Clinton is expected to sign will stave off farmers' short-term cash-flow problems, but they say Congress must work toward solving broader problems facing agriculture.
With farmers still suffering through a two-year decline in commodity prices, Congress this week approved its second multibillion-dollar payout to farmers in as many years. And while bankers appreciate the payments -- which farmers often use to repay bank loans -- they say a more permanent solution is needed because it is hard to persuade lawmakers from nonfarm districts to support new payments year after year.
"It's very, very important to get assistance to farmers because they are in need, but it becomes more difficult to do it each year," said Mark Scanlan, agricultural affairs director at the Independent Community Bankers of America. "It's important to have policy that addresses what's happening in the market."
The National Farmers Union and other farm associations have suggested that Congress offer counter-cyclical commodity payments. This type of program, which the government had before 1996, when it set fixed yearly subsidies in the Freedom to Farm Act, would give farmers higher payments as commodity prices fell below a target price. For instance if the target price for wheat were $4 per bushel and it were selling for $3.50, the government would automatically pay the 50 cents difference.
"But policy changes take time," said John Blanchfield, manager of agricultural banking and rural development at the American Bankers Association. "You have to build a consensus over months. In the short term, money helps."
Money is what the federal government has delivered.
The package that the Senate approved by a 74-to-26 vote on Wednesday and the House approved earlier this month would give farmers $5.5 billion in handouts within two weeks of enactment. It would also give $1.2 billion for disaster relief in the drought-plagued Northeast and flood-soaked Great Plains.
Still, there is a growing sense in Congress and among farm and bank groups that the payments are a Band-Aid to chronic problems of low commodity prices, weak demand, and overproduction. House Agriculture Committee chairman Larry Combest, R-Tex., already has called for hearings early next year to discuss potential farm policy changes.
"In the future, Congress has to strengthen the farm safety net so we can move away from ad hoc funding every time there are crop losses or low prices," he said.
Farm and bank groups expect the hearings to focus on issues that include easing restrictions on exports to countries such as Cuba and Libya, paying farmers to take more land out of production, reforming the nation's crop insurance laws, and offering counter-cyclical payments.
"After two years of these agricultural problems, we've seen that the (1996) farm bill needs to be fixed," said Erika Batcheller, a National Farmers Union spokeswoman.
Without a broader solution, agricultural and bank groups say, they will once again have to scramble for emergency farm relief in 2000.
"Next year we'll have a similar situation to what we're facing now unless there's a large drought somewhere in the world that reduces supply," Mr. Scanlan said. "We still may be at least a year and a half away from a full recovery, barring something unforeseen."
