OU 363

July 30, 2001

The next farm bill may be taking shape. On Friday, July 27, the House Agriculture Committee with strong bipartisan support passed the "2001 Agricultural Act." Some highlights include:

.....enlarges participation in conservation programs
.....allows voluntary update of base acres
.....adds countercyclical target prices to fixed AMTA payments
.....adopts a peanut program similar to grains and other oilseeds

The accompanying table shows the marketing loan, fixed payment, and target price levels for major program crops. For soybeans, the Secretary of Agriculture is directed to establish base acres, and payment yields comparable to AMTA yields. The countercyclical payment would be the target price less the sum of:

a) the higher of the loan rate or the 12 month season average price
b) the fixed decoupled payment rate.

Payment limits are set at $50,000 for fixed decoupled payments and $75,000 each for LDP's and target price payments.

The Bill has a long way to go in becoming law. First, the full House must take action. The Senate has not been in any hurry to advance long-term farm legislation. And the Administration has pointed out that if, as is likely, the new countercyclical payments are designated "amber box" than the U.S. would be exceeding its $19.1 billion WTO cap on trade distorting subsidies. So chances are good that we will not have a bill until 2002.

Who will be the biggest winner if the new farm bill resembles the House Ag Committee model? The answer is landowners, as the new higher guaranteed payments would quickly be bid into land prices and rents.

The Clemson University Cooperative Extension Service offers its programs to people of all ages, regardless of color, sex, religion, national origin, disability, political beliefs, sexual orientation, marital or family status and is an equal opportunity employer.

Clemson University Cooperating with U.S. Department of Agriculture, South Carolina Counties, Extension Service, Clemson, South Carolina. Issued in Furtherance of Cooperative Extension Work in Agriculture and Home Economics, Acts of May 8 and June 30, 1914.

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updated 8/21/01