Home » Column: Is this farmers' 'reward' for 2004 support?

Column: Is this farmers' 'reward' for 2004 support?

Feb 17, 2005 9:51 AM, By Forrest Laws

But time — and budgets — waits for no man, and the president’s first major announcement of an agricultural nature in his second term was that he believed taxpayers are spending too much on farmers.

It would have been nice if the Bush administration could have waited a little longer before dropping a bomb on the nation’s farmers when the president announced his fiscal 2006 budget proposal on Feb. 7.

It must have been galling for mainline farm organizations, who made little secret of their support for the president in 2004, to hear farm programs take a major hit, especially for producers who receive payments for more than one farm entity.

Some leaders may have shared the sentiments expressed by Rep. Marion Berry, D-Ark., who definitely did not support the president’s re-election.

“This is an unmitigated attack on Southern agriculture,” said Berry. “It’s interesting that the president would choose to literally attack Southern agriculture that has been a big factor for him being in the White House two terms. When you look at the blue states, you don’t see many cotton and rice farmers out there.”

Number crunchers quickly noted the impact the cuts could have on cotton and rice farmers in the predominantly Republican South compared to corn and soybean farmers in Democratic states like Iowa and Minnesota.

A reporter for the Chicago Tribune, for example, wrote that cotton and rice farmers generally receive higher payments than corn and soybean farmers because the money is spread among fewer farmers. In 2003, 908,000 U.S. corn farmers received $2.8 billion while 142,000 cotton farmers got $2.7 billion.

What he failed to note was that high 2003 corn prices meant growers did not earn a counter-cyclical payment while cotton prices were so low that producers received the maximum CCP. The same was true for loan deficiency payments, which would also help account for the disparity in payments.

The other angle that few in the national media are mentioning is that why, if farmers are getting so wealthy off government payments, aren’t more people going into farming?

In Texas, more than 90 cents of every dollar earned on a cotton farm is spent producing the crop, according to agricultural economists at Texas A&M University. The remainder is not profit but goes to cover living expenses, new equipment, land costs and taxes.

From 2 to 5 cents may be left over. “That’s the average,” says Jim Richardson, chairman of Texas A&M’s Agricultural and Food Policy Center. “Some years it’s a negative 2 cents; some years, it’s a positive 2 cents.”

Despite the gloom and doom that have greeted the president’s budget, many observers believe the cotton and rice organizations, which are legendary for their ability to influence farm policy, can pull another rabbit out of the hat.

“When the dust settles, we will have altered the law to allow six entities and raised the payment limits to $1 million,” a friend from the Midwest e-mailed me.

e-mail: flaws@primediabusiness.com