Food from Family Farms Act:

Rationale

Why we need the Food from Family Farms Act and Food Sovereignty
The goal of food, farm, and trade policy should be a globally sustainable and adequate supply of wholesome food at affordable prices. A family farm system is the most effective means to provide safe and quality food, diversity of production, equitable social and economic opportunity, and preservation of land, water, and bio-diversity. The National Family Farm Coalition’s food and farm policy proposal, called the Food from Family Farms Act (FFFA), is the foundation for a new sustainable family farm system.

However, years of farm and trade policy that allows commodity prices to plunge to historically low levels have devastated the fabric of family farm agriculture and rural communities in the U.S. and around the world. The resulting global food system, while abundant, fails to feed the hungry, fails to promote healthful diets, and fails to eliminate food safety risks like disease pathogens and chemical contamination. Despite new optimism from higher prices for some commodities and projection of new markets for bio-fuel production, the public cannot rebuild a sustainable family farm agriculture system or a healthful, safe food supply without appropriate public policy in the 2007 Farm Bill.

The next farm bill and trade policy must address the weak economic position of indebted family farmers, growing agribusiness vertical integration, valuing farmland for development and recreational uses, and global destruction of ecosystems for new production. Without this new policy, the uncertainty of international agricultural and energy markets combined with the lack of public policy to deal with this uncertainty or the economic power of multinational agribusiness corporations portends continued replacement of family farms with industrial “factory farms.”

It’s time for a new farm bill that acts as a consumer-farmer economic bill of rights. We believe the 2007 Farm Bill must reverse the replacement of diversified sustainable family farms with huge corporate crop plantations and giant industrialized livestock confinements and feedlots that depend on exploited labor, vast amounts of fossil fuel energy, destructive technology, and taxpayer-funded subsidy-type farm bills.

Family farmers, farmworkers, and food processing workers produce a necessity of life; they deserve dignity, justice, and equity rather than exploitation for corporate profit. The current free trade subsidy system, with no price supports for crops and meaningless 1970’s-level price supports for milk, benefits multinational corporations including giant exporters, processors, and retailers, who profit by buying the cheapest commodities from all over the world, processing them and marketing them in monopolistic markets devoid of honest competition. Corporate livestock and dairy production gain competitive advantage using cheap grain and oilseeds to the detriment of diversified family farmers who maintain crop rotations and recycle animal waste as crop nutrients. Labor intensive fruit and vegetable production shifts to countries where workers have few rights and are paid $4 per day, causing unemployment and low wages for U.S. farm workers. Worldwide migration out of rural communities to overcrowded cities and across national borders creates undue hardship and social tensions.

The National Family Farm Coalition has developed a new farm policy proposal to create a sustainable farm and food system. The Food from Family Farms Act would ensure a just food system, improve the environment, create local food markets and economic opportunities in rural America, and support similar aspirations in every nation. Free trade agreements like the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) that hamstring domestic U.S. farm policy must be revised to respect the United States and every country’s Food Sovereignty. Unlike the current farm policy, provisions in the Food from Family Farms Act are predicated on the principle of food sovereignty, the right to democratic policies based on a country’s needs and traditions for food security, conservation of natural resources and the geographical distribution of economic opportunity.

Restoring farm income from the sale of farm commodities at a fair price, rather than making farmers and ranchers dependent on government subsidies, must be the primary focus of any new farm program. The Food from Family Farms Act assures a fair price through a cost of production price support system, food and energy security reserves, and conservation programs with full planting flexibility to avoid wasteful overproduction. Current projections indicate that 2007-08 corn carryout, none of which will be in government stocks, could be as low as a 20 day supply, pointing to the obvious need of food and energy security reserves to remove some of the uncertainty and volatility for food security and prudent bio-energy investments. On the other hand, bountiful crop yields or a plunge in oil prices could send crop prices plummeting requiring massive infusions of government support, pointing to the obvious need for real price supports for basic commodities. The Food from Family Farms Act provides food and energy security absolutely needed for a world threatened by uncertain foreign policy threats and climate change.

Our family farm policy encourages a transition to sustainable diversified family farming through full implementation of the Conservation Security Program (CSP), offering rewards for existing practices and new incentives on working lands for more conserving crops and methods which fit well with diversified family farming, sustainable bio-energy and local food production. A balanced family farm system will require less fossil fuel and give opportunities for farmers to become producers of clean renewable energy.

