President Barack Obama’s proposal to reopen the 2008 Farm Bill and slash direct payments to large farms is meeting strong opposition from the agricultural industry across the nation and in Montana.
In his $3.55 trillion budget outline unveiled in February, Obama proposes to cut direct payments – a federal agricultural subsidy – to farms that generate more than $500,000 in gross revenues. Based on recently released figures from the United States Department of Agriculture, Montana has more than 1,100 farms that meet that criteria. These farms are responsible for nearly half of the food produced in the state, according to a letter from Sen. Max Baucus to Secretary of Agriculture Tom Vilsack.
Obama’s rationale behind the proposal is to eliminate government subsidies to large corporate farms that he doesn’t believe need them. To make the changes, Congress would have to vote to reopen the 2008 Farm Bill. There are more than 116,000 farms nationwide that could lose their federal payments under Obama’s plan.
But Lola Raska, executive vice president of the Montana Grain Growers Association, said Obama’s proposal misses its goal though she respects its intentions. She said if a 2,500-acre farm – average size in Montana – yielded a moderate 40 bushels per acre and sold the harvest at a typical market price of $5 to $6 per bushel, its gross revenue would exceed $500,000.
Raska uses this example to demonstrate the effect Obama’s cuts would have on average-sized farms in Montana. Furthermore, Raska said mid- and larger-sized family farms – not massive corporate operations – are responsible for the majority of agricultural production in the state. She said 80 percent of all food produced in-state comes from only 20 percent of the farms.
As state Sen. Bruce Tutvedt, a farmer from Flathead County, puts it: “Based on size, you would be taking out the most productive and efficient farms from participating in the farm program.” If the criteria were changed to income instead of gross sales, the large corporate entities may be hit, though Montana would be safe.
“I don’t know any farmers who do $500,000 in income” in Montana, Tutvedt said.
Tutvedt, who grows mint and other crops, said changes to the Farm Bill would affect only a handful of the Flathead’s biggest farm operations, including his own. The eastern part of the state would feel the greatest repercussions.
Echoing Raska’s sentiments in his letter to the Secretary of Agriculture, Baucus wrote that Obama’s proposal “does not successfully distinguish between struggling farmers and wealthy landowners.” Baucus, a lead author of the 2008 Farm Bill, also was critical of the plan for proposing to cut crop insurance subsidies and not investing in agricultural research.
“I support President Obama’s goal of cutting subsidies to large agribusinesses and I hope that you will rework the current proposal so family farmers are not harmed,” Baucus wrote.
The Montana Farm Bureau Federation has also spoken out against Obama’s plan.
Raska and Baucus point out that gross revenues are far different than net revenues, especially in agriculture, an industry that is currently subject to soaring fertilizer prices and other high input costs. Direct payments are designed to help farmers toe the line when sales – gross revenues – don’t keep pace with expenses, the market declines or unpredictable weather strikes, which is a constant dilemma in agriculture.
A farm that spends $600,000 on expenses and makes only $500,000 in revenues would not be eligible for direct payments if Obama’s plan is instituted.
“Anyone who’s familiar with agriculture knows that you can have higher expenses than revenues,” Raska said.
Tutvedt said he doesn’t know why Obama wants to reopen the Farm Bill after Congress emphatically defied former President George W. Bush two times to pass the $307 billion law last year. Twice Bush vetoed the bill and twice Congress voted overwhelmingly to override him. To Tutvedt, that’s a clear signal the bill should be left alone.
“To go into and change that would be an interesting turn in the program,” Tutvedt said.
Agriculturalists are also concerned with Obama’s budget proposal to cut crop insurance subsidies, which Baucus addressed in his letter. Raska said crop insurance is vital to farming operations and she envisions growers cutting back or dropping their insurance altogether if more restrictions are put into place.
Raska believes widespread opposition to the proposed changes within the agricultural industry, as well as the lobbying efforts of farming groups at the federal level, should have a persuasive effect on the Obama Administration. But even if the current issues get resolved, she sees more arising as the federal government looks for ways to trim its budget.
“As long as we’re having a problem with the economy, I think it will be ongoing that we will have to justify the Farm Bill,” Raska said.