Growers Nervous As Washington Eyes Farm Subsidies

Guests

Sen. Charles Grassley (R-Iowa), farmer and member of House Agricultural Committee
Troy Bredenkamp, executive vice president, Colorado Farm Bureau

Federal subsidies for farmers have been an essential element of the U.S. agricultural industry for decades. But as both political parties look for ways to cut the deficit, payments to growers are under the microscope, and farmers are bracing for leaner times.

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NEAL CONAN, host: This is TALK OF THE NATION. I'm Neal Conan at the studios of Colorado Public Radio. There are few areas of agreement as Republicans and Democrats debate the budget in Washington, D.C., but there is now common ground on one item long considered sacrosanct: farm subsidies.

For decades, farm-state lawmakers from both parties touted ag subsidies as rural America's safety net, helping the people who feed the country cope with extreme weather, pay for farm equipment that can cost as much as a house, and compete in the global market.

But farmers need to brace for leaner times. Direct payments could end altogether, and the Federal Crop Insurance Program is slated to take a hit too. We want to hear from farmers today: What's next for you? Give us a call, 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. Go to npr.org. Click on TALK OF THE NATION.

Later in the program, we'll speak with Joyce Meskis about what it takes to operate an independent bookstore in an economic downturn and the age of the e-book. But first agricultural subsidies, and we begin with Senator Charles Grassley, who joins us from Capitol Hill. He's a veteran Republican from Iowa, long-time member of the Ag Committee and a farmer himself. Senator Grassley, nice to have you back on TALK OF THE NATION.

Senator CHARLES GRASSLEY: I'm glad to talk to you about this subject, and I think you have described the reasons behind farm programs very well in your opening comment. I thank you for having that understanding.

I would only add something historical, and that would be that what you described as a farm program has gone back to the 1920s and very prominent since the 1930s and has been the basis of not just support for farmers but also support for rural America, and everything being meant not to guarantee farmers a profit but to basically protect them, as you said, against a lot of things beyond their control, and those are natural disasters, there's politics, there's war, you know, there's everything.

A farmer pays what he has to pay for input, and a farmer generally has to take what the market is when he wants to sell his product.

CONAN: Interesting you listed politics among the natural disasters farmers have to deal with.

(SOUNDBITE OF LAUGHTER)

GRASSLEY: Well, politics would be like Nixon freezing the price of beef in 1971 or '02 and just ruining the beef industry in the Midwest, or Carter putting a grain embargo when the Soviet Union invaded Afghanistan, or I guess Ford putting something on.

Or think of just domestic politics, when a lock and dam goes out on the Mississippi River and because Congress hasn't appropriated enough money to keep it in good order, and you can't ship grain down the river. So prices drop 25 cents in one day.

All of these things are beyond the control of the farmer and, I think, a legitimate exercise. And can I also be transparent on one thing, because you mentioned I was a farmer? I participated in the farm program since my dad died in 1960. So every year since 1961, I've participated in a farm program. That doesn't necessarily mean every one of those years I've gotten some sort of a payment, but I at least had the built-in protection of a farm program.

CONAN: Are you now accepting the political reality, direct payments are over?

GRASSLEY: Yeah, but remember, direct payments is just one of about four various ways that farmers are helped in this safety net. Direct payments are - and they're relatively new, since 1996. Prior to that, you only got payments if prices were low or because a natural disaster through what we call target price or through a loan program.

Now we have direct payments because there was a feeling farmers ought to know ahead of time some help they were going to get rather than wait until you have a catastrophe. Well, with $7 corn - and remember, three years ago corn was $7, and in six months it was $3.58. So farmers should not get used to $7 corn, nor should people in the city use $7 corn as an excuse to get rid of farm payments.

But with the price of grain as high as it is, it's just bad public relations to have a payment when prices are high. So I think that's why it's going to be done away with. But you also want to remember that there is the insurance program you talk about, where famers have to buy insurance, but it is a subsidized insurance, just like you might say flood insurance is subsidized insurance for city people.

Anyway, the flood or the crop insurance has already contributed $6 billion, cut a year ago. So I don't know whether you can cut that much more because I think the federal government would rather have an insurance program than anything else in the safety net because it gives farmers the incentives to manage their own risk as opposed to the political exigencies that go on here in Washington - are you going to get disaster payments or not?

