NCC: Grassley Amendment Adds Unnecessary Burden to Production Agriculture

The NCC expressed its disappointment with an amendment to the Senate Budget Resolution that moves funds from production agriculture to an untested conservation program that has not yet been implemented.

March 14, 2003
Contact: Marjory Walker
(901) 274-9030

MEMPHIS – The National Cotton Council expressed its disappointment with an amendment to the Senate Budget Resolution that moves funds from production agriculture to an untested conservation program that has not yet been implemented.

During consideration of the FY04 Budget Resolution March 13, Senator Grassley (R-IA), Chairman of Finance Committee and member of Agriculture Committee, offered an amendment, which if included in the final budget resolution, could require the respective Agriculture Committees to amend the 2002 farm law in a manner that would move $1.398 billion from farm programs to the new, as yet uninitiated Conservation Security Program.

NCC Chairman Bobby Green said that Senator Grassley’s proposal appears to further reduce existing limitations on farm program benefits, which already penalize commercial-sized operations.

"This amendment comes at a time when the new farm law is less than 10 months old and not even fully implemented, " Greene said. "It will undermine confidence in the farm law, resulting in producers experiencing difficulty in obtaining production financing, reluctance to make long-term investment in the industry’s infrastructure and disrupting planting and marketing decisions."

Greene commended Senator Sessions (R-AL) for his efforts to convince members of the Budget Committee to reject Grassley’s amendment. Senator Sessions argued that the Budget Resolution is not the place to mandate changes in farm policy that was only recently enacted after two years of full and thorough debate.

Grassley suggested that the cuts in farm programs be achieved by dramatically reducing the limit on program benefits provided in the recently enacted 2002 farm law. His proposal would establish a new, significantly lower limit on total annual benefits that would apply to cotton, rice, peanuts, grains and oilseeds -- a "one-size fits all" program without consideration for the economics of individual crop production. Grassley has continued to actively promote his proposal in the press, but did not introduce legislation, nor furnish members of the Senate Budget Committee or Agriculture committee details about his proposal prior to offering this amendment.

Greene said that as the respective budget resolutions move to the House and Senate floors next week, the NCC would continue its efforts to persuade members not to include provisions that would require the Agriculture Committees to modify the new farm law.

"Any more stringent payment limit provisions or eligibility requirements will negate the benefits contained in the new farm bill for commercial-size producers," Greene said. "More restrictive limitations or eligibility requirements only add to transaction costs for producers and create additional administrative costs to USDA."

Greene noted that Senator Grassley stated he believes his proposal reduces land rental offers. If that happens, all landowners would be adversely affected, not only absentee owners, but farm widows and retired farmers. USDA’s ARMS data show that farms with smaller annual sales hold a substantially higher proportion of their assets in land than do larger sales operations. Therefore, any general reduction in land values would cause a much larger reduction in the equity position of smaller sales operations.

The Courtland, AL, ginner also noted that the effect of this amendment could be devastating to Sunbelt agriculture. "More restrictive limitations or eligibility requirements would cause shifts to other program crops in the Sunbelt and would shift production to specialty and hay crops in the West, disrupting markets in both cases, Greene said.

Greene also expressed concern that the House Budget resolution, if enacted as approved by the Committee, would result in draconian cuts in agriculture programs by requiring changes in the law to achieve spending reductions of nearly $20 billion over the next 10 years, of which $600 million must be cut in FY04 and nearly $5 billion in the period FY04-08.