Farmers differ on bill, but all want safety net
PESOTUM – Not even farmers agree on the legislation that governs their industry. But as Congress considers revamping the farm bill, many agree that one thing that should remain is help in bad times.
Eric Rund said he's disappointed in the House proposal for a new farm bill because it's more of the same.
Rund, who's changing his farming plans so he'll be in a position to cash in on growing markets for energy crops, would like to see legislation that would support alternative markets.
"The government should provide seed money, not long-term subsidies, so we can develop markets and give industry tax credits or loan guarantees so they can install new equipment," said Rund, who thinks crops like miscanthus show the most promise for producing energy.
But he wants the government to keep a safety net in place.
"I was dependent on the farm program until this year," said Rund, who plants two-thirds of his land with corn because his travels in South America showed him beans can be grown much cheaper there. That decision five years ago put him in a good position this year to take advantage of ethanol-fueled corn market prices.
"Between 2000 and 2005, there were two years in a row when my net income was from farm payments," he said. "This year, I'll get little if any. It's a good feeling to rely on the market rather than a brown envelope that comes in the mail."
Chris Hausman, who also farms near Pesotum, said he likes the flexibility of the current farm program. "It gives farmers the freedom to make changes based on market prices, and that's what farmers want," Hausman said. "We want income from the market, not the government. But we need to have a safety net to help all producers when yields or prices fall short."
Agri-Visor analyst Dale Durchholz said that freedom – included in the 2002 policy and unchanged in the House proposal – felt good to farmers after years of policies that tied subsidies to specific crops and planted acreage.
"There were four years in the mid-1970s when no one signed up for farm programs because market prices were higher than supports, so that's the only period we can draw numbers from, " Durchholz said. "In the '70s farmers could plant what they wanted and that's where they are today under the current farm bill. They're free to choose."
He said government policies offering incentives for purchasing crop insurance also gave farmers freedom to plant more corn this year to take advantage of the ethanol boom – a "surprising" 92.9 million acres of corn compared with 64.1 million acres of soybeans.
The House proposal makes significant changes in payment qualification rules, lowering the ceiling, and that's causing a lot of discussion in farm circles. But the proposal makes only minor changes in the rules for countercyclical and direct payments.
Chuck Spencer, head of national legislation for the Illinois Farm Bureau, gave farmers at the recent annual Commodities Conference at Springfield a look at what's in store with farm legislation in Washington. He also spoke to Champaign County farmers a day earlier.
He said farm and urban interests are best tied together in the so-called farm bill, even though commodity programs make up about 11.8 percent, or about $7 billion to $9 billion, of the total budget. Nutrition programs command 62.7 percent of it.
Spencer said labeling, USDA snack programs, food stamp programs and community development all emerge as top priorities in the House agriculture committee's press release about their legislation and programs involving farm production are farther down the list.
But he said that's good, because being included in the same legislation as programs like food stamps means rural and urban legislators all have an interest in the bill's outcome.
Spencer said House bill changes in payment qualifications mean more farmers will get shut out of the program. The 2002 farm bill says farmers with adjusted gross incomes exceeding $2.5 million are ineligible for conservation and commodity payments, but the House cut that income limit to $1 million.
"The Senate's already said it's going to go lower," Spencer said. "We'll have the opportunity to find out about payment limits because they're coming down, and they won't be coming back. The Senate's leaning toward $250,000, much lower than the House."
He worries about unintended consequences.
"I'm afraid the people who control the land will go to cash rent, and who benefits from that? The landowner," Spencer said. "And the cash rent comes out of whose pocket? The farmer."
With crop share leases, farmers and landowners share the crop, the expenses and the risks. But landowners collect all their money upfront with cash rent leases. Spencer said that puts all the risks on farmers, and if they have to borrow money to put in a crop, they also lose the interest on that money.
"Even with the $1 million ceiling, some farmers are saying, 'With corn at $4, that's getting closer to my income,'" Spencer said.
House members raised limits on direct payments from $40,000 to $60,000 and retained the $65,000 cap on countercyclical payments.
He said the Senate likely won't convene its agriculture committee in September and its farm bill talks could go on through the fall. The current bill expires Sept. 30 and Spencer said the longer Senate talks take, the more likelihood the current bill will be extended.