Tuesday, October 03, 2000 / by Ed Maixner, Farm Progress Washington Bureau
Secretary of Agriculture Dan Glickman on Monday gave $28 billion - an all-time record - as his preliminary estimate of USDA direct assistance to farmers and ranchers for the fiscal year that ended Sept. 30.
However, it turns out that the actual Commodity Credit Corporation cash flow to farmer benefit programs is a little more than $30 billion for the year. Besides that, Glickman notes that neither are the costs of USDA direct farmer loans and loan guarantees included in his $28 billion figure.
Glickman praised the American taxpayers for their generosity in supporting family farmers but also complained that what Washingtonians call the "farm safety net" is inadequate.
Glickman says that his problem is mostly with the way the financial assistance is distributed, as much of the aid is based upon a farmer's production. That means the larger the farmers, the more dollars they get from USDA and - worse yet - the largest payments are based on outdated production data.
"I don't think that is very good policy," Glickman says.
Glickman also projected his department will send out many more billions of dollars to farmers in the next month or two.
USDA will, for example, pay out $1.4 billion this month in Conservation Reserve Payments and $340 million in economic assistance to tobacco farmers. Farmers can also claim their Fiscal Year 2001 Agricultural Market Transition Act payments, which total $4.1 billion, starting this month.
Besides that, congressional appropriators are expected to finalize other disaster payments and economic aid to farmers this year, and the total may be $2 to $3 billion.
USDA Could Make Profit on Forfeited Sugar
Complaints from the soft-drink industry and other food companies about government costs this year to support beet and cane sugar producers may be premature.
Jack Roney, economic advisor to the American Sugar Alliance, says U.S. beet and cane processors are apparently forfeiting more than 900,000 tons of sugar, or about 10% of their crop, to the Agriculture Department this year as their alternative to repaying commodity loans.
Roney says USDA economists projected the government's net costs for those forfeitures earlier this summer at $141 million, but the actual costs won't be known until USDA resells the forfeited sugar into the marketplace - which could be next year or several years from now.
Roney points out that USDA absorbed a lot of forfeited sugar when prices plunged back in 1978-79. But by the early 1980s, he says, USDA resold for about 30 cents the sugar it had received at an 18-cent-per-pound value, making a nice profit.
Glickman Says Hog Producers Will Pay Their Own Referendum Costs
Pork producers may be interested to know that General Accounting Office auditors just charged up about a half million dollars against their checkoff program.
Last spring, Ag Secretary Dan Glickman ordered a referendum on the pork checkoff program and said USDA would pay the costs. But GAO - the investigative arm of Congress - decided last week that referendum costs must be paid out of checkoff revenues.
Asked about the matter Monday, Glickman said he will follow the GAO's finding on that question.
For the National Pork Producers Council, switching the costs back onto their checkoff program is adding insult to injury: the producer group opposed the referendum in the first place.
Cindy Cunningham, communications vice president for the Pork Producers Council, says, "We are deeply troubled" that the checkoff program is being assessed the costs "despite assurances made by the secretary."
Adding further to the Pork Producers' displeasure is an another GAO finding that Glickman was within his authority to order a referendum on the pork checkoff program.
Confusion arose last spring whether petitions for the referendum were sufficient, and Glickman ultimately sidestepped challenges to the petitions and simply ordered hog producers to vote on continuing their program.
The National Pork Producers had challenged Glickman's authority and asked that GAO review his authority to unilaterally call the referendum.:
