Farm Emergency Energy Act

Rep. Chip Pickering, R-Miss., has introduced new legislation aimed at helping farmers battle rising energy prices.

The bill, the “Farm Emergency Energy Act,” would provide funding for a new program under the Commodity Credit Corp. that would provide relief to farmers and ranchers who are facing rising prices for fuel and fertilizer as a result of high energy costs.

“All across America high energy prices are crippling each and every sector of the agricultural economy,” said Pickering in a statement. “For the past three years, farmers have faced adverse weather conditions and low prices. Now, they are facing another major obstacle — the rising price of energy.

“The prices for gas are triple what they paid last year. That is why…all farmers need emergency assistance in dealing with current energy costs.”

Pickering introduced the new legislation as USDA economists predicted another year of financial difficulties due, in part, to higher diesel fuel and natural gas costs. That's despite the fact that natural gas prices have eased somewhat in recent weeks.

Farm input costs rose a record $7 billion to $8 billion in 2000 primarily due to higher diesel fuel costs, interest expenses and labor costs, USDA Chief Economist Keith Collins said in a speech in Philadelphia.

Collins said fertilizer prices are running about $350 per ton for anhydrous ammonia, or triple what they were in 1999. Fertilizer costs are tied to natural gas prices, which, in mid-December, were five times greater than December of 1999, leading the fertilizer industry to idle half its nitrogen capacity.

Natural gas prices have fallen about 40 percent in the last month, however, enough for at least two fertilizer plants to resume operations in mid-February, according to the USDA economist.

“The U.S. farm sector is suffering its third weakest market since World War II,” he said, noting that prices of many commodities are near 25-year lows while prices farmers pay for energy and fertilizer have risen sharply.

In recent weeks, National Cotton Council leaders have been working to persuade USDA to include high energy costs as a part of a “Severe Economic Loss” program. Although the latter was authorized in the 2000 Crop Disaster Program passed by Congress last fall, USDA has yet to develop the program.

When NCC President Robert McLendon met with George W. Bush before Christmas, he pointed out that authority for a third segment of disaster assistance does exist under the severe economic loss section of the 2000 program.

Pickering's legislation conceivably would add further impetus to that argument and lead USDA to implement the program.

An analysis by Cotton Council economists shows that cotton producers should receive payments of $6.40 per dryland acre and $8.05 per irrigated acre to offset economic losses resulting from increased fuel costs in 2000.

The analysis is based on extrapolating the cost of fuel for producing an acre of rice in 1998 into the cost for producing the same acre using the higher energy prices farmers paid in 2000 across each of the major commodities. It assumes $1 billion would be provided for the severe economic loss section of the 2000 disaster program.

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