December 11, 2001
The Honorable Tom Harkin
United States Senate
Washington, DC 20510
Dear Mr. Chairman:
The organizations listed below represent a significant majority of the production of grains, oilseeds and fiber in the United States. We are writing to urge you and your colleagues to oppose amendments to new farm legislation, which would further reduce limitations on farm program benefits below levels included in the Committee’s bill (S. 1731). In testimony presented to Congress concerning new farm legislation virtually every commodity and farm organization opposed payment limitations.
One of the primary objectives of new farm legislation is to improve the financial safety net available to farmers and to eliminate the need for annual emergency assistance packages. If limitations on benefits are made more restrictive than those in S. 1731, a significant number of farmers will not benefit from the improved safety net. Simply stated, payment limits bite hardest when commodity prices are lowest. The addition of new crops to the list of those eligible for fixed and counter-cyclical payments will mean even more producers are adversely affected by new limitations.
Proponents of tighter, more restrictive limitations will argue that farm programs cause farmers to enlarge their operations and that a few are receiving most of the benefits. Farmers expand in order to achieve economy of scale and to be competitive in domestic and international markets. Randomly established limitations and increased regulatory burdens do not promote efficiency or competitiveness, but they do increase costs and increase the workload for USDA employees.
Please consider the following:
- In the 1996 farm bill Congress reduced limitations on direct payments from $50,000 to $40,000; Congress established a comparable limit on emergency assistance payments authorized in recent years.
- Congress enacted legislation requiring program participants to meet actively-engaged-in-farming rules and established the 3-entity rule to further limit benefits.
- Limitations apply on a cumulative basis to all crops produced on the farm; S. 1731 adds several new crops, including oilseeds, to the list of program eligible commodities and it establishes a new counter-cyclical program for times when prices are low; it would be counter-productive to add crops and safety-net programs and simultaneously reduce the availability of those benefits to farmers.
- Marketing loans are designed to encourage producers to aggressively market crops; limitations on the operation of the marketing loan would contradict its primary objective; there was no limit on the marketing loan program in 1985; since then Congress has reduced the limit to $200,000 (for all crops) and then to $75,000 before temporarily increasing the limit to $150,000 in recent years to ensure that the program could achieve it’s objectives in times of extraordinarily low prices.
- Recent statistics released by environmental groups overstate payments by aggregating 5 years of data and failing to account for the sharing of those payments to individuals in families and corporations listed as recipients.
The limitations in S. 1731 on direct payments, new counter-cyclical payments and marketing loan gains are not insignificant. Further, the regulations requiring recipients to meet actively engaged criteria remain in place and are enforced by the Department of Agriculture.
We urge the Senate not to impose additional limitations or eligibility restrictions on the financial assistance so critical to producers who face increasing costs and historically low prices.
Thank you for your consideration of our views.
Alabama Farmers’ Federation
American Farm Bureau Federation
American Soybean Association
Agricultural Retailers Association
National Association of Wheat Growers
National Barley Growers Association
National Corn Growers Association
National Cotton Council
National Grain Sorghum Producers Federation
National Sunflower Association
Rice Millers’ Association
Southern Peanut Farmers Federation
US Canola Association
US Rice Producers Association
US Rice Producers Group