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Economist: Non-farm groups seeking changes to farm bill
Ohio Correspondent

ATTICA, Ohio — The next farm bill is likely to focus on managing risk through revenues and conserving productive farmland, according to Carl Zulauf, an Ohio State University ag economist.

“There will be a farm bill. It’s a matter of what’s in it,” he said during a 2006-07 Policy and Outlook meeting last week at the Attica Fair-grounds.

“There’s a very different environment from any of the previous five farm bills I’ve been involved in,” Zulauf said. “In my 25 years I have never seen as many non-farm groups talking about the need for change.”

Zulauf said the public perception is that farmers are wealthier than people in other segments of the economy. He said farmers must understand that perception, whether or not they agree with it. “The farm sector is in good shape economically right now,” Zulauf said, although livestock is hurting because of high corn prices.

After 75 years of improvements, several statistics show past changes have worked. The farm program began in 1934 as a poverty program to supplement farm incomes with money from the non-farm sector.

“It appears that the farm sector has approached equilibrium,” he said. “We should all be saying, ‘Hallejuah.’”

Data from the USDA show the incomes of farmers are higher than the incomes of the general public.

The data predates current crop price increases.

“It shows farm households are better off than non-farm households since the 1990s,” he said.

Although he sees problems with the data, he said it’s difficult to “sell” legislators the need for $20-$25 million in transfers from relatively poorer non-farm sector to the better-off farmers.

Large newspapers such as the Wall Street Journal and the New York Times have been critical of farm programs for that reason. There is another difference in the environment surrounding this farm bill debate.

For the first time since 1981, Zulauf said, the farm community as a whole is not in agreement on the next farm bill.

Rice and cotton growers - which have been receiving the bulk of available money - would like the farm bill to remain as it is, while many others want change.

“There’s a huge disagreement among farm growers about what to do,” he said. “If farmers are not speaking with a unified voice, you open the door for non-farm sectors.”

Even farm sectors not normally included in the farm bill want to be heard, such as the fruit and vegetable growers and the livestock industry.

Non-farm voices come from conservation groups, which would like payments tied to conservation measures; international development groups; domestic food programs, which think money should go to the people poorer than farmers; and foreign governments, who see government payments as export subsidies and want them to stop. “We could have a very nasty fight,” he said.

Zulauf said most legislators come from areas where farming is not a large factor.

“That is a fundamental problem,” he said. “That opens the door for change.”

Zulauf said the United States is only now seeing the effects of changes made in the farm program 10 years ago.

“It takes about 10 years to understand the impact of a policy change,” he said.

Statistics show spending for farm programs has switched steadily from 90 percent price supports in the 1961-1973 farm bill to only 41 percent price supports currently.

Instead, funds go toward risk management and fixed income payments.

Zulauf said the debate will begin in earnest next summer and the results will depend on conditions at that time.

“At that point a lot of it will depend on the price of corn,” he said.

This farm news was published in the Dec. 13, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.