So I think we ought to promote crop insurance to a greater extent that we have, do away with direct payments, but then don't forget that you also have what you have counter-cyclical payments, which is a new word for target prices. When prices get below $2.10 a bushel for corn, then - and hopefully they never get that low because it costs $4 a bushel just to raise a bushel of corn. But if they get that low, counter-cyclicals would pay in.

And then there's kind of a new type of disaster payment that was put in the - a bill about two years ago called the SURE payment. And SURE is an acronym for I don't know what, but anyway...

(SOUNDBITE OF LAUGHTER)

GRASSLEY: ...it deals with kind of a substitute for what Congress used to vote from time to time, disaster payments for farmers.

CONAN: We're talking with Senator Charles Grassley from Iowa. We want to hear from farmers today. What's next for you as you look toward the end of at least some federal agricultural subsidies. Give us a call, 800-989-8255. Email is talk@npr.org. And we'll start with Clint(ph), and Clint's on the line with us from Paris, Tennessee.

CLINT: Hi, yeah, I'm a corn and soybean and wheat farmer in Tennessee, and it's been the family business for several years, several generations, I'm sorry. But the government hasn't bought my vote yet. I believe that farm payments ought to come to an end.

I believe that it's just socialism. It's a redistribution of wealth, and if it weren't for farm payments, I think farmers would be just fine. There are plenty of crops to grow out there, and there's not any reason the government should be subsidizing any of them, and they definitely don't subsidize all of them.

CONAN: But as long as they're doing it, you're going to take the payment.

CLINT: Sure.

CONAN: And what difference will it make if the subsidy ends next year?

CLINT: I don't think it'll make much difference at all, especially with the prices as good as they are right now. If the prices weren't as good as they are right now, I believe that some farmers would just grow different crops. And that would be better for the nutrition of the American public. We wouldn't have so many different foods made from corn and soybeans that really are inferior products to a lot of our foods today.

CONAN: Okay, thanks for...

GRASSLEY: Well, he's right. In Tennessee you have more alternatives to growing crops, but in Iowa, Minnesota, the Dakotas and Nebraska, you're pretty much tied - well, in Nebraska maybe you've got corn, soybeans plus wheat. But in Iowa, we grow mostly just corn and soybeans.

I would like to give Clint just something to think about. I wouldn't expect him to agree with me. But the help for farmers is a safety net, yes. He calls it socialism, a transfer of wealth. But it's based upon the proposition that you need guaranteed food for national defense, in other words our military.

Napoleon said an army marches on its belly, or I suppose you could use the modern-day analogy that how long can a nuclear submarine stay down. Well, until it runs out of food. Otherwise, it would never have to surface. We've got - that's one reason, national defense.

The other - and I'd also point to Germany and Japan. We defeated them in World War II, but they have strong farm programs just because they realized they made a mistake by not having an adequate food supply during World War II.

The second one is the old saying that you're nine meals away from a revolution. Now, we don't have food riots in America like they do in a lot of places in the world, but one of the reasons we don't have food riots is because the family farm and our free marketplace is such a productive enterprise that we produce a surplus of food.

We export about 40 percent of our grain, as an example, and I don't know how much of our meat, but a lot of meat.

CLINT: But subsidies will not control the supply of food in this country unless they control the weather.

GRASSLEY: And so well, and because you can't control the weather is another rationale for the safety net for farmers. Now, there's one thing that maybe makes Clint really irritated, and it makes me irritated as well. You have 10 percent of the biggest farmers getting 70 percent of all the farm payment. That's why I've been an advocate for a hard cap, that no one farmer can get more than X number of dollars.

And the reason for that is that the safety net ought to apply to medium and small-size farmers who have less of a chance of overcoming natural disasters and political decisions and war and international politics and all that stuff that affects farmers, whereas larger farmers do.

The other thing is when 10 percent of the biggest farmers get 70 percent of the benefits out of the farm, quite frankly, we're subsidizing big farmers to get bigger. And I think that that's bad for the next generation of young farmers.

