Jan 31, 2007
Johanns Announces Farm Bill Proposal

If recent USDA proposals make it into the 2007 Farm Bill, fruit and vegetable growers may see some of the money that’s been allocated for program crops in the past.

USDA Secretary Mike Johanns presented the Farm Bill proposals during a Jan. 31 Webcast. If adopted by Congress, the total expenditures over the scheduled 10 years would be more than $618 billion. Johanns said the 2007 Farm Bill would save about $10 billion more than the 2002 Farm Bill while providing $5 billion more than would have been available if the 2002 bill were extended.

Overall, specialty crops account for nearly 50 percent of domestic farm-gate crop value, but receive very little consideration in the current Farm Bill,” said John Keeling, executive vice president and CEO of the National Potato Council and co-chair of the Specialty Crop Farm Bill Alliance. “We believe the administration’s Farm Bill proposals begin to focus the appropriate attention on specialty crops, and emphasize the importance of these crops to the economic wellbeing of U.S. agriculture.”

The direct payments for commodities will be increased under the proposal, and will include a number of programs specifically for specialty crops. Program crop growers also would be able to grow specialty crops without affecting their federal subsidies, which has not been allowed since 1985 and is a provision the specialty crop industry would prefer to keep.

“We are disappointed that the department felt compelled to remove the primary safety net for U.S. fruit and vegetable producers by eliminating the planting flexibility law that has been in effect since 1985,” said Robert Guenther, senior vice president of public policy for United Fresh Produce Association. “We feel it is premature to make this type of broad policy decision in light of the fact that WTO has not required the U.S. government to do anything at this time. To many, it looks like they have raised the white flag before the fight has ever begun. Most concerning is that they have thrown open the ability to have subsidized farmers compete against unsubsidized fruit and vegetable producers across the country.”

Johanns said the Farm Bill was a “wise federal investment” and could make the case in any city – regardless of the amount of agriculture in the area – that the money spent was a good use of taxpayer dollars.

“These proposals are more equitable distribution. They’re better able to withstand challenge. These proposals transition toward market-based programs and away from programs tied to price or production,” Johanns said. “And of course, most important, we have to keep that support amongst the people that pay the bills – the taxpayers.”

The proposal includes $2.75 billion for food assistance programs to use on fruit and vegetables, $500 million to increase fruit and vegetable purchases in schools and $250 million for the Market Access Program, targeted at non-program crops.

The commodity proposals include a change to payment limits. Producers in the top 2.3 percent of Americans in terms of income level would no longer be eligible for payments.

“Basically, the way this works is we’re taking a different approach to payment levels from what you’ve seen in the past,” Johanns said. “We’re basically saying this: If you have an adjusted gross income of $200,000 or more, your participation in the commodity programs of Title 1 of the Farm Bill would cease.”

Johanns said the proposal does away with the “three entity rule.” Under the proposal, a grower could receive payments from any number of entities, but is limited by the $200,000 adjusted gross income cutoff and a payment level of $360,000. The change would save about $1.5 billion, Johanns said.

Changes to the safety net are being presented to Congress that would be counter-cyclical and based on revenue. In past years, payouts have been highest when growers are doing well, and lower during bad years. That’s because the safety net was based on commodity prices and not grower revenues.

“The price trigger is going to deal people out of the safety net when they need it most,” Johanns said.

The changes to the Farm Bill are compliant with the WTO cotton case, Johanns said, because they are not tied to price and production.

Some of the highlights of the USDA proposal are:

• $1 billion provision for specialty crop research, with emphasis on advanced plant genomics and genetics

• $20 million for international sanitary and phytosanitary issues

• Specialty crop technical assistance grants increased by $68 million, with the award cap raised to $500,000

• Conservation funding increased to $7.8 billion and the creation of new Environmental Quality Incentives and Regional Water programs

• $1.6 billion to fund renewable energy research, development and production – with an emphasis on ethanol
Wetlands Reserve Program funding increased by $2.3 billion and the enrollment cap raised from 2.3 million acres to 3.5 million acres.”

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