By TIM THORNBERRY
Kentucky Correspondent

LOUISVILLE, Ky. — As discussions of the 2012 Farm Bill begin and a federal budget is introduced in Washington, the idea of cutting agriculture subsidies as a cost reduction measure has once again surfaced.

The program has long been targeted by both Republican and Democratic administrations over the years, so it’s anyone’s call as to whether it will actually happen now. Critics argue it is an antiquated system that has outlived its original intent, to help struggling farmers during the Great Depression. That is not the case according to those in the agriculture industry.

“Farm support programs not only keep farmers in business, but also help maintain land values, stabilize food prices, and improve local, rural economies,” said Jennifer Elwell, communications director for the Kentucky Corn Growers Assoc. “Removing these programs will not only affect our food supply, but society as a whole.”

She added that support payments to farmers represent less than one half of a percent of the total federal budget, yet agriculture is responsible for one-sixth of our nation’s economy.

“While wanting to get rid of ‘subsidies’ may be the popular thing to do in Washington right now, I don’t see how reducing farm programs will have a big impact on the overall budget,” Elwell said.

The President doesn’t see it that way, however and has included some cuts in the current budget proposal.

According to information from the Office of Management and Budget, “The President’s budget proposes to refocus assistance to rural America by tightening existing payment limits and targeting payments to only those who really need them. Reducing payments to wealthy farmers will generate $2.5 billion in savings over 10 years while still maintaining a strong and secure safety net for production agriculture.”

The proposal would overhaul subsidies and the federal crop insurance program. Information from the USDA states, “The budget proposes to limit farm subsidy payments to wealthy farmers by reducing the cap on direct payments by 25 percent and reducing the Adjusted Gross Income (AGI) payment eligibility limits for farm and non-farm income by $250,000 over three years.”

Reforms to the crop insurance program are projected to save a total of $8 billion over 10 years as the USDA will pursue reforms to the financial terms of the Standard Reinsurance Agreement, government’s contract with the crop insurance companies.

For many farmers the crop insurance issue is just as or more important than subsidy cuts.

Richard Preston, a first-generation grain farmer from Glendale, Ky. said if risk management programs are reduced or eliminated, he believes it would send our food production system into chaos.

“Lending organizations would not be willing to provide capital to farmers without crop insurance, and modern farming requires incredible input costs,” he said. “I have a mid-sized farm, about 2,000 acres, and it costs me about $1 million to operate each year. Last year, I had a bad crop, but my neighbor five miles away had a good crop. Without insurance, I would not have been able to continue doing business.”

Often farm programs in general are criticized especially by non-farm oriented groups, as being too expensive and wasteful. 

Mark Haney, president of Kentucky Farm Bureau said without the safety net of farm programs, not only are farmers affected but so are consumers.
“Here in the U.S. you spend anywhere from 10 to 12 percent of your disposable income feeding yourself and your family, whereas, in many other countries it’s two or three times that,” he said. “That happens because we have a stable food source and we see that as national security. We think it is very important that the U.S. can feed itself and continue to feed many other countries.”
In the case of direct or counter-cyclical payments made to farmers when prices fall below a predetermined target price, Haney pointed out that those kinds of payments, while getting much of the negative press, have not even kicked in for a time due to strong commodity prices. He also said that many reforms to the system were made in the 2008 Farm Bill.

Farm Service Agency Administrator Jonathan Coppess announced last month that the USDA wasn’t issuing 2010-crop counter-cyclical payments to producers of certain covered commodities.

“Counter-cyclical payments are authorized by the 2008 Farm Bill to provide producers with a safety net during periods of low crop prices; but I know our farmers overwhelmingly prefer to receive compensation for their efforts from the marketplace,” he said.

As the country struggles to come out of a recession, the agriculture industry has been strong and has led the way out of the economic downturn in many communities.

Rep. Frank D. Lucas (R-Okla.), who chairs the House Committee on Agriculture said, during a recent public hearing to review the state of the farm economy, that the U.S. farm economy is strong, but warned that things can turn quickly. He also likened the nation’s farmers to a thin line.

“There are just 210,000 Americans out there who are responsible for 80 percent of U.S. agricultural production. These Americans support our economy, help keep us secure, and in these 210,000 people lies the answer to the question of how we are going to feed nine billion people come the year 2050. In short, these American men and women form a very thin line that we had better hold.”
Preston said agriculture is one of the last successful manufacturing industries that the United States has, and our agricultural products are something the whole world wants.

“For an economy to do well, you must produce or build something. Agriculture does just that and it creates lasting value,” he said. “Most all farm profits go straight back into the local community. We continue to invest in our futures and the futures of our children and grandchildren by building infrastructure. It seems very silly to attack the one economical segment that lets us compete in the global economy.”