September/
October 1998
Freedom to Farm Bill Has Not Hurt Agriculture-Yet
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Aakre says that during the past two years, farmers have been financially better off under the new farm bill than they would have been under either of the previous two farm bills. He points out that for the 1996 crop year, transition payments were $0.874 per bushel for wheat, $0.332 per bushel for barley and $0.251 per bushel for corn. Total transition payments received by ND farmers alone came to $311.5 million.
If the previous farm legislation had been in effect, total deficiency payments would have been zero.
Similarly, transition payments for the 1997 crop year were $0.631 per bushel for wheat, $0.277 per bushel for barley and $0.486 per bushel for corn-and total transition payments received by ND farmers came to almost $247 million. If the 1990 Farm Bill had been in effect, however, deficiency payments would have been just over $197 million.
Aakre says the major difference between deficiency payments provided by previous legislation and 1996 Farm Bill transition payments is that the latter are not affected by national average farm price-which is why farmers have received more in government payments over the past two years than they otherwise would have.
"Many producers are in financial trouble," he says, "but to suggest this is because of the 1996 Farm Bill is incorrect. We can't fix the farm financial problem if we do not recognize it-if we look the other way and blame the farm bill. Farmers' financial difficulties have been caused mainly by weather-related production shortfalls combined with escalating input costs."
It is true that farmers, in addition to all their other problems, no longer have the safety net they once had. But this is not the result of the new farm bill but of another piece of legislation, the 1994 Federal Crop Insurance Reform Act, which eliminated ad hoc disaster appropriations.
Farmers haven't yet experienced the downside of the 1996 Farm Bill, but this year they probably will. It's likely that the fixed transition payments farmers receive for their 1998 crop, plus the national average market prices they get, will add up to less than the old target prices of $4.00 for wheat, $2.36 for barley and $2.75 for corn. Even so, Aakre does not think the nation's farmers would be any better off in the long run if the country reverted to the old style of farm bill.
"Several decades of past farm legislation have actually served to speed up consolidation of farms," says Aakre. "Why? Because all government payments have been tied directly to operation or ownership of land. This has meant that farmers received benefits in proportion to the number of acres they controlled, rather than according to what they needed to support their families."
Aakre asks this question: Should an income support program support a business investment, or should it support people?
Income support payments based on land, he says, always get bid into the price of land, which means the price of land goes up. This raises the cost of production and benefits only the landowner.
"It is time to quit subsidizing land and investments," says Aakre. "If American society decides it is important to provide income support to agriculture, let's redesign the program so that transfer payments benefit the most people-rather than benefiting a handful of people who have the most." n