Debate in Washington over Payment
Limits for Farmers and Ranchers

February 13, 2003


A great amount of debate has taken place recently in Washington, Texas and all of rural America regarding the amendment adopted by the U.S. Senate to establish new payment limits for farmers and ranchers, and to eliminate farm payments to non-farmers. The passage of the amendment has raised the ire of many Texas producers, who believe that without unlimited government assistance they will not be able to continue to farm.

While the National Farmers Union supported the payment limit amendment in the Senate, it was only because numerous attempts to address the real problems adversely impacting farmers were defeated or ignored. Government payments and limitations theron, are not the ultimate answer to producer's economic problems, the price of our commodities is the problem, and that is where NFU has focused its efforts.

U.S. agriculture policy should be designed to allow farmers and ranchers to obtain their income from the market not the government, by giving them the tools to address low prices, overproduction and inadequate demand. We cannot, however, continue full production during periods of inadequate demand and expect to get a decent price from the market. Something has to change, and we have been trying to change it.

We have advocated allowing farmers and ranchers to receive increased safety net protection if they agreed to voluntarily reduce production. In addition we proposed re-instating the Farmer Owned Reserve program, creating a new renewable energy reserve made up of farm-grown crops that can be used to manufacture energy; and we advocated a humanitarian food reserve to ensure a steady supply to those who are hungry and ill-fed. All of these tools could have helped increase market prices to levels where farmers would be less reliant upon federal program payments.

Farmers Union recognized long ago that Freedom to Farm would ruin rural America. We advised against its passage, and have been the most consistent and longest advocates for its change since it became law. Because of the failed policies and promises of Freedom to Farm, we have watched farm commodity prices plummeted to decades-old levels.

In 1996, when F-2-F was enacted the average price received by cotton producers was $75.40 per hundredweight. For rice, wheat, soybeans, and corn respectively, the prices received were $9.15 per hundredweight, $4.55 per bushel, $6.72 per bushel, and $3.24 per bushel. Today, those same commodities are bringing approximately 45 to 80 percent of those amounts. The average cotton price has averaged $32.40 per hundredweight over the last five months. Rice prices are projected to average $4.25 per hundredweight during the current marketing year and wheat, soybeans and corn are projected to average $2.80, $4.30 and $2.00 per bushel respectively.

Because of the serious price declines, NFU led the effort to obtain emergency economic assistance in 1998, and when Congress provided less than was needed, NFU led the effort to get President Clinton to veto the Congressional package, which caused Congress to double the amount to farmers in 1998. Again, in 1999, 2000 and 2001 NFU was at the forefront in urging Congress to pass additional emergency economic assistance. It is important for producers to remember that the emergency economic assistance provided from 1998 through 2001 was not part of Freedom To Farm.

We make no apologies for our efforts to secure larger payments to producers over the past 4 years. We did so because Congress refused to make the necessary changes in farm policy to improve market prices, and this was the only way for farmers and ranchers to survive during this period of extremely low commodity prices.

The three most important issues farmers and ranchers are facing are price, price, and price! Until policy makers understand the fundamental reason for low prices (i.e., full production) then unintended consequences such as restrictive payment limits will continue to be relevant issues if we are to continue to expect support for agriculture in a Congress dominated by members with little direct connection to farming.

Given the adverse publicity farm programs have received over the past few months, it is not surprising to see Congress act on the matter. When policymakers read daily stories regarding non-farmers receiving payments, such as billionaires, sports stars, universities and Fortune 500 companies; or individuals receiving approximately $40 million over the past five years, then it does not take a rocket scientist to figure out changes will be forth coming. The lack of support for addressing these problems in a responsible way has created a black eye for all farmers, including hard-working family farmers. Payments to non-farmers have jeopardized all farm programs. Many in agriculture decided the best approach to this issue was to ignore the problem, and chose not to take positive steps to reconcile obvious problems. This is a serious mistake in both the short-term and long-term. The Bush administration has stated that a structure of farm programs which provides support on every bushel or pound of production leads to overproduction and lower prices, driving greater concentration and higher farm program costs.

It is true that some Texas producers could be impacted by the payment limitation proposal, but only if the Senate amendment becomes part of the final language approved by the House/Senate Conference Committee, the Full House of Representatives, The Senate, and signed into law by President George W. Bush. Therefore, there are numerous steps in the process that allow for modification of the amendment or its elimination before the provision becomes law.

It is not too late for policymakers to make the changes necessary to address the real problem of low prices resulting from full production. No business in the world can continually out-produce the demand for its product without affecting the price that it is going to receive. Agriculture is no different. We can and must do better. A farm policy that must increasingly rely on government payments for the bulk of farm income is not sustainable. Restoring the tools to allow farmers to receive their income from the market is better for farmers, rural communities and American taxpayers. This is the goal of Farmers Union.

Texas Farmers Union, P.O. Box 738, Sweetwater, Tx 79556