Sliced bread or sausage?

Dwight Roberts President/CEO USRPA

Dwight Roberts President/CEO USRPA

Producers hope for eventual, meaningful risk protection for rice.

Now that the dust has finally settled on the new Farm Bill – the Agricultural Act of 2014 (AA 2014) – one can understand why they say legislating is like making sausage. The legislative process followed by the AA of 2014 (where the House rejected the Farm Bill, which was then subsequently approved without nutrition/food stamp/SNAP provisions and then recombined and passed with new nutrition provisions that were passed separately), was a tortured one filled with political drama.Unfortunately, nothing in this process did anything to enhance the commodity related provisions of the bill for rice.

There was always a chasm of difference between the House and Senate Commodity Titles, largely resulting from a Midwest centric/corn and soybean versus an All regions/cotton, rice, peanuts view of the world. The high point for rice policy was the House-reported bill, but it was not to be. The rhetoric from the corn and soybean crowd was shameless in its duplicity.Although rice producers do not begrudge other commodities their programs,to hear concerns of planting distortions coming from commodities that enjoy the benefits of a Renewable Fuels Standard is outrageous (in a shocking and offensive manner). Rice was fortunate to have champions on the House and Senate side that demanded a bill that would work for all regions of the country.

Important Reforms Absent

Although the final product is as fine apiece of sausage as could be devised, it is still a piece of sausage with dubious components.For instance, the nutrition reforms included in the bill, which were estimated to save over $8 billion are now largely expected to be circumvented by the states.Meanwhile, the $14.3 billion in cuts to commodity programs are real and acute.Rice producers realized early on in the Farm Bill discussion that political support for direct payments was gone, and they were unlikely to be continued even though they were the only commodity program mechanism that provided real support to rice producers and in a WTO-friendly manner. Other reforms to replace the elimination of direct payments that would have greatly benefited rice were not included,such as liberalizing trade with Cuba or seriously addressing trade barriers faced by rice – the highest faced by commodities at80 percent.

Even the new Price Loss Coverage program(PLC), designed to address the real risk faced by rice farmers (price), only provides assistance after the end of the marketing year. For those facing financial difficulties today, that is a far cry from the support provided by direct payments.

Full Details Still Unknown

In addition, having to decide upon the many options required by the AA of 2014for enrollment in the Agriculture Risk Coverage or PLC program for the life of the Farm Bill, which may make or break a producer, is a frightening prospect given the lateness of enactment. The 2014 rice crop is being planted now/has been planted,and rice producers won’t know the full details of their commodity program until later in the year.

Rice producers are optimistic that the AA of 2014 will eventually provide meaningful risk protection. After listening to the many concerns expressed by rice producers,it is difficult to understand the enthusiasm expressed by others about the AA of2014. Rice producers do not want to appear ungrateful to our champions who fought the good fight and did the best they could in a political process heavily dominated by other regions and requiring compromise,but we should be truthful about the end product and what it really is – a piece of sausage.

Crop Insurance Considerations

If one examines where the funding was allocated in the AA of 2014, the clear winner was crop insurance with an increase of $5.7 billion. Rice producers certainly understand the need for a robust crop insurance program. Although it has not adequately served
rice producers in the past (it is getting better all the time), crop insurance has been greatly utilized by others, especially corn and soybean growers. Shifting our risk management policy from our traditional commodity support programs to crop insurance does not come without risk. Crop Insurance risk protection is much less responsive to gaps in protection when major catastrophes occur than are the traditional commodity programs. The political dynamics surrounding any crop insurance modification involves not just producers, but other interests that participate in the program such as companies, agents and regulators. In addition, the new crop insurance features that may benefit rice occur in the future. For instance, the new Supplemental Coverage Option to be
offered in 2015 appears to be promising, but rice producers have to produce a crop in 2014 without that protection.

For more, visit www.usriceproducers.com.