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222kent olson

By Janet Kubat Willette

jkubat@agrinews.com

MINNEAPOLIS — If the Bush administration farm bill proposal becomes law, it will mean less federal money for Minnesota corn and soybean producers.

Agriculture Secretary Mike Johanns released the Bush administration’s farm bill proposal Jan. 31 and University of Minnesota professor Kent Olson last week highlighted some of the proposal’s impacts on Minnesota at a Twin Cities Agricultural Issues Round Table.

The Bush plan changes the Marketing Loan Assistance Program, said Olson, a member of the applied economics faculty at the U of M since 1985. It sets loan rates at 85 percent of five-yea Olympic moving averages, with maximums.

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Olympic averages are based on three years of data, because the high and the low are thrown out.

Also, Posted County Prices become monthly, instead of daily and Loan Deficiency Payments are set in the month that the commodity is sold.

Proposed loan rates for 2008 through 2012 are $1.89 for corn, $4.92 for soybeans and $2.58 for wheat. Current rates are $1.95, $5 and $2.75.

The proposal contains the same 10 titles as the 2002 farm bill, Olson said: Commodity programs, conservation, trade, nutrition, credit, rural development, research, forestry, energy and miscellaneous.

The bill itself will be mammoth. The 2002 bill has 421 pages.

While commodity payments get a lot of attention, the majority of the money goes toward food and nutrition programs. Olson said about 70 percent of the 2002 bill has been spent on food and nutrition.

Direct payments will see some increases and then some decreases under the Bush plan, Olson said.

The direct payment will be based on 85 percent of base acres, with no updating of base acres and yields. Beginning farmers, however, would get a boost. Their direct payments would be up to 120 percent of the direct payment for five years.

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Proposed direct payments for 2008-2009 and 2013-2017 are 28 cents a bushel for corn, 47 cents a bushel for soybeans and 52 cents a bushel for wheat. That’s the same as current law for corn and wheat and 3 cents more for soybeans. For 2010 through 2012, payments would be 30 cents for corn, 50 cents for soybeans and 56 cents for wheat.

Counter-cyclical programs would become commodity-based and revenue-based. Target prices would be eliminated.

The dairy support price would remain at $9.90 and the Milk Income Loss Contract would remain, with cuts. Payments would start at 34 percent of the difference with the Boston price of $16.94, declining to 20 percent.

The sugar program remains at "no net loss," Olson said, but a provision regarding suspension of imports is eliminated.

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