Farm Bill expected to stabilize agriculture in Mississippi

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Published: September 23,2002

While the 2002 Farm Bill has been criticized as a “budget buster,” agricultural representatives in Mississippi are pleased with the bill that they say stands to bring stability to the state’s number one industry.

“The 2002 Farm Bill was a long time in the making by our congressional delegation, but the end results will be more than worth the wait,” said Lester Spell Jr., commissioner, Mississippi Department of Agriculture and Commerce. “Legislation of this importance just does not happen overnight and its impact on Mississippi, a state whose economy is greatly dependent on success on the farm, stands to benefit greatly.”

As to criticism about the cost of the Farm Bill, Spell said it was crafted to remain within the budget. While figures vary, it is estimated that only 1% of the budget goes directly to the farm policies included in the legislation. Spell said a significant portion of that goes to the school lunch program and similar programs.

“And what do we get in return?” Spell asks. “With little argument, most would say the most diverse, the cheapest, and the safest food supply in the world. The average American still spends less than 10% of his income on food, in a world where in most countries people spend much more — 15%, 25%, even 35% of their incomes on sustenance.”

Spell said the intent of the legislation is to:

• Stabilize farm gate prices with its counter-cyclical payments provisions, direct payments and marketing loans.

• Shore up conservation efforts by increasing funding for a variety of programs with good track records. Conservation funding is up 80%.

• Encourage innovation in value-added agricultural programs.

• Secure the future of production agriculture, which will help to insure homeland security by preventing dependency of foreign production.

• Provide a safety net to commercial financial institutions and farm credit organizations by providing a target price on certain commodities.

The legislation also addresses the controversy over labeling some foreign fish as “catfish,” by requiring the USDA to phase in a program requiring “country of origin” labeling on food products, much like that presently required for many other goods. “The public will have a better chance of being informed and then making its choice as to what product to buy,” Spell said.

Mike Pepper, director, governmental relations department, Mississippi Farm Bureau, said the passage of a good farm bill was particularly important with farmers facing the fifth year of record low prices and the lowest real net cash income since the Great Depression.

“Without a doubt, this farm bill is an investment in farmers and the rural communities where they reside,” Pepper said. “The new Farm Bill will provide producers with an improved safety net during times of low commodity prices through its combination of a counter-cyclical payment, a direct payment and a marketing loan to help prevent the need for government to provide emergency economic assistance.”

Pepper said the next step is that each sector of agriculture will analyze what exactly is in the bill, and the impact it will have on the industry. “The USDA faces clarification of issues as producer groups and other interested parties meet to discuss details of the bill,” he said.

One criticism of the Farm Bill is that by providing price supports, it could encourage farmers to overproduce, making prices for commodities even lower. “But it is a tough call,” said Cary W. “Bill” Herndon Jr., interim head of the Department of Agricultural Economics, Mississippi State University. “What are you going to do? Let farmers go out of business? Let the rural communities dry up and blow away?”

Herndon said there is a ripple effect with farmers having more income, that means more money for rural communities, which provides for better economic health for that area, the state and the nation.

The new Farm Bill replaces the 1996 Farm Bill, known as the Freedom to Farm Bill that was intended to gradually eliminate agriculture subsidies. That bill was originally supposed to last until the end of 2002. Herndon said Congress ended up replacing the bill early because the 1996 Farm Bill wasn’t working the way Congress had envisioned. Low commodity prices were causing great economic harm to U.S. agriculture and rural areas. Congress had been providing ad hoc disaster relief funds each year in response.

“Starting in 1998, each year the Congress passed ad hoc disaster relief payments to compensate farmers for low commodity prices because the 1996 bill didn’t provide that safety net,” Herndon said. “After four years of these ad hoc disaster payment bills, Congress decided to stop doing that and re-design the Farm Bill to provide those income safety nets through a variety of different programs. This is a way to provide an income safety net to protect farmer’s incomes in these times of low commodity prices.”

Herndon says the Farm Bill will have a major positive impact on Mississippi agriculture particularly because the state is a major producer of cotton and rice, two crops eligible to receive a higher level of payment per acre than other crops.

As the ranking member of the Agricultural Appropriations Subcommittee, Mississippi U.S. Sen. Thad Cochran (R) has been a leader during the two-year period the Farm Bill was developed. Cochran said one of the most important provisions of the bill is a newly designed target price mechanism developed to provide a more market oriented farm program. The amount of payments will increase as commodity prices move downward.

“Under the 1996 Farm Bill, the program payment amount was a set amount each year regardless of the market price for each individual commodity,” Cochran said. “This new program will allow farmers to receive a payment equal to the difference in the market price or loan rate, plus the fixed payment and the set target price for each individual commodity.”

The Farm Bill has received a lot of criticism in the national media. Cochran said farmers and agribusiness representatives need to respond by helping educate the public about the benefits for the American consumer.

“Many people continue to read articles regarding the amount of payment a single farm receives without taking into account the costs associated with producing the crop,” Cochran said. “It is important to understand that consumers of agricultural products are the greatest beneficiaries of farm programs.”

Cochran said provisions in the Farm Bill for conservation funding will help protect natural resources while providing farmers with assistance to meet environmental regulations.

“Farmers and private landowners will benefit from the increase in spending for programs such as the Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP) and the Wildlife Habitat Incentives Program (WHIP),” Cochran said. “This Farm Bill will also establish the Conservation Security Program that will allow row crop producers to receive incentive payments for maintaining and increasing farm stewardship practices. This is a new program for working lands.”

The Environmental Quality Incentives Program (EQIP) is also reauthorized through 2007. The EQIP program will significantly benefit livestock producers as they strive to comply with environmental regulations.

Cochran added that the rural development portion of the Farm Bill has generated great interest in Mississippi. “The rural development title provides $360 million to eliminate the backlog of pending applications for water and wastewater grants and loans,” Cochran said. “This funding will greatly assist those rural communities which are facing drinking water shortages.”

USDA Rural Developm
ent serves as the lead federal entity for rural development needs and administers program assistance through three agencies: Rural Housing Service, Rural Business-Cooperative Service

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