In my state, it's driven up the price of land almost to a bubble level. It's driven up the price of (unintelligible) almost to a bubble level, and it's because these big farmers are getting bigger, and it's because of them getting 70 percent of the benefit.

So we can save a billion and a half dollars if we start putting a limit on what any one farmer can get.

CLINT: You know, farm subsidies...

CONAN: Clint, I'm sorry, Clint, but we have to make way for somebody else. But we appreciate your phone call. I think Clint was joining us on the line, and Senator Grassley, I know you just joined us as you came off the floor from a vote somewhere in the Senate there, and we appreciate your taking the time to be with us today.

GRASSLEY: Yeah, and thank you very much. I'll be glad to be with you again sometime.

CONAN: We hope you will. Senator Charles Grassley of Iowa, a farmer himself, a Republican, ranking member of the Senate Judiciary Committee and longtime member of the Agriculture Committee.

When we come back after a short break, we want to hear from more farmers. What's next? 800-989-8255. Email us, talk@npr.org. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION. I'm Neal Conan, broadcasting today from the studios at Colorado Public Radio. We're talking about farmers and farm subsidies. While some crops, including wheat here in Colorado, are doing particularly well, many farmers need to make plans for leaner times That's because lawmakers in Washington appear set to dramatically change how much money the federal government will give to farmers in the future.

Long considered untouchable, the farm safety net is now on the negotiating table as Congress looks to trim billions from the federal budget. We want to hear from farmers today. If payments are cut or eliminated altogether, what's next for you? 800-989-8255. Email us, talk@npr.org. You can also join the conversation by going to our website. That's at npr.org. Click on TALK OF THE NATION.

And joining us here in the studios at Colorado Public Radio is Troy Bredenkamp, executive vice president of the Colorado Farm Bureau, and nice to have you with us today.

TROY BREDENKAMP: Thanks, Neal, thanks for having me.

CONAN: Are your members worried?

BREDENKAMP: Yeah, somewhat. I mean, we realize that certainly from a budgetary perspective, we're entering a whole different realm, and certainly the farm program of the past may not be the farm program of the future.

Certainly I think it's a challenge to change things midstream. This farm bill was passed in 2008, and so farmers built in some certainty knowing that farm bill's going to be around for a while.

CONAN: But effectively this new budget bill, that's going to be the new farm bill.

BREDENKAMP: It definitely could be. Certainly we are looking at the 2012 situation and the reauthorization of the farm bill. And we realize - I mean, we are very much realists and realize that from a budgetary perspective, some things are certainly going to change.

CONAN: Well, wheat farmers in this state and east of us, boy, there's a lot of wheat growing out there. But they're doing particularly well.

BREDENKAMP: There is, you know, and I think that points to the program actually working as it was designed in the 2008 farm bill. One of the things that Senator Grassley pointed out was countercyclical payments. Those were payments that were built in in the event that prices drop below a certain target rate.

The target rate for wheat in 2012 is $4.17. It's currently trading at $6.21. So that is a payment that was built into the farm program that won't be made because the payments are very well.

But I do think the important thing to point out is that the entire farm program system was predicated - part of it was predicated on the fact that you are dealing with multiple risks. You are in Colorado right now. We could have a flood occurring on the Yampa River right now. At the same time, we could have a major range fire down in southeast Colorado. And by the end of the day, I guarantee one of those wheat fields in eastern Colorado will receive hail.

So you are dealing with multiple challenges at the same time. There's a lot of risk. And the part of the farm bill that I think is important for consumers to realize is that it was there to even out those highs and those lows, to manage some of that risk so that we can keep on providing affordable, abundant food supply for the nation.

CONAN: Let's get another caller in on the conversation. We'll go to Clay(ph), and Clay's with us from Loyal in Oklahoma.

CLAY: How are you doing today?

CONAN: I'm well, thank you.

CLAY: I appreciate you taking my call. One of the things that I'm a little bit concerned about in this whole discussion on cutting the farm programs, I mean, clearly we need a safety net. I'm a wheat and cattle producer primarily in western Oklahoma. (Unintelligible) we grow some other crops too, in rotation, but basically wheat and cattle.