In conjunction with the Food from Family Farms Act, National Family Farm Coalition urges the U.S. government to enforce anti-trust laws against increasing corporate concentration and vertical integration in the food industry from production and processing to marketing and retailing. The ownership of livestock by packing companies and their control of captive supplies must be banned because this gives them the power to encourage overproduction and manipulate markets to the detriment of family farmers and ranchers. Likewise, because these same multinational companies threaten to move livestock production overseas to avoid health and environmental regulation, consumers need mandatory country of origin labeling (COOL) of their food in all cases.

The USDA must respond to historical and ongoing civil rights complaints and implement laws that enable equitable access to farm and housing programs for all farmers and rural people. Farmers who produce under contract should have the right to fair arbitration clauses, contract transparency, and other rights currently denied. The USDA can promote new regional and local markets for farm products and purchases of food by federal agencies from independent family farms. The plight of America’s migrant agricultural workers should be adequately addressed through its farm, labor, and trade policies.

The 2007 Farm Bill and revisions in trade policy through passage of the Food from Family Farms Act will build peaceful international relations and build good will among our trading partners, giving every country a chance for balanced sustainable economic development. International trade cooperation can assure fair prices for all farmers through shared responsibility of international commodity price floors, international food and energy security reserves, and conservation programs that encourage local food and sustainable bio-energy production. Congress should respond to the popular demand for economic, environmental and social sustainability of the food system by enacting the Food from Family Farms Act.

Outline of the Commodity Title

Food Sovereignty

Trade and farm policy should respect every country’s right to establish policies based on needs and traditions for food security, conservation of natural resources, and distribution of economic opportunity.

Prosperity for U.S. farmers must not come at the expense of farmers and peasants in other nations. The United States must take the lead in promoting international commodity agreements aimed at setting floor prices and equitable sharing of responsibility for international reserves and supply management, thus eliminating the destructive practice of dumping.

The ability to develop farm programs that respond to the needs of our nation’s farmers and consumers must be reinstated through adoption of provisions such as Section 22 of the Agricultural Adjustment Act. Section 22 allows for a limitation on imports of a specific commodity if that level disrupts the fair domestic market price for our nation’s farmers.

Market Price Support

Farmers who comply with provisions of the Food from Family Farms Act (FFFA) will be eligible for market price supports established through a Commodity Credit Corporation (CCC) nonrecourse loan for wheat, feed-grains, soybeans, oilseeds, cotton and rice. Loan rates will be set at an appropriate level that reflects the cost of production for each individual crop based on USDA’s Economic Research Service (ERS) calculations and average transportation and storage costs. A similar formula will apply for establishing the price for milk at the farm-gate.

The nonrecourse loan creates an actual price floor requiring purchasers to pay at least the loan rate for commodities. If purchasers won't pay the loan rate, the crop can be forfeited to a government reserve. This replaces the marketing loan of the 1996 Freedom to Farm bill and the 2002 Farm Bill that allow prices to drop below loan rates because of Loan Deficiency Payments (LDP) and Marketing Loan Gains.

Loans can be paid back with interest at anytime when market conditions warrant. At the end of the nine month loan period, producers will have the option of redeeming the loan, forfeiture to the CCC Food Security Reserve, or entry into the Farmer Owned Reserve (FOR), if open. Farmers will be allowed to rotate the commodities in the FOR to maintain quality.

A maximum quantity of crops up to a loan value of $450,000 per farm will be eligible for the loan program. A low interest loan program for construction of on-farm storage facilities will be established.

LDP’s or marketing gains will no longer apply. Storage costs on the FOR will be paid at the commercial rate with an annual payment in advance.

Reserves: Food Security, Humanitarian, Energy, and Farmer-Owned

Without a price support and reserves, a bountiful crop becomes an economic curse to farmers as overproduction can result in only one outcome, lower prices and economic hardship. The FFFA creates various reserves to enhance food, energy, and national security.

A Strategic Reserve stocked to a level of 7.5% of the average annual use will have first priority with commodities forfeited from non-recourse loans. Half of the reserve can be used for emergency humanitarian relief and half can be used to supply the growing renewable fuels industry (Under unusual circumstances, the Secretary may be allowed to buy stocks from the market for the Strategic Reserve.) Further forfeitures will fill a Food Security Reserve (FSR) set at a minimum 10% of annual usage.

