Helping young farmers get started is one of the goals Agriculture Secretary Vilsack has for the new farm bill. He notes that almost 1/3 of all farmers are over the age of 75 and he’s suggested some type of tax incentive that would encourage retiring farmers to sell to younger farmers who might not otherwise be able to acquire land.
The Secretary also outlined some points for Congress to consider when drafting the new farm bill calling for a strong crop insurance program, policies that support exports and biofuels, and a focus on research and conservation.
So far this year there has been a lot of talk but not much action on the development of the new farm bill. That may change in the near future. On Monday the Congressional Budget Office will provide an important piece of information about how much money will be available in the “budget baseline”.
This is the starting point for the Agriculture Committees, but funding levels will probably be reduced further as a part of deficit reduction efforts. Still, this information from the CBO will give Congressional Committees some critical information so that they can begin to decide what programs they will be able to include in the new legislation. The Food and Agriculture Policy Institute (FAPRI) released their baseline forecasts this week. The FAPRI baseline assumes average weather, trend-line crop yields and essentially no changes in current farm policy. It’s thus an important tool used by Congress to evaluate the impact and costs associated with any proposed changes in farm policy, different weather and price scenarios, etc.
The new 10-year baseline shows corn used for ethanol rising slowly from 5 billion bushels to 5.7 billion bushels by 2021/22. Corn stocks increase and prices average about $4.75 per bushel through the next decade. Wheat exports rebound and average about 1.08 billion bushels, keeping ending stocks near current levels. Prices are near $6. Soybean acreage stays near 74 million acres and prices average about $11.40 through the next decade. Total major crop acreage in 2021 is about 10 million acres below the forecast for acreage for 2012. The scenario is based on a continuation of current farm policies through the next decade.
The Senate has approved legislation that would restore the authority of the Department of Commerce to apply countervailing duties to nonmarket economies such as China and Vietnam. The authority was removed in December when a U.S. Court of Appeals canceled tariffs on nearly $5 billion in imports. The legislation has strong support in both the House and in the Administration, but it still might take awhile to get the bill approved and signed into law.
USDA’s Risk Management Agency has set the price guarantees for the 2012 crop insurance policies. The prices are based on average futures prices during the month of February. The price for corn is $5.58 per bushel, the price for soybeans is $12.55 and the price for spring wheat is $7.84. Prices for all three crops are down from the levels set last year in February. The deadline to buy crop insurance in the Midwest is March 15.
Contracts covering about 6.5 million CRP acres expire this September and USDA will soon hold a general sign-up to try to replace some of those acres. USDA has recently announced some new incentives to encourage farmers to enroll in the CRP, with a goal of keeping total CRP acres near 30 million acres. USDA plans to establish 1 million acres of continuous CRP (always open, with no set sign-up period) and will offer $50 per acre higher rental payments to encourage enrollment. This could be contentious, however. Several members of Congress are calling for the cap on the CRP to be lowered in the next farm bill as a cost saving measure.