Published on 04/08/96

New Farm Bill Good News, UGA Economist Says

Georgia farmers have a federal program again. But what does it mean?

Congress passed the Federal Agricultural Improvement and Reform Act March 28. The seven-year farm bill is a new deal for agriculture. It promises to bring an end to farm subsidies as the country has known them since the Great Depression.

That's good news for taxpayers.

In the end, it's good news for growers, too, said George Shumaker, an economist with the University of Georgia Extension Service.

"It's clearly good news for agriculture," Shumaker said. "It allows farmers the freedom to adjust their operations to take advantage of the most profitable crop opportunities."

Shumaker and other Extension economists will conduct four seminars on the new farm bill. The sessions are planned for 1:30 to 4:30 p.m. in Statesboro April 30, Tifton May 1, Macon May 7 and Calhoun May 8.

The new farm bill differs from those of the past, he said, in two major ways.

First, the FAIR Act ends the connection between market prices and payments to farmers.

"In the past, when market prices were high, subsidies were low, and vice versa," Shumaker said. "Under the FAIR Act, subsidies to eligible producers are predetermined regardless of market price."

Second, the new bill lifts the limits on what farmers plant.

"In the past, farmers had to restrict their plantings to be eligible for subsidies," Shumaker said. "The FAIR Act puts no restrictions on what or how much can be planted. Subsidies are not tied to what the farmer grows."

In the new bill, farmers who had crops in federal wheat, feed grain or cotton programs in any of the past five years can get market transition contracts.

Sign-ups will begin around mid-May. The deadline will be Aug. 1. Growers will get half of the yearly payment within 30 days of signing up. The rest will be due by Sept. 30.

For program crops, farmers will be able to get nonrecourse marketing loans as they have in the past, Shumaker said. But the top loan rates are set at low levels: $51.92 per hundred pounds for cotton, $2.58 a bushel for wheat, $1.89 a bushel for corn and $5.26 a bushel for soybeans.

The secretary of agriculture can reduce loan rates. But the rates can't be set at less than 50 cents for cotton or $4.92 for soybeans.

A minor change is that the FAIR Act covers seven years. Past farm bills have spanned five years.

The bill's best point, Shumaker said, will be its overall effect.

"The environment this bill will create will allow innovative and well-managed farms to prosper and grow faster than they could before," he said.

Farmers will be able to adjust what they plant to match rising market prices, he said. But it will make their marketing skills critical.

"The people who will prosper will be those who have mastered skills of managing market risks," he said.

For Georgia peanut growers, the peanut program survived with two major changes. One, the support rate for quota peanuts will be dropped from $678 a ton to $610. Two, the total national quota (and, as a result, each grower's quota) will drop by 10 percent to 12 percent.

On the plus side, peanut growers will be able to transfer quota across county lines. That could enable them to recoup some of their losses from the drop in quota and quota prices.

For dairies, the FAIR Act ends the assessment on dairy products. It drops the support price from $10.35 per hundred pounds in '96 to $9.50 in '99. After that, a loan program will replace dairy subsidies.

The new bill allows the secretary of agriculture to start new Conservation Reserve Program contracts and extend old ones. It limits the program to 36.4 million acres.

Dan Rahn is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.