Farm bill leaves peanut quota holders unhappy
Published 12:00 am Sunday, June 30, 2002
Georgia peanut farmers are putting up a fight against the new federal farm bill and plan to put the gloves on in court.
Members of the Peanut Quota Holders Association voted earlier this month to support a class-action suit challenging provision of the law, which abolished the quota system.
Pike County farmer Wayne Gibson said, given the opportunity, he will join the class action suit, although he’s not sure if Congress can be sued, and if so, he doesn’t think peanut farmers have deep enough pockets to see it through.
"This thing could stay in the courts for 400 years," Gibson said, shaking his head.
Under the quota system, peanut farmers could purchase or rent licenses or quotas that guaranteed them a minimum price for their peanuts, with the quota establishing the number of pounds of peanuts eligible for that price.
The members of the Peanut Quota Holders Association contend that the Farm Bill clearly defines the peanut quota as assets and the Constitution prohibits the government from taking assets with out adequate compensation.
The government is offering 70,000 quota holders a rate of 55 cents per pound over five years at a cost to taxpayers of about $1.2 billion.
Some quota holders value the assets at between 75 cents and $1.10 per pound.
Gibson’s quarrel isn’t so much with the rate being given to quota holders as it is with other issues.
"The buyout is for five years," Gibson said. "Well, I’m not planning on dying in five years. So, after five years, that’s lost income to me. It’s that way for a lot of people, especially elderly people who are depending on renting their quotas to supplement their incomes."
Gibson said many quota holder are widows and retired farmers who have rented their quota to younger growers and did so with the consent of agricultural officials.
"For a while, we could only rent our quotas within the county, then the government came along and said we could rent across county lines and a lot of people did that. Other counties, like Baldwin and Mobile, were paying a better price for quotas. We were told that quotas could be produced on our farms or considered produced on our farms. So, the would quotas stay with us."
Gibson said the new Farm Bill changes all of that.
"We took the government at its word," Gibson said. "We thought we could rent our quotas and they would stay with us. Now, the quotas are going to the producer."
Gibson said the issues surrounding the Farm Bill are complicated and many people probably don’t understand what the loss means to quota holders.
He said it could be compared to someone who owns a rental house and the government stepping in and giving that house to the renter.
"We are definitely losing an asset when we lose our quotas," he said. "We are being compensated 11 cents a pound for five years, but taxes will take a bite out of that. You can take the ‘compensation’ over five years or in one lump sum. We don’t know yet if the compensation will be considered capital gains or ordinary income. People will have to decide which is better, money wise, for them, but I’m going to take mine in one payment. You don’t know what’s going to happed down the road. The government might come back in a couple of years and decide to do away with the compensation payments."
Gibson has another beef with the new Farm Bill that abolished the quota system.
Legislation that was signed into law in May by President George W. Bush, abolished the quota system and is being replaced by a base system, in which federal support payments are calculated from a "base" amount of crop that farmers have typically produces.
"Under the new farm bill, farmers who just wanted to rest their land for a while or just cut back on their farming operation for a while, could be out of the peanut farming business," he said. "They rented out their quotas and now they’ve lost it. The base is going to someone else. Like me, I didn’t intend on getting out of the peanut farming business, but I’ve been put out because I can’t grow peanuts without a base. I couldn’t make it."
Andy Sheffield holds and rents peanut quotas and he’s not sure how the Farm Bill will affect him.
"Only those farmers who have produced peanuts in the last four years will have a base and will have the guaranteed price from the government," he said. "The federal government has the target price set at $495 a ton, but loan value at lending institutions is only $355 a ton.
"The government will pay the difference of $140 in three payments in October, February and August, which is almost a year after harvest."
Sheffield said the world market price is ultimately the price farmers will get with the government making up the difference between it and loan value. This is a totally new aspect of farming."
Frank Talbot holds and rents quota and is also a buyer for Anderson Peanut Company.
He said the new farm bill, price wise, is better oriented toward the producer than the quota holder/landowner.
"The buyout is generous to the quota holder at 55 cents a pound," he said. "Farmers took a step of faith this fall and planted their normal acreage before the Farm Bill was signed and all of the information in."
His has one concern that he hopes will be unfounded.
"Baldwin County farmers have just begun to plant peanuts in the last four or five years and are having great success with bumper crops," he said. "Since they don’t have the same problems with disease pressures as the lifelong peanut farmers in Pike County, marginal producers may be forced out of
farming because the new regulations seem to favor those with higher production."
Note: School-to-Work intern Gentry Hassett contributed to this article.