26 US House members ask Pres. Obama to let farmers out of CRP

[caseymcq]

So let me get this straight, we want to allow farmers who are enrolled in one gov't subsidy to cancel that contract without penalty so that they can in turn use that land for "food production". ...

And enroll in a different subsidy program

Farm Subsidy Database

[ac777]

There is reason a McDonalds cheeseburger costs less than a head of lettuce.

How does the price of corn affect Lettuce? Don't blame the farmer for the price of corn, or food. We don't choose what the market price is. CBOT does, and we choose when to sell it. Farmers are the only business to buy their supplies at retail, sell their product at wholesale, and pay the shipping both ways.

[goblueM]

he's not blaming the farmer, he's complaining about government subsidies to farmers

[ac777]

So they were getting paid to do next to nothing with their land (I love this country-sarcasm), but since there is a "shortage of food", ie higher prices, ie more money to be made, they want out of their one gov't contract so that they can make more money by farming, which just happens to be another gov't backed program.

Actually he was.

[Powerstroke]

The price of corn doesn't affect lettuce. That's not what I said. My point was that how can something like a cheeseburger cost less than a head of lettuce or a pound of tomatoes? It is because corn as the main culprit, and other farm programs also are so heavily subsidized by the gov't that there is no true picture of what the market is.

Farmers are the only business to buy their supplies at retail, sell their product at wholesale, and pay the shipping both ways.

Since when? You don't get volume discount on fuel, fert, pesticides, seed etc? I believe you do. And you choose when and where to sell your product.

I'm not hammering on farmers, you're just playing the game. I blame the gov't and all their unnecessary subsidies. It creates an unlevel playing field that picks the winners and losers, just like they did with banks, and auto makers and energy companies........Farmers have been the selectees for decades.

[goblueM]

ac,

He's not blaming farmers for participating in the system, he's criticizing the system itself

[ac777]

I can see your guys point about the subsidies, and I think most farmers would agree that we don't really need them. The subsidies really have done the opposite thing they were intended to do, which was to help the smaller farms, but in reality it helped the bigger farms more because they pay per acre. The more acres you farm the more you get paid. The number is a pretty small one, i think it varies from 10-20 dollars per acre, and for someone farming a few hundred acres, it's not going to add up to much, but for 5-10 thousand acres it starts adding up big time. So I guess I just get tired of people bashing farmers, and I do realize that you guys are pointing out government flaws, but most people just group them all together and it makes the farmer look bad. While I wouldn't turn down a subsidy if its going to be given out, I think we could do away with it, and be ok, which may happen in the future. Also, I think times have changed. If anything subsides should be given to the smaller livestock farms, since in the past 5-10 years they have struggled much more than the grain farmers, when it used to be the opposite which is why they started giving subsidies to the grain farmers. The government apparently isn't smart enough to "Change".

[SrBrits]

I realize I don't have complete research and figures to post, but

but nothing, once again an under informed or uninformed person whining about something that he/she doesn't have a clue to, and most likely a union member, getting paid 3 times more than they are worth, and 25 extra pounds around the midsection, a full plate of food in front of themselves but complaining about the cost of food in America, the lowest cost of food nation in the world, brought to you by the american farmer,(the most efficient and lowest cost producer in the world).HA-HA go figure.

or as they say,

"food for thought"

[BobT]

Quote:

n the past 5-10 years they have struggled much more than the grain farmers,

Just as a matter of record, grain prices have only been at the current level for the past four years. Prior to that, they were at roughly the same level for roughly the previous 30 years.

I've been raising wheat and soybeans on my ground since 1993. The value for my grains in 2006 was virtually the same as it was in 1993. During that nearly 15-year period I always figured on about $3.50/bu for my wheat and $5.00 for my soybeans. It was lower in some years and higher in others buy not by much. In 2007 the prices sky-rocketed for some reason and I figured it would be short-lived but for some reason the grain prices have stayed up where they are now. Thank goodness for that considering what the price of fuel, fertilizer, seed, and other things have done.

To help put this into a little perspective consider this.

Just four years ago I bought round-up ready Soybean seed for just over $20.00 per 50#. This past December I ordered my seed for this year and it was almost $58 per 50# after applying a 7% discount for buying early.

Not too long ago I did a little internet searching and found a price chart that showed the producer grain prices going back in history and it showed the prices for wheat and soybeans had remained almost steady from 2006 and going back as far as the mid '70s.

In 1978 I began working for one of the mining operations on the iron range for $7.21/hour and I thought I had it made. I supported my entire family on that amount of money and we lived quite comfortably. According to the American Institute of Economic Research cost of living calculator, $7.21/hour in 1978 is equivalent to $24.35/hour today. Imagine what one's lifestyle might be like living on a family income of $7.21/hour today.

Food for thought.

[ac777]

BobT, I don't really get what you are trying to prove with your post? I was at the CBOT in 2004 when Soy trading hit $10. Since then it has varied quite a bit, but has barely been at or below $5. That was 7 years ago, right within my 5-10 year time range as I couldn't remember the exact year I went until I looked back. Although I don't disagree with you, I'm not really sure what your point of your post was since we were discussing subsidies.

