Mike Kenyon, a Kane
County farmer, pointed to the huge round hay bales in the corner of
his barn, the products of his new roll-baler.
It’s fast, he says, and easy to use -- the only problem is, the
bales weigh close to 900 pounds. Every year, he says, someone gets
crushed underneath one of them.
“Well,” he continued with a little shrug, “you only die once.”
Farming is a notoriously tough business, which perhaps explains
Kenyon’s resignation about the future, at the end of a year of ugly
weather conditions and trade battles that hit the U.S. agriculture
sector hard. Nationwide, the average yield per acre for corn was
lower year than at any time since 1997, corn production was at its
lowest since 1995, according to USDA data. Wheat results were
similar, while the drop in soybean yields was less dramatic, but
also evident.
In the midst of this uncertainty, enter the massive 2002 Farm
Act, which last year was touted as a panacea that would save farmers
and end annual budgeting uncertainty, but at the same time was
decried as an expensive monstrosity that would increase farm subsidy
spending by $74 billion. But now that the law has been in place for
a year, Illinois farmers are saying it really doesn’t make much
difference.
And in fact, Congressional Budget Office figures show farm price
support payments actually fell in 2002, by 38 percent to $13.9
billion from $22.4 billion in 2001, which was under the old law.
“It’s not bad,” said Rick Corners, who farms 2,000 acres in
Jefferson County, about 300 miles south of Chicago. But, he added,
farmers aren’t breaking any records either.
Kenyon, in Kane County, is more pessimistic.
“The fault with the farm program is the support … is based on
market price” not on crop yield or income, he said. “If your yield
isn’t there, you’re not making any money” regardless of price.
“It don’t matter what the price is if you don’t have anything to
sell,” Corners agreed.
Both men have crop insurance, of course, but, said Corners, “you
just can’t insure enough.” Certainly not enough to make a profit, he
said.
Between 1996 and 2001, Steve Pitstick received about $437,000 in
farm subsidy payments, according to the Environmental Working Group.
Kenyon Brothers Co. got just over $207,000. Rick Corners got almost
$164,000.
Nevertheless, "nobody is really benefiting from it,” declared
Pitstick, talking into his cell phone from atop a troublesome
harvester as he tried to bring in his wheat crop. However, “it’s
keeping us all in business, you might say.”
“The government can’t solve everything,” Corners said. “There’s a
lot of farmers who’d shoot me for saying this,” he added. But,
“that’s just the way it is.”
Analysts in the U.S. Department of Agriculture tell the same
story as the farmers: the 2002 farm law raised the subsidy rates for
farmers, but a substantial portion of the additional money was in
countercyclical payments linked to low crop prices. After the law
was enacted, however, bad weather wreaked havoc with farmers’
yields, and the short supplies kept crop prices shored up just above
the price at which the subsidies would kick in.
For corn, the average market price for the first third of the
2002-2003 crop marketing year, which ends August 31, was $2.34 per
bushel, according to the USDA. If the full-year average falls below
$2.32, countercyclical payments kick in. The cash price this week is
only about $2.03, suggesting that there may be a countercyclical
payment after the end of this crop marketing year, although that
will be determined by the full-year average.
The essential factor is volume, or yield, farmers say.
Countercyclical and direct payments provide protection against low
crop prices when harvests are good, but they don’t provide any help
when prices are high, and failed crops mean farmers have less to
sell.
Hence the farm lobbying for an emergency relief bill passed by
Congress in February, appropriating another $3.1 billion to try to
make up for Mother Nature’s uncooperative streak. The implementation
of that bill has just begun, so it's not clear whether it will help
out the many farmers in southern Illinois who, according to Kenyon,
have lost nearly all of their wheat crop to wet weather.
“We got less for the crop overall than we should have,” said
Pitstick, who owns a farm in Kane County not far from Kenyon’s. “The
farm bill came into existence, I guess you would say, late in the
season. We had some grain sold ahead of time,” he continued, so when
the farm bill was passed, and the price subsidies were raised, he
and other farmers found they’d sold too early to collect on them.
The 2002 Farm Act also introduced direct, or guaranteed, subsidy
payments for each crop produced, regardless of market prices. The
prices rise during the five-year term of the law. Currently the
direct subsidy payment for corn is 28 cents per bushel, for wheat
it's 52 cents per bushel, and for soybeans, 44 cents per bushel. No
direct payments were provided under the 1996 Farm Act.
The new farm bill has taken a little time to get used to, but
“everybody’s figured out the new game,” Pitstick said.
But, a taxpayer might ask, what's the benefit of that huge new
farm law? Where did that $74 billion funding increase go? Some math
can account for much of the difference between what was in the
newspapers last year and what's actually happening.
The $74 billion increase and $170 billion spending total are both
long-term projections of the 2002 law's costs by the Congressional
Budget Office. Since farm subsidies are considered an entitlement
program, like Social Security, the actual amount of funding isn’t
written into the original authorization law, and varying demand –-
because of, say, weather -- makes estimating long-term costs tricky
at best.
But the estimate is for ten years, which is anomalous, since the
direct and countercyclical payment triggers in the farm law are for
only five. So half of that estimate is based on assumptions about a
future bill that Congress has yet to write.
Then, too, the level of “new” spending depends upon what you
think of as the “old” spending, said Bob Hauser, a farm economy
expert at the University of Illinois at Urbana-Champaign.
The “old” 1996 farm law was supposed to wean farmers away from
the large, top- managed subsidy programs that had existed for years,
he explained.
But no weaning took place, and a series of big-money supplemental
and disaster-relief bills in subsequent years actually ended up
raising substantially the farm subsidy levels in the late ‘90s. So
figuring out the change in the level of funding requires totaling
all the money that was in fact spent, not just what was authorized
in the ’96 law.
The Environmental Working Group, a Washington-based lobby that
wants a reduced farm program, puts the total funding for the five
years from 1996 to 2001 at $92.2 billion.
The CBO estimate for the new law, for the five years from 2002 to
2007, is $107.6 billion, which would be an increase of $15.4
billion, or 16 percent, not exactly chicken feed but a far cry from
the $74 billion figure that had been publicized.
For the 2004 crop year, the CBO estimates an outlay of $19.9
billion, or 0.9 percent of CBO’s estimate of 2004 total federal
spending, $2.2 trillion.