Glickman Questions Payment Rate Scheme

September 27, 1999

Agriculture Secretary Dan Glickman questions the way Congress is considering paying farmers under a relief provision included in the agricultural appropriations bill. He claims some payments will be made on acres not planted this year.

Using market transition payments under the 1996 farm law as the basis for relief payments this year will mean some farmers will be paid for acres not planted, says Glickman. The payments should be targeted at this year's losses, he adds.

For example, he notes, wheat payments would be made on 15 million acres not planted to wheat this year and on more than 300,000 acres of rice just in Texas that are subject to market transition payments but not planted to rice this year.

"Is it right to provide an income loss payments on acres not planted?" he asks. That kind of loss assistance, he adds, "doesn't target the losses."

There is an argument that favors using transition payments as a method of getting the money to farmers quickly, Glickman says, but the speed of the payments isn't as important as spending money where it isn't justified.

And USDA "learned a lot from last year" when disaster payments were delayed for months. "We can get the payments out pretty fast anywhere," says Glickman. He's working with the conference committee appropriators to get the payments better targeted.

However, he also said livestock feed assistance needs money from the appropriations bill, and there's not enough money in the appropriations bills to meet the credit needs of farmers who seek USDA-guaranteed loans.

He wouldn't say if he'd recommend a veto of the appropriations bill if Congress ignored his quest for targeting or even if a controversial milk pricing bill was included. Earlier Glickman said he would recommend a veto of the dairy bill but implied that would happen only if the bill went separately to the White House for President Clinton's signature.

Although Glickman is correct that transition payments can be made on acres not planted to the original crop, the reason is the planting flexibility in the 1996 farm bill which both Republicans and Democrats have generally favored. Under pre-1996 farm policy, farmers got deficiency payments only on acres actually planted to a particular crop.

Congress and many farm groups felt this system encouraged surplus production because farmers produced for the government payment, not the market. Returning to such a system for the emergency payments could raise some of the same concerns, especially if farmers expected the payments to be repeated next year and make 2000 planting decisions accordingly. In addition, that kind of payment scheme could cause the United States to reach or exceed its maximum allowable subsidy payments under world trade rules, whereas using the transition payment mechanism may not count against the limits.