WASHINGTON — Lower insurance premiums for dairy producers. Better deals for new farmers and ranchers. Higher minimum prices for farmers of all crops.
The farm bill deal passed by the House this week has something for most everyone in the agriculture industry to like, and Minnesota farmers behind many of the state’s major commodities say they’re happy with the end result — and relieved to have the whole thing over with.
Experts say the bill’s agriculture sections won’t have much of an impact on average consumers — only about 20 percent of the $500 billion bill goes to farming, as opposed to federal nutrition programs — but farmers themselves say they’re getting a good deal.
As expected, the bill ends direct payments to farmers and expands federal support for crop insurance, and it institutes a couple of new government programs meant to protect farmers against sudden price changes. Taken together, it saves about $23 billion over five years, according to the House Agriculture Committee.
“As everybody, we would always like a little more, but there was no money to be had,” said Bob Worth, a Minnesotan who serves as vice president of the American Soybean Association. “They did a good job writing this farm bill with the money that they had.”
Ending direct payments
Under the system of direct payments, farmers can receive fixed payments based on the number of acres they have planted in the past. Crop insurance, on the other hand, protects farmers in the case of crop loss due to weather, but provides no payments assuming a successful harvest.
Lawmakers instituted direct cash payments in 1996 to try weaning farmers off of old types of subsidies, intending to end the payments after five years. But a downswing in crop prices during subsequent farm bill negotiations convinced Congress to keep the payments on the books, University of Minnesota applied economics professor Kent Olson said.
Now, Olson said, producers realize the payments have “became so hard to defend” politically that they support ending them for good, arguing they’re both wasteful (farmers sometimes received locked-in payments for crops they’re no longer growing) and that giving up the payments is a necessary sacrifice for the sake of deficit reduction. Ending the payments will save $4.5 billion a year.
In their place, lawmakers expanded federal support for government-subsidized crop insurance and gave farmers a choice between two other price support programs — one to protect farmers against small revenue losses and another to ease sudden price or yield shortages (with higher price floors than before, to boot).
Gary Wertish, the vice president of the Minnesota Farmers Union, said farmers consider crop insurance options a better investment than direct payments at this point, given how crop insurance helped many of them during a drought in 2012. He said that was really the impetus for pushing Congress to institute new protections this year.
“That’s by far the most important piece of any type of farm legislation,” he said. “We gave up direct payments. They were hard to justify because farmers have had decent prices and made a profit.”
Democratic Rep. Collin Peterson, a lead farm bill author and negotiator, said the new price support programs will eventually kick in when prices drop, protecting farmers against a down market.
“It’s not perfect, but it gives people the option of another safety net that they can choose,” he said. “I think these new programs are going to be more important than ever.”
Complaints from commodity groups were minor
Most farm lobbying groups support the final farm bill and the changes to the subsidy program, including the biggest ones in Minnesota.
John Mages, a Belgrade corn farmer and member of the Minnesota Corn Growers Association, said his group has long backed ending direct payments in favor of expanding crop insurance.
Corn is Minnesota’s second-most valuable exported commodity and its growers collect the most subsidies from the federal government: more than $287 million in 2012, according to the Environmental Working Group.
“They kept crop insurance pretty much intact and made some improvements to it,” Mages said. “I think it’s a pretty good bill.”
Minnesota soybean farmers got most of what they wanted in the farm bill, Worth said. His group was especially concerned Congress would tie payments to crop production — which could both lead to overproduction of certain commodities and complicate World Trade Organization compliance — but lawmakers didn’t do that.
Where there were complaints with the bill, they were minor. The Minnesota Milk Producers Association had opposed a Peterson-led effort to create a new dairy safety net program, but that was stripped out of the bill. The final legislation creates a new insurance program for dairy farmers with lower premiums for a producer’s first 4 million pounds of milk annually. In Minnesota, “the majority of dairy farmers are staying under that mark,” executive director Bob Lefebvre said.
Meat producers tried, unsuccessfully, to convince Congress to end country of origin labeling, which Minnesota State Cattleman Association president Dar Geiss said could lead to trade tensions with Canada and Mexico, which in turn could drive up costs. Even so, he said he’s “satisfied” with the final bill, even if the meat lobby will keep pushing lawmakers on labeling.
“At least now we have something to look at and know what measures of business we can operate under for the next five years,” he said.
Little impact for consumers
There are scores of smaller provisions in the bill, too, including financial incentives for beginning farmers and ranchers and funding for famers markets and organic food research.
Even though farmers are happy with the new bill, Olson said the changes are small enough that consumers won’t really feel the effects (at least not on the agriculture side: lawmakers did cut food stamp funding for some beneficiaries, but none in Minnesota).
“In one sense, a lot of those programs are similar to ones that have been around,” Olson said. “Rules are changed, numbers have changed, but it’s the same basic idea. … These changes aren’t drastic or shocking enough to make any changes on the supply side.”
Farmers had pushed Congress to pass a new farm bill since federal agriculture laws technically expired in 2012. The House couldn’t reach a deal on a final bill until last summer, and negotiations with the Senate lasted until last week.
Kevin Paap, the president of the Minnesota Farm Bureau, said he wrote to every member of the Minnesota congressional delegation asking them to support this week’s final deal. Six of the state’s eight House members supported the bill, and both senators say they’ll vote for it.
“We’ve been at this for over three years,” he said. “We’re taking nothing for granted.”
Time was of the essence, too: it may not feel like it, but Paap notes, “we’re not that far from spring.”
Devin Henry can be reached at email@example.com. Follow him on Twitter: @dhenry