| WASHINGTON, D.C. – After learning that soybean farmers will have to repay USDA $0.18 cents per bushel for the 2004 crop year, U.S. Congressman Marion Berry (D-AR, 1st ) sent a letter today to U.S. Secretary of Agriculture, Mike Johanns, urging him to immediately suspend any counter-cyclical repayments for the 2004 crop year until the agency conducts a thorough review of its calculations. This is the second time this year Congressman Berry expressed frustration with USDA over its process for determining farm bill payments.
"It is obvious USDA has some serious incompetence administering payments to farmers," said Congressman Berry. "Two repayments in less than a year is too much. These over-calculations exceed anything that has taken place in recent memory."
The Counter Cyclical Payment (CCP) program requires USDA to pay farmers the difference between the current market price and the guaranteed price mandated in the 2002 Farm Bill. USDA determines the market price by averaging voluntary price estimates throughout a specified region. Since USDA overestimated the market price of soybeans this year, the agency is now forcing farmers to pay back money given in the first two rounds of counter-cyclical payments.
USDA made a similar error during the 2003 rice crop which forced Arkansas' rice producers to pay back a substantial amount of their counter-cyclical payments. Congressman Berry was able to secure an amendment to the Fiscal Year 2006 Agriculture Appropriations bill that attempts to eliminate future repayments by requiring USDA to consider the benefits of mandatory price reporting. Full access to pricing information would improve estimates and give farmers more security in the payments they receive from USDA.
"We are adding to the burden of a difficult crop year by forcing our farmers to pay back this large amount of money," said Congressman Berry. "Our producers have already dealt with a drought, record input costs, and two natural disasters that jeopardized their economic security. This repayment is equivalent to a third disaster. We must do a better job of gathering information so our farmers know what to expect in the future.”
Text of the letter to Secretary Johanns is included below. Congressman Berry also plans to attend the Farm Bill Listening session at the Arkansas State Fair in Little Rock on Friday, October, 14th at 12:00pm to discuss these issues with USDA's Deputy Secretary Chuck Conner. The meeting is open to the public and will give farmers an opportunity to provide feedback on U.S. farm policy.
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October 11, 2005
The Honorable Mike Johanns
United States Department of Agriculture
Secretary of Agriculture
Room 200 A Whitten Building
1400 Independence Avenue, S.W.
Washington, DC 20250-0002
Dear Secretary Johanns:
It has come to my attention that many soybean farmers in Arkansas and across America will be forced to repay 18 cents per bushel on the countercyclical payment for the 2004 crop year. This is the second time in as many years that a crop in my district has been negatively affected by this "safety net" known as Counter-Cyclical Payments. Earlier this year I notified you of a similar problem facing rice producers. I urge you to immediately suspend any repayments until a thorough review of your calculations is conducted.
The Counter-Cyclical Payment Program (CCP) was established in the 2002 Farm Bill to provide support counter to the cycle of market prices as part of a "safety net" in the event of low crop prices. This year, however, the actual market prices were greater than projected market prices and farmers are now forced to pay back money given in the first two rounds of counter-cyclical payments.
This is very concerning to me and those farmers who have participated in the CCP this year. Paying back this large amount of money unexpectedly will place a great burden on farmers during an already difficult crop year. As you know, our producers have already dealt with drought, record input costs, and Hurricanes Rita and Katrina. I am very worried these conditions will force many farmers in my state to go out of business.
Two repayments in less than a year is too much. The USDA should not have such late year fluctuations in its projections. Farmers, by law, have the option of not taking advanced payments. However, under the current economic and drought conditions, most don't have the luxury of passing on the cash flow that these advances provide. A thorough review of your calculations is needed to ensure that they are correct. And if they do turn out to be correct, I urge you to revise your formula to provide for fewer last minute fluctuations.
I would appreciate you looking into this matter and getting back to me as soon as possible.
Sincerely,
MARION BERRY
Member of Congress
MB:ag |
