The Associated Press reported on Friday that, “U.S. farm subsidies under the 2002 farm bill have been repeatedly challenged by trading partners, and new bill proposals from Congress would likely worsen the situation, the U.S. Department of Agriculture’s top economist said.

“‘We are going to face continuing challenges for our domestic support programs’ unless lawmakers make significant changes to their legislation to overhaul the farm bill, USDA Chief Economist Keith Collins told Dow Jones Newswires in an interview Thursday.”

The AP article indicated that, “Instead of reining in subsidies in a time when some prices farmers receive for their crops are at record-high levels, Collins said, Congress is trying to raise price support levels and target prices.

“The subsidy challenges by U.S. trading partners have been lodged through the World Trade Organization. A WTO ruling in December slammed the U.S. for not sufficiently complying with an earlier ruling that cotton subsidies need to be curtailed.”

“Substantial counter-cyclical farm payments and marketing-assistance loan programs are still under fire, Collins said, and Congress’ proposals don’t address the problems.

“‘Under the House and Senate farm bill proposals,’ he said, ‘they do not reform domestic programs in a way that would eliminate such challenges and, in fact, they may aggravate such challenges.’”

The AP article reminded readers that, “The United States also faces yet another possible challenge through the WTO. Upon request by Canada and Brazil, the WTO opened an investigation in December into whether the United States has exceeded its ceiling on trade-distorting subsidies for corn, cotton, soybeans and other farm commodities.

“Brazil and Canada, according to news reports, asked for the WTO investigation after failing to get the U.S. to limit subsidies in the ongoing WTO Doha Round of trade talks.

“U.S. lawmakers, Collins said in the interview, are still working under the U.S. interpretation of constraints agreed on in the 1994 Uruguay Round trade pact, not in the spirit of the Doha Round. The Uruguay Round was agreed on under the General Agreement on Tariffs and Trade, or GATT, which became the WTO.”

For related background on U.S. interpretation of WTO rules, versus the spirit of the DohaRound, see this FarmPolicy.com update from October 8, “More Technical Background on the U.S. Classification of Direct Payments.”

For additional analysis on the Farm Bill debate and WTO issues, see, “Farm Bill: Does Breaking WTO Crop Subsidy Rules Matter To Congress?” which was posted yesterday at The Mulch Blog.

Strong Prices Yield Conservation Unease

Peter Harriman, writing in Saturday’s Argus Leader (South Dakota) reported that, “The first big wave of idled South Dakota farm land being returned to production is washing over agriculture.

“About 300,000 acres that had been dedicated to growing native vegetation through the federal Conservation Reserve Program are coming out of the program and probably will be replanted to traditional row crops.

“Before the wave crests in a couple of years, about 800,000 acres in South Dakota will be withdrawn from CRP, based on the number of landowners who have not opted to renew their 10- to 15-year contracts.”

Mr. Harriman noted that, “The effect on wildlife and water quality of plowing under four-fifths of a million acres of grass is going to be substantial,wildlife officials warn.

“‘Wildlife managers bust their buns over a career to impact tens of thousands of acres. To see 300,000 acres’ lost to crop production next year, ‘that’s going to come with a cost,’ says George Vandel, South Dakota Game, Fish and Parks wildlife director.”

The article stated that, “But even as the total acres planted in the state are set to increase, heads of commodities groups are wondering what crops will be acreage winners and losers in 2008.”

“Wheat was selling at $9.37 Friday and soybeans at $12.20,” Mr. Harriman reported, adding that, “Future corn demand is bolstered by a requirement in the new federal energy bill that 15 billion gallons of corn-based ethanol be produced by 2015. A big question for farmers, though, is whether the prices for wheat and soybeans have been bid up by speculators or whether they reflect true supply and demand and probably will endure.”

In conclusion, the article indicated that, “Overall, at its peak, the state had about 1.5 million acres set aside in CRP, and in any given year, about one-third was affected by emergency haying or grazing, leaving two-thirds, or a million acres, as undisturbed cover.

“‘If we can get that cellulosic ethanol to be managed like CRP,’ Vandel says, ‘we might be able to come up with a way of maintaining that core of a million acres.’”

