"We're not trying to get rid of Freedom to Farm; we just want to fine-tune it," says Craig Blindert.
Blindert and Phil Cyre, both South Dakota farmers, are drumming up support for a farm program addition they're convinced would strengthen crop prices and save the government money, too.
Under the proposed Market-Driven Set-Aside Program, formulated by Blindert, farmers would voluntarily idle a percentage of their acreage in exchange for higher loan rates on their remaining production. The main focus would be to take marginal land out of production in times of surpluses, and encourage higher production when prices are high and more supply is needed.
Blindert and Cyre see this as the best plan on the table for building profit back into crop farming.
"It's the strongest in overall benefit to producers and reductions in costs to taxpayers, and it retains all of Freedom to Farm's flexibility," says Cyre, of Hazel, SD.
Iowa State University ag economist Neil Harl agrees. "It's the best possibility that I have seen, on a market-oriented basis, to achieve a reduction in supply," he says.
Blindert and Cyre hope the program will be adopted when Congress considers farm program changes early next year. They've been to Washington, where they discussed the proposal with dozens of congressmen as well as officials at USDA and the Office of Management and Budget.
"We're getting some congressional interest," says Blindert, of Salem, SD. "But we've got to get the producers behind it or it won't fly."
The guts of the program would give farmers the option of idling up to 30% of their corn, soybean, wheat, cotton or rice acreage. For corn, soybeans and wheat, each 1% set aside would be rewarded with a 1% loan-rate increase up to 10%. Set-aside rates between 10% and 30% would get an additional 1-2 cents/bu credit, depending on the crop.
For cotton, loan rate increases would be constant, totaling 75 cents/lb at the 30% set-aside level.
The program would operate on a planted-acre basis by individual crop. Farmers would sign up every year, choosing their level of participation based on their individual profit outlook for the year.
Blindert figures initial participation would be high because crop prices are low, then would fall off as production drops and prices strengthen.
He's right, according to a recent study by USDA's Food & Agricultural Policy Research Institute (FAPRI).
The study, requested by Iowa Sen. Tom Harkin, concluded that planted acreages of corn, soybeans and wheat would decline by 6-10% during the program's first two years. By 2008, acreages would be down an average of 3% compared with 1999 levels.
The FAPRI study also showed that crop farmers' annual net income would increase by about $5.4 billion over the 2000-2008 period. But livestock producers' net income would drop by $600 million a year due to higher feed prices.
FAPRI put annual Commodity Credit Corp. outlays $2.5 billion higher than current levels. But that's much lower than the recently passed $8.7 billion farm aid package, Blindert says, adding that this program would greatly reduce the need for future bailouts.
Blindert developed the proposal more than a year ago after concluding that low crop prices would prevail for several years, barring a weather disaster. Supply and demand are increasing at about the same rate, so production has to be cut, he says. Currently, farmers plant all their acreage because they lose less money than if they don't.
"If we go into a market-driven set-aside - the missing link, as I call it - each farmer would manage his supply compared to the price as he sees fit," says Blindert. "We won't have a lot of excess production - only what the market will bear at a reasonable price."
Iowa State's Harl figures much of the set-aside acreage would be in "peripheral areas" of crop production, such as North Dakota and western South Dakota. There's a need to idle more land in those areas, he says.
He's part of a task force, appointed by Iowa's governor, to look into the farm crisis and recommend possible solutions. Many task force members like Blindert's plan, says Harl. "There are no 'dead cats'. There's usually something in these proposals that smells, but not in this one."
Harl says it looks like a cost-effective way to boost farm income. "For $2.5 billion we'll get nearly $5 billion of better net farm income. That's a pretty good tradeoff compared to pouring in $8 billion.
"I think it will get a hearing, and I think it stands some chance," Harl says.
Blindert can be contacted at 605-425-2729; Cyre at [email protected] For more on the FAPRI study, log on to www.fapri.iastate.edu.