returns on investment of up to 35 to 1.

The National Association of Wheat Growers is actively supporting an amendment, from Sens. Kay Hagan and Mike Crapo, to add the provisions of H.R. 872 to the Senate farm bill legislation. That amendment would clarify pesticide permitting requirements under the Clean Water Act, which were muddied by a 2009 Supreme Court ruling.

Two additional amendments that would directly and significantly affect the safety net portions of the Senate’s farm bill were filed late Thursday.

The first, from Sen. Kent Conrad, would continue the countercyclical program with updated pricing and payment structures, with offsets from modifying the T-yield used in crop insurance calculations as outlined in the farm bill draft passed by the Senate Agriculture Committee.

A second, from Conrad and Sen. Max Baucus, would limit the speed at which the price portion of the revenue calculation in the Senate bill’s Ag Risk Coverage (ARC) program could decline.

Source: NAWG

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Crop insurance importance recognized at Senate Ag Committee farm bill hearing

The Senate Ag Committee renewed the farm bill debate with a hearing on Capitol Hill earlier today. Lawmakers are trying to craft a farm bill under tight budget conditions – without compromising the safety net.

The compromise farm bill drafted by Senate Ag Committee Chairwoman Debbie Stabenow and House Ag Committee Chairman Frank Lucas reached last year during the Super Committee process would have cut spending while creating a whole new subsidy to protect farmers when their revenue drops.

Most lawmakers during today’s hearing stressed the importance that crop insurance will have as a cornerstone in the new farm bill’s safety net.

Nebraska Senator Mike Johanns says that crop insurance seems to be quite important to producers.

Senator Johanns

And North Dakota Senator John Hoeven says there is a lot to work do in the area.

Senator Hoeven

Agriculture Secretary Tom Vilsack was a witness in the first panel for today’s hearing. He echoed the importance as well.

Ag Secretary Vilsack 1

President Barack Obama’s called for the elimination of direct payments in his budget proposal Monday, which put forth a $32 billion cut in farm programs.

And many Farm-state lawmakers have already said they will support eliminating some subsidies and programs in the bill. But, Vilsack says important areas of the farm bill need to be safeguarded – like programs that assist beginning farmers. And he also addressed the issue of estate taxes.

Ag Secretary Vilsack 2

Minnesota Representative Collin Peterson, the top Democrat on the House Agriculture Committee, warns that Congress shouldn’t get too confident about cutting farm programs. He says “There are a lot of land mines and we just have to see how it plays out.” If the agriculture economy crashes, he says, “There isn’t going to be any money to bail anybody out.”

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