You've got to have some kind of a safety net, but at the same time, too, I think one of the things that most taxpayers and consumers don't understand is that so many of our programs are also tied to compliance on a conservation program to protect the soil and the water and the wildlife habitats of those acres that are in production.

Like me, a lot of my land is highly erodible. If I don't follow a conservation plan, I'm not - I don't qualify for farm payments. And at the same time, one of the things that's frustrating me on a policymaker standpoint, there was a program that was started with the last farm bill called the Conservation Stewardship Program, which actually pays producers based on the stewardship that they're providing on the land.

And it's not hobby farms. These are actual commercial farms. These are what - we farm around 4,000 acres out here in western Oklahoma, which for our part of the world is a normal farm. And basically the government works with us to make sure that the soil is protected, that we're doing things to protect water quality, that we're sequestering carbon, we're recycling oil, we're improving wildlife habitats.

And that to me seems like a way that the taxpayers can be assured that they're getting more bang for their buck, and at the same time you could have agricultural producers having some sort of a safety net that provides them assistance, that can help them ride through some of these changes.

But that - the idea of moving into that kind of a green program really hasn't had any discussion. In fact, the conservation (unintelligible) whether it's that or (unintelligible) programs or help that the USDA gives producers through the Natural Resources Conservation Service, all that seems to be on the chopping block, and a little frustrating that the environmental benefits of the farm bill somehow gets lost in this discussion. Nobody's talking about it.

We talk about a farm bill for the future, nobody's looking at some of these options that I think might be a way to make it more palatable for the consumer and the taxpayer...

CONAN: And Clay, I'm sorry to interrupt, Clay, but I needed to ask you: In western Oklahoma, aren't you having a big drought right now?

CLAY: Well, yeah. I mean, right now we're facing a situation where we've got weather that's comparable to anything that we saw in the 1930s during the Dust Bowl. And, you know, your president of the Colorado Farm Bureau mentioned that they've got floods in one part of the state and terrible droughts in the other. Oklahoma's the same way.

And, you know, we're facing a situation right now where, you know - well, one of the crop insurance companies in Oklahoma, I'm not at liberty to say, but I was told my agent the other day who works for this company that every single - every single policy they have has some kind of a claim against it this year because of the wild weather that we've seen in Oklahoma, whether it's drought, whether it's hailstorms, whether it's floods.

And again, I think that goes towards some of the challenges that we're going to be facing with climate change, which again goes back - if there was some way that we could look at some of these innovative programs that are already in law, these aren't anything new.

These are operating programs in the farm bill today, and quite frankly - I'm going to tell on myself here a little bit, but we actually make, as far as support for the government, per-acre payment under the Conservation Stewardship Program, is actually better than what we get on our direct payments based on our wheat bags.

BREDENKAMP: So, I mean, it seems to me that that ought to be a discussion that's out there, because again, the taxpayer gets the environmental benefit from it but I as a producer get the safety net, and at the end of the day we're trying to address the problems that if we don't address, we're going to lose that productive base for the future to feed everybody and also affect water quality and everything else.

CONAN: Clay, thanks very much for the call, appreciate it. Good luck in the drought.

CLAY: Thank you.

CONAN: Here's an email, which I wanted to put back to you, Troy Bredenkamp, kind of on the same issue, this from Lorna(ph): I have a small farm here in western Colorado. Farming does not just mean a cow and a crop in the ground. Farmers are stewards of the soil, plowed or unplowed. A safe and local food supply is a national security imperative, a source of nutrition and health benefits. Protect the farms. You can't eat houses.

BREDENKAMP: I could agree more. We also have a saying with the Colorado Farm Bureau that food grows where water flows. And so certainly in the Western United States, I think we all are aware of just how critical water is to that whole component. We're not going to be growing crops if we are growing houses instead of corn or cattle.

So certainly that is a very important part of it, the whole environmental aspect of what agriculture brings to the entire ecosystem.

CONAN: Let's go next to Steven(ph), Steven with us from Grand Junction in the western part of Colorado.

STEVEN: Yes, I just wanted to share a different example of agriculture. Here in west-central Colorado we have a tree-fruit and a wine-grape industry that is very robust. It's growing. It's been profitable, and the industry has not enjoyed direct subsidies. It's not enjoyed price supports. It's never had those crutches throughout its history.

