Historic Change Is Proposed For Peanut Program

Nathan Smith

The House of Representatives Agricultural Committee released their version of the next Farm Bill on July 27th. The 1996 Farm Bill is set to expire in 2002, but the House bill would implement changes a year early as a 2001 Farm Bill. Among the changes to the Commodities Title, the proposal would make historic change to the peanut program. The Peanut Title calls for the elimination of the quota allotment system that has been in effect since the 1930s and replaces it with a marketing loan and counter cyclical program. The transition would make the peanut program much like the other major crop programs such as corn, cotton and wheat. The new Farm Bill is proposed as a ten-year program expiring in 2011. 

Instead of a quota support price for domestic edible peanuts and an additional support price for exports, the new peanut program would provide a fixed, decoupled payment of $36 per ton to eligible producers (produced sometime during 1998-2001), a counter cyclical payment based upon a $480 per ton target price, and a marketing loan rate of $350 per ton. Current interpretation is the counter cyclical payment would be made to peanut producers on a farm with a peanut base. Base acreage is proposed as the average peanut acreage planted during 1998 - 2001. The payment acreage would be 85% of the base acreage. The payment yield for peanuts would be the average yield during 1998 - 2001. A counter cyclical payment would be triggered when the target price is greater than the sum of the average season price (12 month) plus fixed, decoupled payment, or the national marketing loan rate plus fixed, decoupled payment. 

CCP = TP - ASP - FDP 
or
TP - NLR - FDP, whichever is higher.

CCP = counter cyclical payment
TP = target price, $480
ASP = average season price
FDP = fixed, decoupled payment, $36
NLR = national loan rate, $350

A non-recourse marketing loan or loan deficiency payment would be available to all peanut production on a farm. To compensate for the loss of quota, holders of quota during the 2001 marketing year will receive equal payments of 10 cents per pound annually from 2002 to 2006. Seed and experimental quota are not included. Hopes for a 2001 Farm Bill rest on how quickly the House and Senate vote to pass a new farm bill. The Senate is not as far along as the House though the House has not voted on their version yet. How soon the Senate Agricultural Committee will release their version of the next farm bill is unknown nor how similar it will be to the House version. 

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