Wheat Producers Table Farm Bill Hopes

February 8, 2001

After a year and a half of working, wheat producers have come up with a "sound federal policy" they hope will be adopted as part of the next farm law. The National Association of Wheat Growers' plan involves "five simple principles."

-–"Do no harm": NAWG continues to support the market-oriented approach put into place by the 1996 FAIR Act. Accordingly, NAWG does not support any form of mandatory set asides, an expansion of the Conservation Reserve Program, the establishment of a farmer owned reserve or other similar proposals that seek to undo "Freedom to Farm" or limit farmer flexibility.

-–"Secure the base": Wheat producers "realize that securing a guaranteed base payment, similar to the 1996 FAIR Act's AMTA system, is important to their ability to secure operating capital," says NAWG. Accordingly, NAWG believes that a "food security payment" equal to the 1999 AMTA support level "must be the cornerstone of the next farm bill." Payments should be based upon historical base and made available to all traditional farm program crops (i.e., those currently receiving AMTA payments and oilseeds), according to NAWG.

--Improve the marketing loan: NAWG believes that the non-recourse marketing loan must remain an essential part of the federal support for agriculture. NAWG supports continuing the marketing loan program, and LDPs, with only minor changes. Also NAWG "strongly believes" that the cap on the wheat marketing loan must be increased to $3.15 and that a floor be established at $2.60. Furthermore, NAWG believes that loan rates across commodities should be made more equitable.

--A counter-cyclical payment: Wheat producers continue to feel that the "missing element" in the 1996 FAIR Act remains the need for an additional counter-cyclical element. This deficiency has been made up in recent years through emergency funding of market loss assistance payments. NAWG proposes that in addition to current farm programs, a market loss support program be implemented "to make this emergency spending unnecessary."

Under the NAWG plan, a wheat market support level would be established at $4.25 per bushel as applied to historical base acres and yields. Similar market support levels would be established for other eligible crops. The payment would be calculated by subtracting the average food security payment (equal to the 1999 AMTA payment or $0.64 for wheat) and the higher of either the national average marketing loan level or the national average yearly price from the market support level.

In this wheat example, a $0.64 payment and a $2.60 loan would be subtracted from the $4.25 market support level, leaving a market support payment of $1.01. However, should the average price of wheat rise above $2.60, the amount of payments would decline.

NAWG also listed issues "that cannot wait to be addressed by the farm bill and should be acted upon early this year": increasing the USDA budget baseline; freezing the remaining AMTA payments at the 1999 level; creating an additional AMTA payment for the last year of the current bill; making the payment in lieu of an LDP on grazed-out acres permanent and authorizing an $0.81 market loss assistance payment.