Recent Press Releases

Senators Fight for Farm Bill Safety Net

-- Urge USDA to Follow Clear Language in 2008 Farm Bill --

September 12, 2008

Washington, D.C. —  Today Senators John Thune (R-SD), Norm Coleman (R-MN), Chuck Grassley (R-IA), and Ben Nelson (D-NE) sent a letter to United States Department of Agriculture (USDA) Secretary Ed Schafer, which specifies Congressional intent and correct interpretation of statute for a new 2008 Farm Bill safety net option, the Average Crop Revenue Election (ACRE) Program.

ACRE program assistance is determined by using an average of the prices for each covered commodity for the two years previous to the year of participation. Because farmers may participate in ACRE beginning with the 2009 crop year, Congress intended that 2007 crop prices and projected 2008 crop prices be used as the first set of years to determine the baseline crop prices for the 2009 crop year. However, recent comments by USDA officials indicate that ACRE program may be implemented based on 2006 and 2007 prices, which would result in much lower baseline prices and an ineffective safety net for farmers who would participate. The national average crop prices for covered commodities will be much higher for 2007 and 2008, than is the average for 2006 and 2007 crops.

The letter also informed the Secretary that the Congressional Budget Office (CBO) used the higher 2007-2008 projected average price to determine the cost of ACRE in the 2008 Farm Bill. Therefore, if USDA implements ACRE using these years, the 2008 Farm Bill would be of no additional cost to taxpayers than what has already been determined.

Producers may make a one-time election to participate in ACRE, beginning with the 2009 crop year, on a farm-by-farm basis. Participation in ACRE is an alternative to receiving counter-cyclical payments, and ACRE participation also results in a 20 percent reduction in direct payments and a 30 percent reduction in marketing assistance loan rates for all covered commodities and peanuts on a farm. Producers may choose to enroll a farm in ACRE for any of the years 2009, 2010, 2011, and 2012. However, once a farm is enrolled in ACRE, that farm must continue to be enrolled in ACRE through 2012.

"The statute very clearly provides that the 2007 and 2008 projected average crop prices shall be used to calculate ACRE assistance," said Thune. "Seeking out a loophole to diminish the effectiveness of ACRE when input costs are skyrocketing and commodity prices are dropping is a very `farmer unfriendly' position for USDA to take and is a disservice to our agriculture producers."

"The ACRE Program was included in the farm bill to provide farmers another viable safety net option," said Coleman. "The use of outdated crop years to determine baseline prices for this program will weaken the farm bill safety net, and as commodity prices shoot through the roof and there is a great deal of uncertainty, our farmers need to know that the safety net will be as strong as possible. It is my hope Secretary Schafer will listen to our concerns and implement this farm bill consistent with Congressional intent."

"We were very clear in the farm bill that the 2007 and 2008 crop years are the basis for assistance through the ACRE program. It appears that the Department of Agriculture is once again misinterpreting our intent for its own benefit," Grassley said.

"The U.S. Department of Agriculture needs to follow the law as written by Congress, not as people in the agency want," said Sen. Ben Nelson. "We put that program in place as part of the important safety net for America's farmers, giving them an innovative new option. USDA needs to get it right."
The text of the letter sent to Secretary Schafer follows:

September 12, 2008

The Honorable Ed Schafer
Secretary
U.S. Department of Agriculture
1400 Independence Ave, SW
Washington, DC 20250

Dear Secretary Schafer,

The Food, Conservation, and Energy Act of 2008, (P.L. 110-246) includes a new option for producers called the Average Crop Revenue Election (ACRE) Program. Under ACRE, producers may make an irrevocable election to participate as an alternative to receiving counter-cyclical payments, and in exchange for a 20-percent reduction in direct payments, and a 30-percent reduction in marketing assistance loan rates with respect to all covered commodities and peanuts on a farm during each of the 2009, 2010, 2011, and 2012 crop years.

The first crop year producers will be able to exercise the irrevocable election to participate in ACRE is 2009, according to P.L. 110-246, Section 1105 (a)(1), which provides:

"(1) AVAILABILITY OF AVERAGE CROP REVENUE ELECTION PAYMENTS.- As an alternative to receiving counter-cyclical payments under section 1104 or 1304 and in exchange for a 20-percent reduction in direct payments under section 1103 or 1303 and a 30-percent reduction in marketing assistance loan rates under section 1202 or 1307, with respect to all covered commodities and peanuts on a farm, during each of the 2009, 2010, 2011, and 2012 crop years, the Secretary shall give the producers on the farm an opportunity to make an irrevocable election to instead receive average crop revenue election (referred to in this section as ``ACRE'') payments under this section for the initial crop year for which the election is made through the 2012 crop year."

The purpose of this letter is to clarify the specific two-year period that statute requires be used to calculate the ACRE Program Guarantee Price for 2009 and subsequent years. Section 1105 (d)(3) of P.L 110-246 states:

"(3) ACRE PROGRAM GUARANTEE PRICE.-For purposes of paragraph (1)(A)(ii), the ACRE program guarantee price for a crop year for a covered commodity or peanuts in a State shall be the simple average of the national average market price received by producers of the covered commodity or peanuts for the most recent 2 crop years, as determined by the Secretary."

Without question, the intent of Congress as specified in the statute, is that the first crop year of implementation for ACRE is for the 2009 crop year, and the "most recent 2 crop years" used to determine the ACRE program price guarantee are the two most recent years prior to the 2009 crop year, i.e. 2007 and 2008.

Additionally, we would like to make clear that that the Congressional Budget Office used the 2007 and 2008 crop years to score ACRE, and used the dollar amount projected for the 2007 actual and 2008 crop year prices in scoring the cost of ACRE and the 2008 Farm Bill.

Accordingly, we are requesting that USDA follow the statutory mandate for determining the 2 most recent crop years, (which are 2007 and 2008) for determining the ACRE Program Guarantee Price for ACRE for the 2009 crop year.

For USDA to dramatically diminish the effectiveness of ACRE by using the 2006 and 2007 crop years to determine the ACRE Program Guarantee Price for the 2009 crop year would be a disservice to production agriculture because it would diminish the "safety net" purpose of the Farm Bill and remove most producer interest in ACRE.

We strongly urge you to follow the statutory mandate for determining the 2 most recent crop years, (which are 2007 and 2008) for determining the ACRE Program Guarantee Price for ACRE for the 2009 crop year.

Sincerely,

Senator John Thune
Senator Ben Nelson
Senator Chuck Grassley
Senator Norm Coleman

CC: Jim Nussle, Director of the Office of Management and Budget