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January 18, 2002

AMTA payments bridge
gap for 2002 crop year

By Lana Robinson
Field Editor

Despite the delay of the farm bill in the U.S. Senate, it appears that farm program producers will have credit sources willing to hang in there for the 2002 crop year.

"Yes, it's hard times on the farm, but those individuals who were able to get a loan last year will probably do all right this year again. Wheat in the ground is already financed. Corn, cotton and vegetables still to be planted—all that will be covered by the AMTA (Agricultural Market Transition Act) payments," said Jose Pena, Extension Economist-Management specialist stationed at Uvalde. "The problem's going to be 2003."

According to Pena, 2002 is the last year of the 1996 FAIR Act (also called Freedom to Farm), which means reduced transition payments, but payments nonetheless. On Jan. 7, he said cotton was trading in the neighborhood of 40 cents, and the AMTA payment would bring that up to 55 cents and corn up to about $2.40 (bu.).

"They're making a lot of noises in terms of the budget, and saying because they didn't sign the farm bill, they won't be able to appropriate the things in the Harkins bill," Pena continued. "But we can go through April 15 and be okay. Harkin will not meet those new budget restrictions. We still have some time, even if they don't sign one by then."

Texas AgFinance, a Robstown-based credit cooperative, is part of the Farm Credit Bank of Texas, with a territory encompassing an area extending west to Uvalde and Cotulla, up to San Antonio, Pleasanton, Seguin and over to Brenham. According to Allen Hornung, vice president/branch manager, producers served by Texas AgFinance are about 50 row crop and 50 percent cattlemen, and some sheep and goat raisers in the Cotulla area. Hornung confirmed Pena's observations.

"We've gone through the renewal season already," said Hornung. " We figured, the worst case scenario, is we will still get the AMTA payments, even though in the seventh year, they aren't as good. Still, we knew there was a plan there. Now, if you get to next year and there's not a new farm bill before September, it's going to be a very difficult time trying to figure out what to do. I start working with my customers in August. Even the customers who pay out every year, let alone those who struggle, it's going to be difficult to commit without a plan, a farm bill. "

Hornung said he follows developments on the farm bill on a daily basis and underscores the need for sound farm policy.

"Commodity prices are killing us. All the farmers in this area, and you go by an average year, on a six-year average...at today's prices, they cannot project a profit, with what it actually cost us to produce," he said. "We have been fortunate that a couple of years, we've had good yields. If it weren't for that, this area would be almost devastated."

Hornung estimated that only 25 percent would still be "playing the game" without FSA (Farm Service Agency) guarantees.

"When they make a bumper crop, they make a lot of money, but that only happens about one in every 10 years. You can make an average crop, and that's what you've got to bank on, year in and year out. This is the seventh year at this program. That's all they're going to get. Even with government assistance, they still can't make it. Last year, some made money, but didn't make enough to make their equipment payments—and that was with a double AMTA. Hopefully, that's the least the government will do. And then we will hope that Mother Nature cooperates."