Lexington, KY - It’s never easy for so many lawmakers to compromise on so many issues connected to the Farm Bill. And the legislation now in process on capitol hill in Washington likely is one of the most far-reaching pieces of farm legislation that Congress has considered
The battle is underway as the U.S. Senate Committee on Agriculture, Nutrition and Forestry has passed a bill proposal and the House is currently taking up discussions of their version of the legislation.
The Senate committee bill, among other things, cuts direct payments to farmers and “will reduce the deficit by $23 billion dollars by eliminating unnecessary subsidies, consolidating programs to end duplication, and cracking down on food assistance abuse,” according to a press release from the committee.
This would mean, “Farmers will no longer be paid for crops they are not growing, will not be paid for acres that are not actually planted, and will not receive support absent a drop in price or yields,” the release noted.
Traditionally the government has provided subsidies in many different forms to help control prices in the event of a market surplus, natural disasters, market volatility or for land preservation purposes, to name a few.
And farmers will argue that the very supports some legislators are trying to eliminate bring stability to the markets.
The measures contained in the proposed bill are similar to recommendations made last year when an attempt to pass a farm bill within the so-called Super Committee died along with the committee itself.
Jeff Harper, director of the Public Affairs division at Kentucky Farm Bureau (KFB) said there were no surprises in the recent action.
“I don’t think the farming community was shocked with the bill that would eliminate direct payments,” he said.
Instead of those payments, the committee recommendations are to prop up the crop insurance program and combine two existing programs to provide most of the necessary security.
Harper said ultimately what will impact farmers here and across the country is some type of risk-management specifics, whether contained or not contained in the bill.
He pointed out the freezing temperatures from a few weeks ago that will possibly affect some producers, including peach and wheat growers, as an example of just what can happen and why protective measures are needed.
“We’ve got to have some type of risk management that protects our farmers in that situation,” Harper said. “We had a moist March and it has been dry through April and it might not rain until August and I don’t know of a farmer that can make it rain.”
Harper added that an argument could be made either way for certain parts of the bill, but farmers need that security for events that are out of their control.
“I don’t think you can find a farmer anywhere that would argue that their corn, soybeans and wheat prices have not been good but there is no guarantee that it will be that way this time next year,” he said. “Can you imagine if we went back to two dollar corn (corn closed just over $6.25 a bushel at the end of last week.) So we’ve got to have some kind of revenue assurance programs, as well that protects (against) volatility in the market.”
While grain prices are good, input costs have skyrocketed which would make profitability nearly impossible if a big dip in prices occurs.
“What we cannot lose sight of, in my opinion, is that food is a national security issue in this country,” he said. “I don’t think anybody in America, whether they live in the most rural part or the most urban, wants to ever become dependent on food like we are for our oil. That is a decision Congress will have to make.”
John Mahan raises a variety of crops including tobacco, alfalfa hay, corn, soybean, and wheat. He also runs a sod business along with beef cattle and equine boarding operations in northern Fayette County. Mahan said farmers can do without direct payments if the government can guarantee commodity prices will stay at today’s levels.
“Less than two years ago, we sold corn for $3.50. At today’s fertilizer prices, that does not compute,” he said. “We have got to be profitable for the country to produce the food we need and other countries demand. Obviously that is what it all boils down to. If we don’t eat, everything else ceases.”
Mahan said it’s not just farmers that benefit from direct payments, who use that money for various reasons. For example, it helps land owners who rent their land to farmers.
“It’s a trickle down effect,” he said. “The direct payment adds to the bottom line but my concern is that trickle down effect and the effect the lack of direct payments is going to have. I will have to change things in my operation because that part of my safety net will be gone. It’s going to be felt where I shop, where I buy parts and equipment, where I spend money.”
Like many other farmers, Mahan has nearly completed planting his corn and spent the money to do so. In the event of a drought, for instance, some farmers may not have the available funds to plant next year’s crop, he said.
“Crop insurance will heal some of that wound but you’re not going to have any profit,” he said. “We have been blessed with good prices and good yields but just because we’ve had that, doesn’t mean we need to remove our safety blanket. There are no guarantees on this crop. We play the hand that Mother Nature deals us and we could have a disaster as easily as we could have a home run.”
Mahan summed up the issue by recalling a conversation he had with a friend recently that “really hits home” considering the price of gasoline. “If you think we like depending on foreign oil, imagine how much we will like depending on foreign food,” he said.
Mahan said getting the bill passed may be difficult considering all the misunderstanding and differences of opinions. The current farm bill will expire on Sept. 30 of this year and with the presidential election looming, the 2012 Farm Bill could easily turn into the 2013 Farm Bill.