ACGA Goes for More CRP, FOR Reactivation

April 30, 2001

The American Corn Growers Association (ACGA) told the House Agriculture Committee to increase the statutory acreage cap for the Conservation Reserve Program (CRP) from 36.4 million acres to at least 40 million acres. Their farm bill proposal also would allow the Secretary of Agriculture to reinstate the Farmer Owned Reserve and provide for addition grain reserves for the nation's strategic energy needs, such as ethanol and bio-diesel.

Calling their proposal "The Family Farm Agriculture Recovery and Maintenance Act (F.A.R.M. Act) ACGA President Keith Kittrich of Tilden, NE, said it is a long-term plan designed to benefit farmers. "This formal proposal follows more than 18 months of grassroots development by ACGA, thorough analysis of 25 years of historic data and expert analysis by the Agricultural Policy Analysis Center at the University of Tennessee."

The F.A.R.M. Act would retain many of the current farm bill components including planting flexibility and non-recourse marketing assistance. The Secretary also could implement a voluntary, flexible fallow, supply management program based on a producer's establish tillable acreage base.

Dittrich said, "The F.A.R.M. Act would not rely on Agriculture Marketing Transition Act (AMTA) payments, which are currently paid to individuals based on antiquated yield histories from the early 1980s and planting histories from the early 1990s, nor the unpredictability of supplemental AMTA payments. ACGA believes program dollars should go into the pocket of the farmers who grow the crops through increased loan rates, not through direct payments that artificially increase land rental and land values.

In exchange, the F.A.R.M. Act would enhance the marketing assistance loan rate "to more equitably reflect" declines in farmer's buying power because of inflation as well as increases in productivity. The estimated loan rate for corn under the plan would be about $3.15 per bushel. This compares to the current five-year average (adjusted for inflation) effective safety net for corn (loan rate plus AMTA payments) of $2.62 per bushel. This figure compares closely to the target price of $3.03 farmers had as far back as the mid- 1980's, it is very close to USDA's current cost of production estimates, and it is slightly less than the average farm price during 1996, the first year of Freedom to Farm, according to ACGA.

In order to encourage more competition from the commodity-buying sector of the industry, the loan deficiency payment (LDP) option under the current marketing assistance loan program also would be eliminated under the plan, but farmers would have the full protection of the new loan rate.

For a thorough explanation of the bill, the historic data used in its development and the full congressional testimony, visit the ACGA web site at www.ACGA.org.