Recall that Bruce Babcock and Silvia Secchi noted in an article published in the Spring 2007 edition of the Iowa Ag Review (“Impact of High Corn Prices on Conservation Reserve Program Acreage”) that, “Growing demand for corn due to the expansion of ethanol has increased concerns that environmentally sensitive lands in the Conservation Reserve Program (CRP) will return to crop production. Most of the land currently in the CRP was enrolled because of the potential for environmental damage if it were farmed. A return of this land to crop production would likely lead to lower environmental quality.”

Near the conclusion of the article, the authors stated that, “Our results indicate that land currently enrolled in the CRP offers significant environmental benefits that could be lost under higher commodity prices. Maintaining current levels of environmental quality will require substantially higher spending levels.”

With respect to commodity prices and acreage allocation decisions this spring, Associated Press writer Jackie Farwell reported on Friday that, “U.S. exporters have already sold roughly three-quarters of the soybeans the Agriculture Department predicts for the whole marketing year, which ends in June 2008. To make up for dwindling inventories, analysts say farmers need to plant more soybeans than they did last year –when an ethanol boom led farmers to favor planting corn acres over soybeans.

“So far this year, soybean exports are running at 735 million bushels, or about 74 percent of the USDA’s total estimate of 995 million bushels. Last year, the farmland dedicated to soybean plantings was reduced by 15 percent.

“Feeding Friday’s record was continued strong demand from China, the world’s largest consumer of soybean oil, said DTN commodities analyst Elaine Kob.”

The AP article noted that, “A bushel of soybeans for March delivery settled down 8.5 cents at $12.23 a bushel. The price had jumped to $12.48 overnight, beating June 1973’s closing high of $12.10 but still shy of that day’s trading record of $12.90 a bushel.

“Wheat for March delivery fell 26.25 cents to $9.15 a bushel. March corn fell 2.75 cents to $4.52 a bushel.”

Definition of a Farm, Census of Agriculture

Des Moines Register writer Jerry Perkins reported on Sunday that, “It’s the 2007 Census of Agriculture, coming soon to mailboxes on rural routes all over Iowa and the other 49 states, the District of Columbia, Puerto Rico, American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands.

“Dating to 1790, the ag census is a government effort to take the pulse of agriculture every five years.

“Thick packets of census forms, looking a bit like tax booklets, were mailed Friday. The government isn’t asking for the information; farmers are required by law to return their census forms by Feb. 4.”

The Register article explained that, “The census is meant to cover all farms, defined by the Department of Agriculture as any entity with $1,000 in annual sales or potential sales.

“‘If you have a few acres with some horses and goats, guess what?’ Prusacki [Joseph Prusacki, director of the Iowa field office of the USDA’s National Agricultural Statistics Service] said. ‘You’re a farm.’”

The editorial board at The Forum (North Dakota) picked up on the farm definition issue in an opinion piece posted on Friday.

In part, the editorial stated that, “Farm census forms will be mailed today and should reach the nation’s farmers and ranchers next week. The census, which is done every five years, is important in formulating farm policy and getting a read on agribusiness in the nation’s small farm communities. Farmers and ranchers should fill it out and send it in if they want to have a voice in their future.

“That being said, some features of the ‘farm’ census seem downright silly in farm country, where production agriculture is a mainstay of the economy. For example, the U.S. Department of Agriculture considers a farm or ranch any place that produces or sells $1,000 or more of agriculture products during the census year. A thousand bucks?!

“Let’s see. That could mean if a suburbanite has a big enough yard, plants enough sweet corn and tomatoes, sells the ripe produce from a roadside stand – and sales total up to $1,000 – he’s a farmer and he’s running a farm. So says USDA.”

The editorial indicated that, “Despite the USDA’s peculiar definition of ‘farm’ and ‘farmer,’ the agriculture census is important to genuine farmers and ranchers. The men and women who actually make their living on farms and ranches need to be counted in order to maintain a strong voice in ag policy. Securing an effective farm bill every five years gets harder every cycle.”

In addition, as FarmPolicy.com noted on Friday, “the definition of a farm employed by the USDA for data collection purposes is ‘any operation that sells a least one thousand dollars of agricultural commodities or that would have sold that amount of produce under normal circumstances.’” Some farm policy observers suggest that this is an overly broad definition of a “farm” and hampers the persuasiveness of arguments relating to federal payment distributions based on farm income.

Keith Good