No stocks from the FSR may enter the market until the Secretary determines that the national average price exceeds 150% of the loan rate for 30 consecutive days. When the supplies in the FSR reach the 10% of annual use, the secretary will announce the opening of a Farmer Owned Reserve (FOR) that allows farmers to extend the original nonrecourse loan past 9 months, stop accrual of interest, and receive storage payments from CCC at commercial rates. Any stocks in the FSR above the minimum 10% can be used by the Secretary to immediately replenish the strategic reserve.

If free stocks become tight and drive national average market prices above 130% of the loan rate for 30 consecutive days, storage payments cease on extended loans in the FOR. If national average market prices exceed 140% of the loan rate for 30 consecutive days, then the extended loans will be called for repayment.

Inventory Management and Conservation Compliance

For farmers to be eligible for the price support loan program, along with other benefits of the FFFA, including cost share and disaster relief, they will be required to abide by the current Conservation Compliance. Because the nation's food security is assured by the existence of the FSR and FOR, the Secretary shall establish a short-term conservation set aside program for program crops to avoid wasteful over production and balance production with demand.

The Secretary shall target specific crops for reduced planting with the goal that production will satisfy projected demand. This includes supplies that will be needed to refill Strategic and Food Security reserves. Participating farmers will be required to idle a percentage of a target crop grown (Conservation Percentage (CP)) and enter into a soil conservation program approved by the local Soil Conservation Service on those idled acres. After meeting that requirement, the producer/operator shall have flexibility to determine the crop mix to plant within the acreage base under this section.

Full Planting Flexibility within Acreage Base

Beyond idling the CP for each program crop, the farmer retains full planting flexibility on the Whole Farm Acreage Base which will be defined as Tillable Crop Acres: land that was planted or considered planted to program crops in at least 3 of the 5 preceding crops.

Disaster Program

The nation must recognize the importance of preserving the family farm system and therefore must provide an effective response when natural disasters strike family farms. Increased farm income from price supports at cost of production will be the first line of defense against economic catastrophe. The FFFA Disaster Program eliminates the current subsidized crop insurance system that is not only inadequate when disaster strikes but fosters production on marginal land and underwrites farm consolidation. In its place, a disaster relief program will be offered to all eligible farmers.

When a natural disaster generates a loss so that production is above 75% of established yield, no payment will be made. When production is between 50% and 75% of established yield, payments (or grain from the Strategic Reserve above its 10% minimum level) will be provided to replace income up to the 75% level at 60% loan rate value, not to exceed $67,500.

Further production loss down to 30% yield will be reimbursed at 75% loan rate value, not to exceed $67,500. Production loss below 30% yield will be replaced at 100% loan rate value, not to exceed $90,000.

A loss of 90% shall be considered a total loss and the producers shall have the right to salvage any remaining crop for whatever purpose they choose with no loss of disaster benefits.

Insurance coverage from the private sector beyond established disaster relief would be at the producers’ cost, but will not be required in order to qualify for the Disaster Program.

Receiving crop insurance benefits will not disqualify a producer from receiving full disaster benefits under the disaster program.

Conservation Security Program

Sustainability must be the bedrock principle of agricultural reform, recognizing the benefits of diversified production versus the concentrated, intensive production in today’s industrialized agricultural system. When livestock factories have to pay the full cost of production for their manufactured livestock feed, livestock production on family farms with more ecological crop rotations and use of animal manure for crop nutrients will become more economically viable. To reach our goal of sustainability and family farm diversity, the FFFA encourages such a transition through full implementation of the Conservation Security Program (CSP), offering incentives on working lands for more conserving crops and practices which fit well with diversified family farming and local food production.

Targeting

The FFFA is intended to reverse the current consolidation and industrialization of the nation's farms. Establishing fair prices through price supports and inventory management, thus internalizing costs experienced by farm families, the environment and rural society, is an essential step. Further, some benefits of the Food from Family Farms Act will be capped or targeted. The amount of commodities eligible for nonrecourse loans will be based on a loan cap of $450,000 for all production under loan per crop year. Limits on payments in the disaster relief program will prevent the subsidized underwriting of farm expansion. Likewise, benefits of conservation programs like Environmental Quality Incentives Program (EQIP) and the CSP will target family farms rather than large industrial operations.

Direct Farm Ownership and Operating Loans

Ownership of farms by family farmers helps ensure that they can meet their responsibility to conserve productive capacity and biodiversity for future generations. Federal and state programs to encourage entry into farming through access to affordable credit by beginning and minority farmers is critical. Historic discrimination against minority farmers by USDA must be reversed.