GLENWOOD, Iowa (DTN) -- The National Corn Growers Association released a farm-program proposal Monday in an effort to simplify commodity programs, help manage risk and provide policymakers with a plan that saves money.

The plan follows through on a desire by NCGA members to shift away from direct payments while providing a new overall commodity program that is simpler than the Average Crop Revenue Election program.

The corn growers unveiled the "Agriculture Disaster Assistance Program," which would not only replace ACRE, but would also replace the more traditional Direct and Counter-Cyclical Program as well.

"We are offering this program and the DCP (Direct and Counter-Cyclical) program would no longer be there," said Anthony Bush, a Mt. Gilead, Ohio, farmer and chairman of the NCGA Public Policy Action Team. "We would do away with the current ACRE program and the current DCP program."

NCGA has run the Agriculture Disaster Assistance Program through computer models that project the proposal, as crafted by the group, would cost about 30% less than the current Direct and Counter-Cyclical Program. Few commodities are in a price range to pay counter-cyclical payments, but direct payments cost about $5 billion annually. Projected out over a 10-year congressional budget score, the NCGA proposal saves roughly $15 billion compared to current policies.

"We're offering up 30% of direct payments as a budget reduction is what we are doing here and transitioning direct payments into a revenue-based program, which is what we said we wanted to do here," Bush said. "There would be no DCP program under this proposal."

Given the verification by computer models, Bush said NCGA leaders feel confident about the projected savings.

NCGA offers the plan as Congress moves on a fast-track this fall to find as much as $1.5 trillion in savings over 10 years through the deficit super committee process. Under that schedule, the House and Senate Agriculture Committees have until Oct. 14 to offer their recommended cuts. The super committee then is expected to make its recommendations before Thanksgiving.

"While today's farm bill provides critical assistance to farmers when they face a significant loss, growers also need a program that can efficiently address gaps in protection that cannot be addressed by federal crop insurance alone," said NCGA President Bart Schott. "ADAP (Agriculture Disaster Assistance Program) will assist in streamlining those goals and ensure farmers are better protected when revenue is lost due to crop disease, volatile commodity markets and adverse weather across multiple years."

Bush said NCGA leaders realize they aren't writing legislation, and the proposal is just a concept that would likely be changed in the legislative process. However, NCGA leaders think their plan offers risk protection and simplifies program rules while reducing costs.

"The education process begins today with the release of this proposal to the media and this thing heads up to the Hill now," he said. "Timing was definitely of the essence... We wanted something out in front of the super committee to consider before they just slashed direct payments and that was gone. We wanted something for them to look at that makes sense and producers can live with here."

Bush said the proposal is not lucrative. Farmers would only see payments in times of serious declines of commodity prices or yield. The program is based on losses in specific crops.

"It's not a payment you ever want to really get," he said.

One of the criticisms of ACRE is its overall complexity. The program causes a recalculation of direct payments, base acres and market-loan rates. ACRE also operates on a rolling two-year average based on state yields and market prices. Further, once farmers enroll a tract, it is locked in, which has prompted grief in getting landlords to agree to the program.

Under NCGA's concept, farmers would sign up for the Agriculture Disaster Assistance Program every year just as they now do for the Direct and Counter-Cyclical Program. "We see this as doing away with the landlord issue because it would be tied more to the producer, and the producer would elect to sign up for this on a year-to-year basis," Bush said. "Our intention was to simplify the ACRE program yet retain some of the same qualities."

The proposal would use harvest prices and establish a five-year Olympic average of farm revenue as the basis for payments. Further, rather than using state yields, NCGA proposes using National Agricultural Statistic Services regional crop reporting districts in each state to set the crop-revenue guarantee. In testimony before the Agriculture Committees, farmers have often suggested using a county yield average, but Bush said NASS just isn't able to get yields that detailed across the entire country.

"The problem with going past reporting districts is NASS doesn't feel they have adequate data for every county," Bush said. "They feel confident in their data for CRDs (crop reporting districts). That is why we chose to go crop reporting districts."

NCGA's proposal also would make some other tweaks to ACRE. For one, NCGA calls for basing the new program on a farmer's actual planted acres, not program base acres. ACRE also has a 90% farm-revenue guarantee, with a 25% payment based on that farm-revenue guarantee. This formula is unpopular in policy circles because in situations in which ACRE pays, farmers who buy-up crop insurance coverage can actually collect an insurance payment and an overlapping ACRE payment.

NCGA wants to bump the farm-revenue guarantee up to 95%. Payments would be based on the planted acres and adjustments in farm yields. A payment would be capped under NCGA's plan at 10% of the guarantee. The cap effectively makes the NCGA plan into a shallow-loss program to fill gaps not covered by crop insurance.

To break it down, if a farmer has a $1 million Olympic average of farm revenue, the 95% guarantee would be $950,000. A payment would be capped at 10% of that, or $95,000.

The ACRE guarantee also is capped at moving up or down 10% a year. Those caps would be eliminated.

"This program still covers the multi-year price declines that crop insurance can't cover," Bush said. "That has been a real point of this type of program."

Along with those changes, NCGA's plan would eliminate the 30% reduction in marketing-loan rates imposed by ACRE. While loan rates remain low, there are still farmers who like using those loans for operational expenses and the 30% reduction has hindered that option.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(AG)

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