And our industry is far better off for it. The result is that we have more independent, more creative, more nimble growers in the industry. Yes, we have growers rotate in and out of the industry. Not all survive. But isn't that how it is throughout free enterprise, throughout the private sector?

The tree-fruit and wine-grape industry has had insurance subsidies, but I wish that we did not. Without insurance subsidies, it would force the industry to put these crops in locations where they're more secure, where they have a better track record of long-term production.

CONAN: I wanted to - Troy Bredenkamp, to get your response to that. Might the small businessmen that farmers are be more agile and more adaptive if they did not have the interference, as some would call it, from the federal government in terms of agricultural subsidies, like Steven suggests?

BREDENKAMP: Well, they certainly could be, and we see many sectors of the agricultural sector that have never had subsidies. Certainly he mentions fruits. Fruits, vegetables, those are typically non-subsidized. Livestock production is another area that doesn't see a whole lot of direct subsidization.

But I think it's important to bring it all back home to the point where people realize that of the entire farm bill and of the farm bill payments, 76.4 percent of that farm bill in spending goes to nutritional programs. This would be SNAP programs for the low-income school lunch programs. And only seven percent of that entire budget of the farm bill goes to commodity-type spending. So I think we need to keep it all in perspective.

CONAN: And Steven, thanks very much for the call.

STEVEN: Thank you.

CONAN: Let's go next to - this is Lanier(ph) - I hope I'm getting that right - calling from the Delta in Mississippi.

LANIER: Yes. Thank you very much. I appreciate you taking the call. I'm not going to be very popular with this comment, but my family has farmed six to 8,000 acres every year. We own about five of that and lease the rest depending on what we think the market conditions will be. But, quite frankly, we don't need these subsidies, and they can call them what they want. But they're just sugarcoating a piece of caca. It's still a piece of caca. And, quite frankly, I heard, well, another caller a while ago say, you know, this is in place to help keep the food cost down.

Well, I don't know where they're buying their food at, but, you know, it - our prices at - where we grow it have not gone up, but when I go to the grocery store, it's two or three times higher than it's ever been.

CONAN: That has something to do with the price of oil, I suspect.

LANIER: Absolutely. Well, that and fertilizers and other chemicals. Chemicals are the big cost and then the patents on the seeds and whatnot. But there's a lot of cost in it, but we, we being the larger farmers, we're getting paid seven digits to not farm areas of our farm. That's ludicrous. You know, other business, there's - and we cry, hey, it's a risk. But tell me what business there is out there that doesn't have a risk. And, you know, if we have a traumatic event happen that something goes wrong, we can do like everybody else does when they have hurricanes or something. You know, then will deal with it.

CONAN: Disaster or something like that.

LANIER: This needs to be for the small farmers. It does not to be for our large farms.

CONAN: And, Troy Bredenkamp, that's what Senator Grassley was talking about, a cap on who gets these subsidies.

BREDENKAMP: Yeah. It's certainly something that I think the sector is going to need to take a look at for that 2012 farm bill. But keep in mind, just because this gentleman here farms four to 6,000 acres, that doesn't mean that his risk is any less or more. It is proportional to the guy that's farming 200 acres.

CONAN: Well, if somebody starts a dry-cleaning business...

BREDENKAMP: Sure.

CONAN: ..they're taking a risk too.

BREDENKAMP: I would say the big difference there is that everyone that I'm aware of is addicted to chewing and swallowing. And food security, I think, is a very important aspect of this. I don't necessarily need to get my suit dry-cleaned, but I'm going to have to eat, hopefully, three times per day. And I think that needs to be a priority if we're talking about food security being national security.

CONAN: Lanier, thanks very much for the call.

LANIER: Thank you.

CONAN: We're talking about agricultural subsidies and their diminished future. You're listening to TALK OF THE NATION from NPR News.

And here's an email that we have. This from Vincent(ph) - oh, Margaret(ph) rather, Vincent. Why haven't organic farms been subsidized? This has resulted in much higher prices for organic food, which has been produced with earth-friendly methods. Is that a reference to the kind of crops that most organic farms generally are involved in?

