Ever since President Bush signed the Farm Security and Rural Investment Act of 2002, analysts have been waiting for the other shoe to fall on the new law's provisions.
For most of the summer, Southern growers rallied around the farm bill, defending it against media criticism and from Midwest farmers who don't understand how large-scale agriculture works.
Last week, we wrote about the Catch-22 situation Louisiana rice producers find themselves in on world rice prices and the domestic market price and the way counter-cyclical payments are spread out over two crop years. Now, we're beginning to hear criticism about the farm bill's decoupled payments.
The latter is not new — the same charges were leveled against the decoupled payments in the 1996 farm bill (Freedom to Farm). Critics said then landlords would capture much of the law's direct payments — through higher rents or by booting the tenants off the land and collecting the payments.
“Some landowners whose lease with farmers expire at the end of this year have decided to have the land custom-farmed with soybeans and collect the government payments,” says Roger Carter, a crop consultant in Clayton, La.
Carter says the phenomenon is true primarily with land that has a high cotton acreage base and a high payment yield, both of which were built through the efforts of good tenants.
Writing in his newsletter, Carter says he couldn't help but be struck by the irony in both the old and the new farm laws.
“The Farm Security Act was also designed to protect the farmer from low prices, but instead has put many in the road looking for other land to farm,” he writes. “The bill was designed to help those farmers who suffered through the last farm bill to recover, yet it appears that it will primarily help the landowner.”
Carter says he knew from his initial reading of the bill that it was landowner-friendly rather than farmer-friendly. “Many supporters felt this scenario would not occur,” he said. “We assured them it would. The only way to have prevented it was to link payments with production, and the Midwest did not want that.”
As long as counter-cyclical payments remain high for cotton — most analysts are predicting farmers will receive the maximum available for the 2002 crop — farmers will plant less cotton. “Landowners/farmers can take those payments and put them into a less risky crop than cotton, such as corn or soybeans,” says Carter. “We think most of it may go into soybeans.”
Carter offers his condolences to farmers who fought for the farm bill that was supposed to help them recover, but acknowledges that the program can still work as market forces increase prices.
“Once the counter-cyclical payments for cotton are reduced, landowners will again be looking for someone to farm their land,” he said. “And you can offer whatever rent you wish, but don't overpay.”
National Cotton Council Chairman Kenneth Hood says he would rather be defending the farm bill than explaining why the NCC couldn't get it passed. Most farmers probably feel the same way. But they may want to see some fine-tuning in the months ahead.