Durbin, Brown, Harkin Secure Language in the Farm Bill to Create New Revenue Protection for Farmers

U.S. Senators Dick Durbin (D-IL), Sherrod Brown (D-OH), and Tom Harkin (D-IA) announced today that the committee-passed version of the 2007 Farm Bill contains language creating an optional revenue counter-cyclical program designed to improve the safety net for farmers by replacing current price-support programs with a comprehensive revenue protection program. The program, called Average Crop Revenue (ACR), is based in large part on legislation introduced by Senators Durbin and Brown in late July called the Farm Safety Net Improvement Act.

The ACR was originally included in the Chairman's Mark of the 2007 Farm Bill. The program would have provided farmers with a state-based revenue-counter-cyclical program to protect against losses in both yield and price. In lieu of direct payments, farmers opting into the program would be provided with a fixed payment of $15 per acre. The program also would have been integrated with farmers' crop insurance policies to reduce duplicative payments and provide producers with relief on the cost of crop insurance. During today's Senate Agriculture Committee action, an amendment was accepted that weakened the original language by removing a provision that allowed farmers to reduce their crop insurance premiums.

"I am proud that the 2007 Farm Bill will offer farmers much needed choice. Farmers can either stay with the traditional programs that do little to protect against drops in revenue, or switch to a forward-looking policy that better protects against volatile crop prices, natural disasters, and rising production costs. This is true reform for farmers and taxpayers. Unfortunately, changes made in committee will not allow farmers to take advantage of reduced crop insurance premiums that the Durbin-Brown bill originally envisioned. I will continue to work on behalf of Ohio farmers to strengthen the program as it moves to the floor of the Senate," said Senator Brown, the first Senator from Ohio in 40 years to serve on the Agriculture Committee.

"Although the average crop revenue program was weakened in committee, the inclusion of an optional revenue based counter cyclical program is a positive step forward for Illinois farmers and the future of agriculture policy," said Durbin. "The proposal included in Chairman Harkin's bill is a significant step forward and it will help us make our support programs work better for both producers and taxpayers. While I am disappointed that the Committee failed to include the whole ACR package, I look forward to working with my colleagues to ensure that the program provides producers with a real choice."

Under the ACR proposal, the federal government would provide a payment when a farmer's actual revenue falls below 90 percent of the forecasted revenue for a specific crop. Previously, the program integrated private insurance with the state program; however, this element was removed during today's markup.

The optional ACR program in the Farm Bill would replace existing counter-cyclical payments and loan-deficiency payments with a state-level revenue protection program which will save taxpayers more than $3 billion compared to the current program.

The benefits of this program are:

* Better protection for farmers by protecting revenue rather than merely price as the current system does. Revenue protection fixes many of the holes in the existing safety net. Currently, farmers fail to receive assistance even though they face real losses in revenue when prices are high but yields are low. By protecting farmers' yields, this program also reduces the need for ad hoc disaster assistance.

* Less production distortions by using a revenue target that adjusts with the market rather than politically set target prices and loan rates. Current programs discourage farmers to plant for market demand. This revenue protection program reduces the incentive to overproduce on marginal land and helps reduce production distortions.

* Equitable treatment across crops resulting in planting decisions being made based on market signals not the government program. All commodities are given equal protection based on market risk rather than federally set targets.

* Savings to taxpayers because of the efficiencies created by the program.

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