Consumer food and agricultural programs were bolstered this week with the passage of the 2008 farm bill. The South Dakota Corn Growers Association (SDCGA) thanks South Dakota’s Congressional delegation for their leadership and dedication to South Dakota producers.
The Food, Conservation and Energy Act of 2008 maintains farm programs authorized in the 2002 Farm Bill with minor changes. The bill preserves the non-recourse marketing loan program and continues the price-based counter-cyclical program which provides assistance when prices decline.
“A strong safety net for producers was protected in the 2008 Farm Bill and South Dakota is fortunate to have Sens. Johnson and Thune and Rep. Herseth Sandlin fighting for the best interests of South Dakota agriculture in Congress,” said Bill Chase, president of the SDCGA.
The new component of the 2008 Farm Bill is the Average Crop Revenue Election (ACRE) program to begin in crop year 2009. This program offers producers the option of enrolling in a new revenue-based counter-cyclical program. ACRE is a state-based revenue guarantee for participants based on the 5-year state average yield and the 2-year national average price.
ACRE significantly reforms how U.S. commodity programs operate. It reduces market distortions and lowers loan deficiency payment rates, cuts direct payments and saves money.
ACRE is more market oriented and results in less distortion by using a revenue target that moves with the market rather than being based on targets set by Congress. Farmers make production decisions based on actual forecasts rather than "planting for the program."
ACRE pays farmers only when they face a real loss in revenue unlike current programs in which producers are not required to show that they have suffered a financial loss before they receive government commodity payments. ACRE thus helps restore the underlying notion of what a safety net should be – to provide assistance only when producers are in need and suffering a loss.
ACRE requires farmers to be responsible for the first portion of any revenue loss. As designed, the producer absorbs the first 10 percent of any loss.
ACRE cuts the Marketing Loan Program rates by 30 percent. This reduction begins to address one of our most troublesome international trade concerns, which has triggered WTO trade disputes.
ACRE cuts direct payments by 20 percent to pay for the new program and also generates savings used to help fund conservation, nutrition and other parts of the Farm Bill.
“ACRE is a new concept in the farm bill that producers will need to educate themselves about and the SDCGA is committed to providing opportunities for producers to learn about how the ACRE program will benefit their operations,” said Chase.
The bill contains a broad reach of food programs of which farm program payments represent only about 13 percent of the Farm Bill’s budget. The bill also contains important benefits for consumers, more funding for nutrition programs, and more emphasis on encouraging conservation methods that preserve the environment.
“The Food, Conservation and Energy Act encompasses a vast array of programs and includes increased funding for food assistance programs to feed infants, assist food banks and improve food production,” said Chase. “Conservation programs were strengthened and the energy title in the farm bill continues to set a precedence reflecting the priorities of the nation.”