Sens. Chambliss-Isakson Urge USDA to Stop Plans to Change Peanut Program Loans

U.S. Senator Saxby Chambliss (R-Ga.), Ranking Republican Member on the Senate Agriculture Committee, and Johnny Isakson (R-Ga.) today sent a letter to U.S. Department of Agriculture Under Secretary Dr. Mark Keenum urging the Department to continue using the current peanut loan differential method for 2008 and 2009. The proposal made by USDA last month would result in a significantly lower marketing loan rate for the Runner variety, which makes up almost 100 percent of Georgia production. Georgia produces nearly 45 percent of all the peanuts produced in the United States, making it the number one peanut producing state.

Text of the letter is below:

July 10, 2008

Dr. Mark Keenum
Under Secretary
Farm and Foreign Agricultural Services
Room 205 Whitten Building
United States Department of Agriculture
1400 Independence Ave., SW
Washington, DC 20250

Dear Dr. Keenum:

Now that the 2008 farm bill has finally been enacted into law the responsibility of implementing the legislation consistent with Congressional intent falls on the Department of Agriculture. This task can be as daunting as crafting the legislation and we are appreciative of the efforts you have taken to expedite the implementation process.

However, we are concerned about proposed changes to the peanut program. Shortly after the passage of the farm bill, a white paper was distributed at the direction of Deputy Under Secretary Floyd Gaibler highlighting proposed changes to the method of determining marketing loan differentials for peanuts. The proposal to move to a market-based loan differential for peanuts was met with little to no support within the peanut industry. We find it very disturbing that since Congress made minimal changes to the Peanut Title of the 2008 farm bill that USDA would make such a drastic proposal, which was never discussed during the many farm bill meetings attended by the Department.

Recently you held an industry wide meeting to discuss the peanut market-based loan differential proposal. You made it clear to the industry that the proposal would not be implemented for the 2008 crop of peanuts, but that a decision for the 2009 and subsequent crop years has not yet been made. We are appreciative of the fact there will be no changes for the 2008 crop and that you assured the industry there would be an open dialogue on the subject before a final decision is made for the 2009 and subsequent crop years.

After the industry wide meeting, we both received a letter from the American Peanut Council (APC). The APC is the trade association representing all segments of the U.S. peanut industry. The letter stated that APC members, at your request, reviewed the proposal again and still determined that if enacted the proposal, “…will harm the peanut industry and subject the federal government to the risk of increased financial losses.”

Dr. Keenum, we respectfully request that the peanut market-based loan differential proposal not be considered and that the Department continue to use the existing peanut loan differential method. The proposal is not supported by any segment of the industry and we are fearful that if the Department continues to pursue this proposal there will be a significant deterioration of USDA’s relationship with the peanut industry.

Please do not hesitate to contact us or our staff if you have any questions about our request.

Very truly yours,

Saxby Chambliss
Johnny Isakson

Chambliss Applauds Decision to Postpone Changes to Peanut Loans

U.S. Senator Saxby Chambliss (R-Ga.), Ranking Republican Member of the Senate Agriculture Committee, today applauded the decision made by the U.S. Department of Agriculture (USDA) to not make any changes to the manner in which they establish marketing loan differentials for peanuts for the 2008 crop year. Maintaining the current practice for determining differentials for 2008 benefits Georgia peanut producers as the recent USDA proposal would have resulted in a significantly lower marketing loan rate for the Runner variety, which makes up almost 100 percent of Georgia production. Georgia produces nearly 45 percent of all the peanuts produced in the United States, making it the number one peanut producing state.

“This is good news for peanut producers in Georgia,” said Sen. Chambliss. “This year’s crop of peanuts has been in the ground for weeks and 2008 production contracts were signed months ago. Changing the loan differential formula after the peanut crop has been planted would have been detrimental for our growers. Domestic demand for peanuts and peanut products has increased and the federal government should allow growers to respond to this demand without interrupting current systems in place. I applaud USDA for recognizing the importance of maintaining the historically recognized practice of establishing loan differentials for the 2008 crop year.”

The farm bill recently approved by Congress contains several provisions that benefit peanut producers such as: maintaining a separate subtitle for peanuts; preserving the target price, direct payment rate and marketing loan rate established in the 2002 farm bill; providing for a mechanism to ensure handling and associated costs are not deducted from a producer’s loan rate; maintaining separate payment limits for peanuts; and including Conservation Security Program incentives for producers moving towards an optimal crop rotation.