NCC: Payment Limits Bill Would Be Disruptive

MEMPHIS – The National Cotton Council expressed its disappointment with a payment limits bill introduced today by Sen. Charles Grassley (R-IA).

NCC Chairman Bobby Greene said the payment limits legislation will seriously undermine farmers’ and lenders’ confidence in farm policy even as signup for the 2002 and 2003 crops is well underway according to the provisions of the six-year Farm Security and Rural Investment Act of 2002 signed into law by the President just 10 months ago after two years of debate and numerous stop gap economic assistance packages.

"We have a carefully balanced and effective six-year farm law adopted by Congress after extended debate," Greene said. "Changing that law before it’s first anniversary would disrupt implementation and cause hardship to U.S. cotton producers and their counterparts in grain and oilseed production."

A previous NCC analysis indicated that the earlier versions of Senator Grassley’s bill would put such severe limitations on marketing loan gains and fixed and counter-cyclical payments that production financing will be out of the question for many farmers in the Sunbelt. With current commodity prices, many farms cannot cash flow, even with current restrictions on payments.

Greene said the new farm law contains specific limitations on program benefits and an adjusted gross income means test that makes participants with substantial non-farm income ineligible for benefits. He said farm law participants are required to meet detailed eligibility requirements regarding contributions of management and/or labor requirements and no producer is eligible for more benefits than the farm unit is entitled.

"The addition of more stringent payment limit provisions or more complicated eligibility requirements will negate the benefits contained in the new farm bill for commercial-size producers," Greene said. "More restrictive limitations or eligibility requirements would make it difficult to obtain production financing and make orderly marketing decisions at a time when farmers need stability. Many farmers would also be driven to make cropping decisions based on program benefits rather than market signals."

NCC economists estimate corn and soybean acreage could increase up to 2 million acres and specialty crop production in the West could swell to disrupt fragile markets. Further, changes in the already complicated regulations will increase producer’s cost of compliance and further stretch the limited resources of USDA.

"The farm law does not need to be amended," Greene said. "It provides an adequate safety net in times of low prices and meets the budget requirements established by Congress."