[BobT]

BobT, I don't really get what you are trying to prove with your post? I was at the CBOT in 2004 when Soy trading hit $10. Since then it has varied quite a bit, but has barely been at or below $5. That was 7 years ago, right within my 5-10 year time range as I couldn't remember the exact year I went until I looked back. Although I don't disagree with you, I'm not really sure what your point of your post was since we were discussing subsidies.

If it hit $10 in 2004, I'd like to see the records to prove it. My guess is that if this is true, it was for a very short period of time. The first time I ever sold soybeans for over $6 was in 2007 when I got a little over $8 and thought "holy cow!" Same is true with wheat. The first time I ever saw over $4 was in 2007 when I sold mine for about $6.50 and couldn't believe my good fortune only to find that it later climbed to over $20 for a short time in February, 2008 which was totally out of this world.

[BobT]

Just searched the archives at the CBOT and you are right, the price did climb to over $10.....for about a month.

According to the chart it was at about $5.50 in mid-summer 2003 and then in about November it began to climb. It hit about $10 in March 2004 and by April was back down to about $7.75 and below $6.25 in May. After that it bounced around from about $5.25 to $6.75 until about February of 2007 when it began to climb until it peaked at just under $16 in March of 2008. It dropped back to about $9 by the summer of 2008 and has been slowly climbing to about $13 where it is now. Incidentally, I sold mine at just over $9 last fall.

I also found their historical data going all the way back to 1970. The price for soybeans in 1978? In March they were at about $6.00, climbed to about $7.00 from April through July, then finished the year at about $6.50.

Let's see what soybean prices did in five year increments moving forward from 1978.

In 1983 they started out the year at about $6, remained almost steady until July, and then climbed to over $8.

In 1988 they started the year at about $6.50, stayed steady until June, climbed to about $10, and ended the year at about $8.50.

In 1993 they started the year at about $5.50, hovered there until about June, climbed to over $7 until August then dropped to about $6.50 where they ended the year.

In 1998 they started the year at about $6.50, hovered there until mid-July and then dropped to about $5.50 and finishing the year at about $4.75.

In 2003 - Started at at about $5.75, climbed to about $6.50 in May and June, dropped to about $4.50 by August and finished the year at about $6.00.

And then let's look at 2006.

In 2006 they started at about $6.25 and then varied almost weekly anywhere from about $6.25 down to about $4.50 and ending the year at about $5.00. I guess my memory was right. The price for soybeans in 2006 WAS about the same as they were in 1978.

[BobT]

I looked up the records for wheat and here's what I found.

1978: Jan-Mar $2.8 and finished at about $3.30

1983: Started year at $3.50 and finished the year at $3.60.

1988: Started year at about $3.20 holding stable until June and then climbed to about $4.00.

1993: Started the year at about $3.60 and ended the year at about $3.00.

1998: Started the year at about $3.25 and ended the year at about $2.50.

2003: Started at about $3.25 and ended the year at about $3.50.

2006: Started the year at about $3.75 and ended at about $4.00.

2007: This is the year it finally climbed. Started the year at about $4.75 and ended the year at about $8.50.

Wheat prices remained pretty much flat-lined from 1978 – 2006.

I guess it doesn't appear that my memory was too far off the mark.

There's one other thing I should point out. Using the CBOT is misleading because Minnesota growers don't see those kind of prices. We have to ship most of our products to the mills or out of state and that cost comes out of our pocket. Right now the CBOT price for soybeans is $13.31 but the local elevator is offering $12.49.

[BobT]

For what it's worth I will share that I am not a supporter of farm subsidy but admittedly I do participate. I believe the subsidies keep the market prices to the producer artificially low and this forces us to participate.

I’m just a part-time farmer. All my equipment is paid for and I have virtually zero overhead costs. When I first started farming in the early ‘90s, I did not participate in the farm program because I didn’t want Uncle Sam telling me what to plant and where. But when wheat prices dropped to $2.50 and lower I couldn’t afford to keep putting seed in the ground and the farm programs allowed me to continue without going belly up. The thing is, you can’t choose to participate on a yearly basis. You sign up when the farm bill goes into effect and you sign up for the duration. Once you opt out, you’re done until the next farm bill cycle.

Considering how the price of grain to the producer remained virtually unchanged for almost 30 years, is it any wonder the farmer tills from fence to fence? He had no choice but to increase production with what he had. One way to do that is to till as much soil as he can find. Another way is to improve soil drainage ergo, tiling. Another is to increase seed population on what he has and that means he has to increase fertilization. Another way is through seed genetics to increase yields, disease resistance, and parasite resistance.

Good, bad, or otherwise it is what it is. For many farmers it isn't just about getting the most money at all costs. It might just be a matter of survival. Name one person on this HSOforum that would refuse to accept a wage increase if it was offered. Name one person on this site that would take a pay cut because he felt he was making too much money.

