Government support could shift for farmersby Conrad Wilson, Minnesota Public Radio
ST. LEO, Minn. — When Darwyn Bach climbs aboard his tractor to plant rows of corn, he can't help but think of the bottom line.
Bach has grown crops and livestock in western Minnesota, where farms blanket the landscape, since 1987. During that time there have been ups and downs.
"Well, the goal was always to stay in farming," he said. "But I always kept an open mind in case there was another opportunity that would arise. Especially in low income years you kind of have to keep different options open."
Over the last several years prices for soybeans, corn and other crops have increased, bringing in big revenues for Bach and other farmers. But despite some years of increased profits, Bach still received a $4,500 check from the federal government, his share of the $5 billion federal farm subsidies program. Along with other subsidies, and his profits, it helped his family ride out the years when prices were low.
Government support has long served as a safety net for farmers. But Congress could end the program in the farm bill that pays farmers that money whether crop prices are high or low.
For Bach, who already has planted 520-acres of soybeans and corn this year, the cash payment isn't a huge amount of money, but it is one that was important during lean years.
"I think the safety net is really what kept us going year to year," he said. "I mean without — without that income support I doubt if very many people would've been able to survive in the long term ... so yeah, they were an integral part of us staying in business."
In recent years, as crop prices have increased and budget hawks circle Congress, direct payments to farmers have become difficult to defend.
The Senate Committee on Agriculture's version of this year's farm bill does away with direct payments. But the bill also adds new protections that basically guarantee a portion of a farmer's revenue for certain crops, like corn and soybeans.
For example, if a farmer has a crop insurance policy that protects 70 percent of his average revenue, a new program in the Senate version of the farm bill the government would pay the farmer more — up 89 percent of revenue. Opponents of agricultural subsidies say that's way too much.
"The farmer would pay no premium to get that higher level of coverage," said Craig Cox, senior vice president for agriculture and natural resources for the Environmental Working Group.
The Washington-based nonprofit is critical of many of the current subsidy payments for farmers.
When a farmer buys crop insurance, Cox said, the government already pays a portion the premium.
"The taxpayer would be on the hook for the entire cost of picking up that piece of the deductible," he said.
Some following the bill say Congress is just creating a new way to support farmers.
"Ya know to the extent anybody wants to call it insurance, it's 100-percent subsidized insurance, which is the kind of insurance policy I'd like to have if it was offered to me," said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition. He has worked on the last eight farm bills, since 1977.
Hoefner said creating a new insurance policy to replace the farm bill's direct payment program could save money. He notes that, according to government estimates, the new plan could the costs of farm subsidies from $5 billion to $3.5 billion a year.
But Hoefner said the estimates don't take into account changing crop prices and farm revenue.
For farmers like Bach, that means if prices drop over time, so will the insurance payments.
"It's like a pendulum. It can swing greatly depending on price," he sad. "And that's really not a function of a safety net. A safety net is something you can count on and this isn't really something you can count on long-term."
Still, Bach said he'd take part in the program if Congress writes it into the farm bill because it would be his best option.
Congress has until the end of September to either extend the current farm bill or pass a new one.
- Morning Edition, 05/18/2012, 7:20 a.m.