2008 US Farm Bill

“The unintended consequences of a government program are usually greater than the intended consequences.”  Unknown origin.

Have you ever wondered what the US Farm Bill looks like to an individual farmer?  We signed up our farm for the 2009 growing season.  I wanted to get on my high-horse and opt-out; but my parents talked me into taking the “free” government money.  When I hear farmers griping about “welfare moms” taking government hand-outs I can usually change the conversation with a simple question.  “How much is your government payment?”

The 2008 Farm Bill is on the books.  It covers the 2009 through 2012 growing seasons.  According to the “Wisconsin Agriculturist”, the 2008 Farm Bill works out to $189 billion for domestic nutrition programs and $102 billion direct support for farmers.  The direct farmer support can be further broken down into $42 billion for commodity crops, $24 billion for conservation, $22 billion for crop insurance, and $14 billion for supplemental disaster assistance, trade, horticulture and livestock production, rural development, research, forestry, energy, and other programs.

With $10 billion in offsets from tax provisions the direct farmer support is reduced to $92 billion, or about $18.4 billion per year.  That works out to about $60 for every American.  What are you getting for your $60?

An excellent informational resource is 2008 Farm Bill Side-by-Side.

Eligible commodities are wheat, corn, grain sorghum, barley, oats, upland cotton, rice, peanuts, soybeans, other oilseeds, and pulse crops.  Payment rates are found in the previous link.

What entitles a farmer to receive a direct government payment?  Eligible producers share in the risk of producing a crop on base acres on a farm enrolled in DCP; annually report the use of the farm’s cropland acreage; comply with conservation and wetland protection requirements on all of their land; comply with planting flexibility requirements; use the base acres for agricultural or related activities; and protect all base acres from erosion, including providing sufficient cover as determined necessary by the county Farm Service Agency committee, and control weeds.

That all sounds great, except I know of no farmer that has had their farm checked for these provisions. 

Our direct government payment for 2009 is $3,552.  How is this determined?

The direct government payment is based on the historical production of a farm.  This is an average record of the various crops and acres planted to each crop.   The USDA refers to this as “base acres”. 

The base acres are then multiplied by 83.3% to get your payment acres.  This has been reduced from 85% in the previous farm bill.

Your payment acres are then multiplied by the historical county yield to calculate yield per acre in bushels.

Bushels are then multiplied by the payment rate to determine the direct annual payment in dollars.

Here is what our farm looks like:

Commodity Base Acres Payment Ac. Yield Pay rate Direct pay
Corn 130.6 108.8 112 $.28 $3412
Barley 10.7 8.9 55 $.24 $ 117
Oats 18.2 15.2 62 $.024 $  23

The strange thing about this is we don’t have to grow these crops to receive the payment.  All we have to do is own or rent the base acres.  Farmers look at the expected government payment when valuing land.  An unintended consequence of the US Farm Bill is raising the value of farmland. 

Another strange thing is the pay rate.  This seems to be based on the strength of commodity lobbyists.  Look at barley and oats.  On our farm these two crops are managed the same.  Their effect on the soil is virtually the same.  Why is their payment rate so different?  The only reason I can guess is that the barley lobby is more powerful than the oat lobby.

We have over 100 acres of hay.  Why isn’t there a payment for this commodity?

The strangest thing of all is we don’t know why we receive this money.  We are long-term stewards of the land.  We don’t do anything differently based on the government program.  All it costs us is a couple hours of paperwork.

The most recent statistic I saw was from 2002.  Only one third of farms received a government payment.  Most of the farms that received a government payment received substantially more than $3500.  If anyone knows of more recent statistics, please comment.

6 Responses to 2008 US Farm Bill

  1. […] I’ll be the first to admit that I don’t know much about the Farm Bill, but Curious Farmer does an analysis for what it means for his farm […]

  2. James says:

    Great explanation.

    I like how you are comfortable revealing financial information about your farm.

  3. FoodBubbles says:

    Thanks for the heads up about this fantastic post. It’s a lot to take in, but it gave me great insight into how the farm bill affects the average farmer. It answers a lot of questions, but also presents some that you may or may not be able to address:

    1) Any idea why only one third of the farms take up the government’s offer? Is it the relation to the “welfare mom”, like you mentioned?

    2) How often do farmers flagrantly disregard the conservation and planting flexibility requirements? What are “planting flexibility requirements”?

    3)What about the other payment? I mean, the one where the government pays the commodity producer the difference between the stated “market value” and how much it actually sold for. Where does that usually come in? For how much?

    I would love to see future posts that speak to these issues.

    Thanks!

  4. curiousfarmer says:

    Thank you FoodBubbles for your comment and questions. I will address your questions.
    1. According to the USDA a farm is counted if it grosses over $1000. So a farm with two acres and a sale of one horse for $1000 would count. Of the farmers that qualify for the government program I know of only one that opts not to take the payment. If we don’t take the money that is offered we will be at a competitive disadvantage with our neighbors as we compete for a finite resource, (land). This is one of the reasons I don’t like the farm program.
    2. Farmers are much better stewards of the land than they were one hundred or even fifty years ago. I can see plow scars in our pastures from farmers of yesteryear. There is no economic incentive to disregard conservation and there is a social stigma attached to visible erosion. Perhaps this is why the FSA doesn’t police the requirements.
    I had to look up “planting flexibility requirements.” Turns out it is typical government speak. What it should say is planting inflexibility requirements. This is what it says: “The planting of fruits (including nuts), vegetables (other than mung beans and pulse crops) or wild rice on base acres on the farm is prohibited.” It appears I can plant the base acres to any other commodity, though.
    3. The Counter-Cyclical payment makes up the difference between market price and a target price. We haven’t collected on this in the past couple of years and don’t anticipate the prices being low enough to collect this year. I will report it if we do. There is an economic incentive to cheat with this program and the FSA recognizes this and polices it well. Most farms, including ours, have been spot-checked for accuracy.

  5. Monica says:

    The Environmental Working Group (ewg.org) has some impressive — and appalling — statistics on farm subsidies.

  6. curiousfarmer says:

    Thanks Monica! Lafayette County, Wisconsin, my county, had over 4 million in direct payments in 2007 alone.

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