John Deere recently introduced a new 120-foot planter that can seed from 90 to 100 acres per hour. The planter, which will be made at the Bauer Built Manufacturing plant in Paton, Iowa, will sell for $345,000.
About 80 miles to the southeast, in Ankeny, Iowa, Deere is beginning to build its new 7760 cotton picker. The picker, which packs the cotton into round modules, will list for more than $600,000.
I’m not picking on Deere (no pun intended) or Bauer. Case IH is assembling axial flow combines that sell for more than $400,000 to the west in Nebraska and its own Module Express 625 cotton picker in Minnesota. Each bases their pricing on production costs and perceived value in the market place.
What’s interesting is that this is occurring in and around a state where the two U.S. senators and the former governor seem determined to threaten the livelihoods of the farmers who are most likely to buy this equipment.
Tom Harkin, the chairman of the Senate Agriculture Committee, Charles Grassley, ranking member on the Finance Committee, and former Iowa Gov. Tom Vilsack, who is now secretary of agriculture, mean well.
Grassley and Sen. Byron Dorgan, D-N.D., have tried for years to pass legislation that would put a hard cap of $250,000 on farm program payments to individuals. The Obama administration appears to also favor that language.
Harkin endorsed the Obama administration’s fiscal 2010 budget proposal to phase out direct payments to farmers with sales revenues of more than $500,000 annually over three years. (Interestingly, Sen. Grassley opposes the idea.)
Even before the administration announced its budget plan Feb. 26, Vilsack raised the ire of farm groups by suggesting their members should embrace new programs that would replace existing payments with “green” payments or trading of carbon credits, which are a mystery to many farmers.
In speeches to wheat, rice and cotton groups, Vilsack cited the $1 trillion federal deficit the administration is projecting in fiscal 2010 as the primary reason for the change. Phasing out direct payments to farms with sales of more than $500,000 annually is expected to save slightly more than a billion dollars a year.
Not all farm groups are opposed to the administration’s proposal. The president of the American Ag Movement said he believes fixed subsidies such as direct payments are not politically sustainable and should never have been enacted as substitutes for price supports.
The $500,000 cutoff would be the equivalent of 1,500 bales at current prices or the yield from 750 acres of cotton. It would equal the sales from about 900 acres of corn or 750 acres of rice, which would certainly not put the operators in the class of the giant, corporate farms the environmental groups like to rail against.
Grassley, Harkin and now Secretary Vilsack talk about ensuring that farm program payments go to the “family” farmers who need them. I recently covered a panel discussion by farmers from Minnesota, Illinois, Kansas, Oklahoma and Iowa at the Commodity Classic in Grapevine, Texas. Each would describe his as a family farming operation, although none had fewer than 2,000 acres of cropland.
So who are Grassley, Harkin and Vilsack talking about when they say farm program payments should be re-directed to family farmers? It must not be the growers who can buy those planters, cotton pickers and combines being turned out in Iowa and its neighbors.