After three years of haggling, Congress finally gave us a new farm bill in February. And none too early. According to various politicians and farm leaders we farmers desperately needed one. Apparently we have been so wracked by uncertainty that we barely knew what to do.
Farmers were so wracked by uncertainty that last year we had our most profitable year ever. If this is life without a farm bill, I'll have another please.
The 2008 farm bill expired three years ago, and Congress has been debating a new one ever since. Republicans were holding out for cuts in food stamps; Democrats were holding out for cuts in crop subsidies.
They compromised. The compromise is that crop subsidies may actually go up, and food assistance (which has doubled since 2008) will be cut one per cent. Nothing like spreading the pain around. At the same time, our federal debt as of this moment is $17,500,000,000,000 and change.
This would be as if Pam and I already had a credit card debt that we could never pay off in our lifetimes. And I was spending way too much on beer, and Pam was spending way too much on books. And for three years, we got on each other's cases. "Randy, we can't afford all that beer; you've got to at least buy Hamm's." "Pam, you haven't read half the books you own; can't you use the library?"
Then one day, I say to Pam, "We've got to quit fighting about this. I have a compromise. I'll spend even more on beer and you cut back your spending on books one per cent."
The new farm bill does do away with direct payments. Those are payments farmers have received since 1996 that were based on the fact that we existed. Nothing to do with price or yield, these were sent to us apparently because we're nice guys. You know, salt of the earth, backbone of America.
We continued to receive direct payments as the old farm bill got extended. They continued through the last five years, the most profitable in the history of American agriculture. This passed "reasonable" and crossed into the territories of "embarrassing" and "lunacy" at some point. If you want an example of government run amok, I dare you to find better.
"Direct" payments were created in an attempt to "decouple" farm support from decisions farmers made about what crops to grow. It made sense when commodity prices were low. When prices exploded to historic levels in 2008, you would have expected someone, anyone, to step forward and curtail their distribution.
This comes in the midst of significant debate about the role of government. We all agree it has important duties, but it has over-committed on many fronts. If these ridiculous payments couldn't be eliminated, well, in the words of the punk band Toxic Narcotic, "We're all doomed."
I have been asked if the farm organization I founded would disband now that direct payments will cease. Producers Opposed to Obscene Payments (P.O.O.P.) gathered in an emergency session at Meyer's Bar. Our board decided to stick around, since there is a good chance that the shifting of funds from direct payments to expanded crop insurance subsidies may actually cost you taxpayers more. It is only in the down-the-rabbit-hole world of the federal government where "cuts" end up costing more.
Speaking of Wonderland, the 950-page farm bill includes a new commodity program. We dirt farmers have to make a one-time choice between something called Price Loss Coverage (PLC) and Agricultural Risk Coverage. Here is a small portion of Extension Economist Kent Olson's analysis:
"Under PLC, payments to farmers are made on the basis of the difference between the national average marketing year price and the reference price, the farmer's payment yield, and the farmer's payment acres. Farmers have a one-time opportunity to update payment yields from 93.5% of their 1998-2001 average yields to 90% of their 2009-2012 yields. Payment acres will be 85% of either their current base acres (typically the average of their 1998-2001 acreages) or a reallocation of the current total base acres based on their mix of crops in 2009-2012."
I follow this stuff closer than most, and nowhere in the debates of the last three years did I see anything like this. It came to us sewn in whole cloth. Amy Klobuchar and Collin Peterson did not write that. It does make one wonder what pencil-pushing-geek-committee-staffer came up with it. "Farmers have a one-time opportunity to update payment yields. If they are left handed, farmers can adjust yields based on the position of Orion in the night sky"
While this sort of gobbledygook was being written, efforts from the right and left to put limits on farm support failed. So for now, Microsoft billionaire owner Paul Allen is considered "actively engaged" in farming and receives subsidies just like Brown County thousandaire Randy Krzmarzick.
I realize I'm being cynical here. I've farmed most of four decades, and have dealt with PIK, set-aside, ACRE, and thousands of forms. Certainly there were times government payments were appreciated. There were years that was all the profit there was and what we had to live on.
But what if there had never been a farm bill? Might there be more farmers today? I've had this conversation with several farmer friends. The first farm bill, the Agriculture Adjustment Act, was passed by Congress in 1933. Eighty one years later, what have those billions of tax dollars wrought?
A problem, the problem, with the farm bill is that financial support has always been linked to acres and bushels. Of course it would be. But there has never been any meaningful cap on the dollars offered to producers. There have been limitations written in the bills, only none that ever limited anything. The stories of creative accounting to circumvent those limits are legend.
So in removing some of the risk for growing my 30,000 bushels of corn, you've removed some the risk in producing 300,000 bushels of corn. And you've just given the farmer with 300,000 bushels the wherewithal to buy bigger equipment and to pay more for rent. So what if he wants to grow 330,000 bushels next year?
Much of the movement to larger and fewer farms is an inevitable march of time and technology. I do not begrudge farmers who operate more land than me. Many of them are friends. They are good hard-working businessmen who have chosen to be more aggressive than I have, and that is fine. I do question why you taxpayers have been part of their operation.