Farmers oppose subsidy changes

Apr 26, 2009      The Free Lance-Star

Chelyen Davis

Apr. 26, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Farmers are worried over a proposal from Democrats in Washington to reduce subsidies farmers receive from the federal government.

A budget proposal to base direct payments to farms on gross sales rather than net income failed last month.

But farm organizations say the issue is still out there, backed by the Obama administration, and that it's likely to rear its head again.

The proposal was to end direct payments to farms with more than $500,000 in gross sales.

That would affect about 1,300 farms in Virginia (of about 47,000 total), according to a 2007 agriculture census by the United States Department of Agriculture.

The proposal would also have capped total payments at $250,000 a year.

Farmers say they know $500,000 sounds like a lot. But, they say, since that figure would be based on gross sales, not net, that $500,000 isn't profit. It goes to salaries, fertilizer, seed, equipment and other costs of running a farm.

The national Farm Bureau estimates that if the average soybean farmer, for example, had $500,000 in gross sales last year, he would have netted only $37,000.

Farmers can make $500,000 in gross sales and still end the year with a loss.

Jim Miller, of the Orange County Farm Bureau, said USDA data says more than 10 percent of farmers whose farm operation had more than $500,000 in sales still has a negative household income.

"The average farm in my mind could go through $500,000 very quickly," said Wilmer Stoneman of the Virginia Farm Bureau. "We can discuss all day what the number ought to be, but the number ought to be in the adjusted gross income, not on your total income."

The point of revamping direct payments to farmers is to make sure large-scale operations and "corporate" farms aren't getting government subsidies they don't really need.

Farmers have received government subsidies for decades, under the idea that the critical job of raising the nation's food should have some insurance against the vagaries of weather and the market.

Many farmers receive an annual allotment from the government, a guarantee of a certain level of income even if their crops get burned by drought, drowned in a flood, beaten by hail or whisked away by a tornado.

Those are direct payments. There also are other types of payments.

Critics question whether truly needy, small-time farmers are getting the help they need, or whether instead the bulk of the money is going to large farms that don't really need the help.

Some, like the Environmental Working Group, say the subsidy system is flawed, funneling thousands of dollars a year to a relatively few individuals while small farmers who really need help get just a few dollars, if any. That group maintains an online database of all farm payment recipients.

On the other side, farmers say they couldn't survive without the guarantees provided by the subsidy program.

"I think that most Americans, if they sit down and really give it some thought, would want the producers of their food to be in business continuously and to create quality food for them, not to be struggling and have the demand for food shift overseas and rely on overseas markets for what we eat," said Kevin Engel, who runs Engel Family Farms and has land in Caroline and Hanover counties.

Engel says he couldn't operate without government help, although he says government help with crop insurance is of more value to him than direct payments.

Bill Speiden, a dairy farmer in Orange who serves as the Orange County Farm Bureau's legislative director, said farmers need the government safety net, or the country risks relying even more heavily on imported food.

Some farmers, however, don't object to the proposal to tweak the payment caps.

"It's a good thing to have the limits, the large farmer doesn't really need [the payments] that much," said Jim Gibson, who raises soybeans and other crops in Orange County. "It would do good to help the smaller farmer."

Somewhat in the middle of the two sides is the Center for Rural Affairs, which thinks subsidy payments should be revamped to skew more to small farms, but not eliminated entirely.

The center also didn't like the idea of a $250,000 cap on all payments or the proposal to base payments on gross sales rather than net.

"The way it's designed now the bigger you are, the more money you get, and at the end of the day it doesn't do anything to keep the little guys there," said Chuck Hassebrook at the Center for Rural Affairs. "It's not serving any objective relative to keeping family farms out there."

Newstex ID: KRTB-0063-34424694

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