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Producers brace for impact as cuts loom
Ag News - State Ag News
Wednesday, 24 August 2011 06:57

By Amy Bickel
The Hutchinson News

Traveling Kansas for his listening tours the past few weeks, Tim Huelskamp knows all to well the conditions that plague his Big First district.

Not that the fifth-generation Republican farmer hasn't been through droughts. His family's Fowler-area farm is in the heart of southwest Kansas' semi-arid plains - a landscape that has prospered under the advent of irrigation.

Nevertheless, with temperatures soaring above 100 degrees and little rainfall coming from the sky, even the center-pivots can't keep some corn from burning in the field.

Times like these make farm subsidies like crop insurance even more important, the freshman congressman said.

However, with a looming trillion-plus-dollar debt coupled with a Congress generations removed from the family farm, Huelskamp, whose own family farm receives farm subsidies, admits some of his fellow lawmakers aren't tuned in to what is happening in the Farm Belt.

"I don't think Congress has a clue what is going on," he said, noting that in being one of just a dozen or so farmers represented in the House, it's tough "convincing an urban Congress what is going on in rural America."

That includes the use of farm subsidies.

With a swollen deficit and intense congressional debate on slashing the budget, farm programs again are on the chopping block.

Huelskamp says farmers tell him they know they will have to take a hit, but they're concerned what and how much leaders might target. Potential programs include direct payments, conservation funding and crop insurance.

"In general most of the farmers who speak up recognize we have a spending program," Huelskamp said. "They want to do their fair share. They recognize something is going to have to give."

Direct payments are the main target, he said, but noted farmers are worried Congress might cut drastically from another area that has helped them amid the lingering drought - crop insurance.Forming a farm bill

When Franklin Roosevelt signed the first farm policy into law in May 1933, he promised it would be a temporary measure.

Nearly 80 years later - though tinkered with over the years - the government program is still is in place.

The current farm bill doesn't end until 2012, but amid the more than $14 trillion budget crisis, Congress already is working on the latest measure - one that falls in a far different era than the New Deal period, or even a decade ago.

The top two priorities for Roosevelt's administration were to save the family farm and help rural America - providing a safety net as prices plummeted. But these days, most Americans are far removed from the land. Unlike the 1930s when 25 percent of the U.S. population lived on farms, today that figure is less than 2 percent.

About every five years, however, lawmakers construct a new farm bill - one that today has more to do with nutrition than farm programs.

When the latest farm bill was enacted in 2008, Congress estimated the cost at $284 billion over five years, with 67 percent going to nutrition programs, 15 percent to commodity programs, 9 percent to conservation and 8 percent to crop insurance, according to the Congressional Research Service.

Regardless, Kansas farmers still receive a boost from subsidies: Kansas ranked fifth in the nation in 2010 for subsidy payments with $931 million handed out, according to the Environmental Working Group.

The group is an opponent of government subsidies, saying 10 percent of U.S. farmers receive almost 75 percent of the payments.

Meanwhile, others argue over whether payments are needed at all. Although net farm income is expected to fall in Kansas because of drought and other weather events, they cite that national farm income should rise again this year as commodity prices have remained at higher levels the past few years.

Despite the drought this year, even Kansas farmers have had a string of good years, said Troy Dumler, a Kansas State University agriculture economist based in Garden City. He said the past four years in terms of profits have been the best since the Russia wheat deal in the 1970s - if not better.

"If the goal is to reduce farm subsidies, now is the time to do it," Dumler said. "Farm income will be high; farmers are in the best position they have been in recent memory to handle those cuts. They are getting a lot more return from the market and that doesn't look like that will go away this year."

Dumler said farmers averaged $118,000 from 2007 to 2010. If Congress were to get rid of all government payments - commodity, conservation and disaster subsides except for crop insurance - net farm income would drop about $20,000 to $98,000.

Larger farms probably would not feel the hit as much as smaller farmers, he said. However, he noted, he doesn't expect cuts to be that drastic.

The impact to rural America is what concerns Minneapolis farmer Steve Baccus. While commodity prices are higher, machinery costs have skyrocketed, as well as other inputs like fuel and fertilizer.

Already rural American is on the decline, said Baccus, president of the Kansas Farm Bureau. The 2010 census showed 77 Kansas counties lost population in the past decade. Of those, 23 saw declines of more than 10 percent.

Baccus said the government already has cut crop insurance by $12 billion in the past couple of years.

"We feel like we've already contributed a lot already," he said. "Main Street rural America is going to feel it if it goes the way it sounds like it could go."Targeting direct payments

The biggest hit probably will come from direct payments, which totaled about $5 billion last year, Dumler estimated. Commodities eligible include grains, like wheat and corn, as well as cotton, rice and peanuts.

Baccus said direct payments - which are made regardless of whether prices fall - are popular in the South with cotton and rice farmers - crops that can be more expensive to grow. Lawmakers in those areas say fewer cuts should be taken from the direct-payment program and more from crop insurance.

However, Midwest farmers depend on crop insurance more than those in the South - especially this year as drought, flooding and hail affected states such as Kansas.

Baccus said he is concerned that without subsidized crop insurance, farmers wouldn't be able to afford coverage from the private sector.

"The South, they'll fight tooth and nail to keep" direct payments, he said. "But we have real concerns about the cuts - primarily to the risk management programs if you are farming from Texas to Minnesota."

On his own farm, he has 300 acres of corn that an adjuster appraised at 20 bushels an acre. Conditions worsen in southwest Kansas, he said, where some corn under center-pivot irrigation already has been chopped for silage.

"It's pretty sad," he said.

Rebecca Davis, director of the U.S. Agriculture Department's Risk Management Agency in Topeka, said her agency has paid out more than $155 million in crop insurance indemnity payments this year. Of that, $142 million was for wheat.

"And it is still going up," she said, noting fall crop estimates are trickling in from adjusters.

In all, Davis estimated that about 85 percent of Kansas farmers participate in the government's crop insurance program. The government subsidizes 59 percent of the premium.Their two cents

On Thursday, the Senate Agriculture Committee will conduct a hearing in Wichita to hear from Kansas producers and leaders about their thoughts on the farm bill.

At a Senate hearing in May, Ag Secretary Tom Vilsack said the USDA was prepared to do as much with fewer resources, but "there is no doubt that cuts will have real impacts for American agriculture and the American people."

"There will be pain and everyone will have to sacrifice something," Vilsack testified. "There are no easy cuts."

What the final 2012 bill will eventually look like in the end is anyone's guess, said Karl Esping, a Lindsborg farmer who also is chairman of the Kansas Sunflower Commission and serves on the National Sunflower Association board.

His wife's family began farming in 1869 in McPherson County, and Esping is still farming that land. Now his son is helping with the operation, the sixth generation.

Along with Baccus, Esping said he would be presenting his own views at Thursday's hearing. He will talk about research and development - about the need to feed a world of more than 9 billion by 2050. He will talk about the need for an abundant and safe food supply.

He will also stress the priority of crop insurance as an important risk management tool.

Esping said he has watched as farmers across McPherson County have had to chop their dryland corn for silage as drought conditions linger. Even his own crops are suffering, he said.

He went to Washington in February, stopping in 18 different congressional offices to talk about farm policy. He knows the current budget situation.

He knows something is going away.

"We all know the troubles that our country is in financially, and we know that farm programs are under extreme scrutiny," he said. "We know we need to share."

 
Comments (1) Comments are closed
1 Wednesday, 24 August 2011 08:12
If Huelskamp is truly a tea party member, he will vehemently oppose all farm subsidies as they are Govt entitlements. Time to walk the Talk Mr congressperson.
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