September 17, 2007 / 8:24 PM / 12 years ago

USDA's Johanns backs revenue protection plan

WASHINGTON, Sept 17 (Reuters) - The best way to strengthen the farm safety net is to add a provision that protects farmer income, Agriculture Secretary Mike Johanns said on Monday, rejecting the idea of an ever-ready disaster relief program.

“The more you study it, the more sense it makes for farmers,” said Johanns, referring to so-called revenue-based counter-cyclical payments. They take yields and prices into account. Counter-cyclicals now are based on price alone.

Johanns lauded revenue-based counter-cyclical payments while meeting 250 members of the National Farmers Union, which wants the new farm subsidy law to authorize disaster relief to farmers and ranchers whenever severe losses occur.

An NFU member from Nebraska asked Johanns to support permanent authority for disaster aid. Johanns said revenue-based counter-cyclical payments, supplemented by crop insurance, were a better way to protect farmer income, and less costly under bookkeeping formulas used by Congress.

Disaster-relief authority is a priority for the NFU and its allies in Congress for inclusion in the farm law being written this year. Two senior members of the Senate Agriculture Committee, Democrats Max Baucus of Montana and Kent Conrad of North Dakota, support it. The committee chairman, Democrat Tom Harkin of Iowa, prefers revenue-based counter-cyclicals.

NFU president Tom Buis told reporters that revenue-based payments are “too decoupled” — separated from a farm’s output — to be a reliable aid. Most proposals for revenue-based payments are triggered by national income from a crop or state-level income.

Buis said “the most significant safety net” element for growers are support prices, which effectively guarantee a minimum price. He said “direct payments,” based on past production of subsidized crops, ought to be reduced.

During remarks to NFU members, Johanns said a House-passed provision to deny crop and conservation payments to people with an adjusted gross income above $1 million “is not reform.” The administration has proposed a $200,000 income limit.

Keith Collins, the Agriculture Department chief economist, told the NFU he believes “we’re going to see more wheat (planted) this fall” in response to record-high prices. High prices also will encourage soybean plantings, he said.

Collins declined to estimate how much additional land would go to wheat. He said wheat crops in Argentina and Australia, which will be harvested this fall, “will be very important” in responding to shrinking world wheat supplies.

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