BREDENKAMP: And that I don't know. I would assume if I'm growing corn organically, I'm going to be - have access and availability to the same kind of subsidies that a conventional grower would grow. One of the reasons why organic crops typically cost more is because there is a higher labor-intensive cost of production to that crop, and I get less yield so the crops are going to typically cost more.

CONAN: Let's go next to Tina(ph) . Tina is - am I reading that right? In Cedar Rapids?

TINA: (Unintelligible) my phone. Hello.

CONAN: Hi, Tina. You're on the air. Go ahead, please.

TINA: Hi. This is Tina. I work at the North Liberty Community Pantry, and you just barely touched on the issue that I don't think it's getting addressed in the. And the problem is the government subsidizes the food that is the most nutritious and least processed that we provide to the families who come to the pantry: fruits and vegetables and whole grains and meats, the things that we want to have on our shelves all the time. They're talking about 50 percent cuts. We've actually already lost 30 percent because of the current USDA budget.

And they've got 23 percent cuts in the next budget that has already passed through the House. This means that last year we paid $5,000 for this food. It will cost us $75,000 to replace this food. We can't afford that. Our entire budget for the entire pantry is $60,000. We serve low-income families, the elderly, those most at risk in the community and its hunger. And I don't think that that's getting addressed nearly enough in this discussion. We are...

CONAN: So...

TINA: ...putting together a forum on July 21st, and we've invited Senator Grassley to attend that forum, to listen to families, to listen to organizations like ours. We're talking about tens of millions of dollars to supply food pantries across the nation that cannot replace the cost of these foods, and these are the foods that we want everyone to be eating to be healthy.

CONAN: Get a response from Troy Bredenkamp.

BREDENKAMP: Well, I mean, certainly, the situation she's pointing to is - can be replicated across the country. With the economic downturn we have been through, we've seen obviously a huge increase in the need for food assistance, which has driven up that discretionary portion going to nutritional programs, but, obviously, it's not keeping up with demand. We're looking out from a 2012 ag appropriations bill about a 13 and a half percent reduction in that discretionary spending.

We're being told that it's going to be across the board. However, I assume that if there's going to be need in the nutritional realm, they're going to have to come up with the money to help people buy food.

CONAN: Tina, thanks very much for the call and good luck with your meeting with Senator Grassley.

TINA: Thank you.

CONAN: Now, let's see if we can go next - I think we can get one more caller in. This is Joe(ph) . Joe is with us from Gainesville.

JOE: Yeah. Hi. Thanks for taking my phone call.

CONAN: Sure.

JOE: I'm a small farmer in Gainesville, Florida, and I'm OK with subsidies for a lot of things. But I think with any business, we all have to take those risks, and I'm kind of repeating what some of the other people have said earlier. You know, I think it's a little bit unbalanced for large farmers to get these subsidies. And realistically, if the price is being subsidized, you're keeping the value of those crops lower, and the consumers aren't actually seeing the real value of what those crops are. And...

CONAN: And...

JOE: ...most farmers...

CONAN: What...

JOE: ....know not...

CONAN: What crops do you grow, Joe?

JOE: I grow shiitake mushrooms, and I also have an edible landscaping company in Gainesville.

CONAN: And do you get federal subsidies?

JOE: No, I don't.

CONAN: So you're saying the - since you don't, nobody should?

JOE: Well, no. What I'm saying is that I know lots of small farmers that don't receive subsidies. What I'm saying is if the subsidies aren't balanced between the population of farmers, then, no, I don't think anybody should get subsidies. I think that there should be some way of balancing it out to where everybody should get a piece of it. Otherwise, it really doesn't make any sense because you're just - you're creating a false, you know, price for commodity crops.

CONAN: And, Joe, I'm afraid we're going to have to leave it there but thanks very much for the call. And we'd also like to thank Troy Bredenkamp, executive vice president of the Colorado Farm Bureau, for his time. Thanks for joining us here in the studio.

BREDENKAMP: Well, thanks for coming to Colorado.

CONAN: When we come back, the trials of independent booksellers in a tough economy and the age of the Kindle. Joyce Meskis is from the Tattered Cover will join us next. Stay with us. It's the TALK OF THE NATION from NPR News.

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