October 19, 2007 / 10:14 PM / 12 years ago

Senate farm plan adjusts crop subsidy rates

WASHINGTON (Reuters) - U.S. Senate Agriculture Committee leaders would adjust two key elements of U.S. crop subsidies, loan rates and target prices, as part of a farm bill that would create a revenue protection option, the panel said on Friday.

A committee summary of the proposed commodity section of the farm bill said the loan rate for raw cane sugar would be raised by 1 cent a lb and a program would be authorized to convert surplus sugar into fuel ethanol.

Although the summary said loan rates and target prices will be “rebalanced,” the figures were “one of the issues still under negotiation” and not yet available, a committee spokeswoman said. On Wednesday, a senator said wheat, soybeans, barley and oats would get higher target prices.

Leaders said they would eliminate the “three-entity” rule that allows producers to collect subsidies indirectly and would require payments to be tracked to individuals. They also would require producers to sell their crop on the same day they claim a loan deficiency payment, a change from current law.

Highlights of the framework:

—The traditional farm program would be extended through 2012 under the framework with no change in base acres. Direct payments would continue and farmers would be barred from planting fruits and vegetables on land eligible for subsidies. A pilot program in Indiana would allow tomatoes to be grown on otherwise not eligible for vegetables.

—An “average crop revenue” program would be available as an option beginning in 2012. Farmers would be paid $15 an acre annually on the lesser of the total of their base acres or the average number acres planted to grains, cotton and soybeans from 2002-2007.

An ACR payment would be made when the average statewide revenue per acre for a crop is less than state guarantee. The guarantee would be 90 percent of the state’s expected average yield multiplied by the moving three-year average, including the current year, of the pre-planting price guarantee offered on federal crop insurance policies.

After harvest, the Agriculture Department would calculate the actual state revenue using the actual state yield per planted acre and the harvest price used by crop revenue insurance policies. If actual revenue is below the state guarantee, producers would receive a payment equal to 90 percent of the difference, adjusted for each producer’s proven yield history in relation to the state yield.

“Planting flexibility provisions under discussion,” said the committee. Early descriptions of the revenue program said it would require growers to repay price-support loans in full.

—Besides raising the loan rate for raw cane sugar, set the loan rate for refined beet sugar at 128.5 percent of raw cane. Sets sugar allotments at 85 percent of human consumption.

—Extends the Milk Income Loss Contract subsidy for the life of the farm bill and raises the payment rate to 45 percent from October 2009. Makes a larger volume of milk eligible for MILC. Supports manufacturing grade milk by setting prices for USDA purchase of butter, dry milk and cheddar cheese.

—Earmarks $365 million for Specialty Crop Block Grants. Guarantees $123 million for research and market promotion for specialty crops and to help farmers switch to organic crops.

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