[Powerstroke]

Wow, srbrits, not are you completely off-base, you completely misunderstood everything I said. Thank you for contributing nothing to this discussion. It is true that I didn't come prepared to duke it out over figures and extensive research. However I don't think it was required. My anecdotal observations are well known and most people who read them understood my point.

A farmer such as BobT is the perfect example of how subsidies have hurt the average farmer. Now that the subsidies are in place its not the "family farm" that is lobbying, its the cargills etc that are fighting to keep the subsidies because it is easy money for them.

[creepworm]

In the opinion of an agricultural economist that gave a lecture I went to, the only thing subsidies are doing is keeping land at an artificially high level. Giving money on a per acre basis to each farmer increases the price per each acre of land. Therefore, if the subsidies were no longer available, land prices would fall, hurting landowners more than farmers.

[BobT]

In the opinion of an agricultural economist that gave a lecture I went to, the only thing subsidies are doing is keeping land at an artificially high level. Giving money on a per acre basis to each farmer increases the price per each acre of land. Therefore, if the subsidies were no longer available, land prices would fall, hurting landowners more than farmers.

I wonder how true this economist's statement really is. If you think about it, who puts more stake into land value than a farmer? Well, maybe a real estate salesperson I suppose. Higher land prices means more equity to finance farm activity. Of course it also means higher cost to those who want to expand or rent. Good for the seller/lessor but not for the buyer/lessee.

[creepworm]

I wonder how true this economist's statement really is. If you think about it, who puts more stake into land value than a farmer? Well, maybe a real estate salesperson I suppose. Higher land prices means more equity to finance farm activity. Of course it also means higher cost to those who want to expand or rent. Good for the seller/lessor but not for the buyer/lessee.

That was exactly his point. Farmers set the value of the land when they come offer to rent or buy the property. Due to the added value the land has because of the subsidies received, the grower pays more per acre of land. End the subsidies, land prices will fall.

[BobT]

I'm not so sure I agree that the subsidies have been so influential. I say this because it has only been the last four to five years or so that the rent values have been climbing like they have. So what has happened in the last four to five years to influence this? In 2007 grain values doubled and sometimes trippled for a while before dropping back down. At first, one would have expected it to be a short-lived scenario but the prices have remained about double what they were in 2006. I believe this has prompted many farmers to attempt to cash in on this by leasing out more land and competition for the available land has driven them to outbid their neighbors. Supply and demand in action.

I know a few of my neighbors that are flabbergasted at some of the offers being made to lease land. My fear is these guys could be setting themselves up for a repeat of the 1980's crash in land value. If I'm right it would show that we are slow learners.

[lichen fox]

I agree Bob...And as I see it, the bottom line remains with the farmers...it's thier land, and if they want to try and "cash-in" on producing more crops in a time when some supplys may be coming up short due to various factors...let them do it. Most have been in the program for more than ten years already and so what if we forgo the "penalty" for taking it out early...it will cut thier initial costs somewhat and we'll also be saving much of the money we would have paid out in annual payments at $40-80 per acre annually....if they take out a million acres, we save a good chunk of change...and as many of today's farmers would probably agree, also get rid of those so, called "price support" payments and we can save even more...Most of the Grain farms in our country have gotten very large and the ones that are still in it know how to manage and make money...by thier own addmission, many of them will tell you they don't need, or even want the subsidies...just let them manage thier land and resources freely and come what may...let thier individual management skills and supply and demand for what they produce be the only limiting factors...more acres = more $ spent on production needs, including equipment and labor...more jobs in the ag sector will help alot in improving rural economies...The farmers don't tell me how to do my job, and I'm not about to try and tell them how they should manage or what they "need" in subsidies...The Goverment should just get out of farming...including the Billions of dollars we pay in subsidies to the insurance companies that sell crop insurance!! Every company has risks and has to decide how much they can afford to pay to protect those risks from disaster....the farmers are no different. But it's time for the insurance company's to stand on thier own feet and not minimize thier risks with taxpayer dollars.

[graingrower]

Cropland enrolled in the CRP is set aside for a reason; it is marginal, with a low production history, and would not make a significant contribution to the domestic grain supply.

[lichen fox]

Yes, that was the intent of the program from the start and I would guess that "most" of the acre's qualified under that criteria...The original formula incuded factors such as water and wind errosion, wetlands, etc...and I do know that in our area quite a few acres of very productive land qualified under those critera and got put in the program simply because the landowner was ready to retire from farming and could make more off CRP than they could on cash rent back in the 80's...I also think that today's farmers that would possibly consider taking any of this land out would only take out land that would be productive...I really don't see anyone taking out the really marginal land.

[carpshooterdeluxe]

Cropland enrolled in the CRP is set aside for a reason; it is marginal, with a low production history, and would not make a significant contribution to the domestic grain supply.

True, but only to an extent. There comes a point at which it becomes profitable to enhance the land and farm it. Seeing it all over first hand out here in eastern SD. We are 25-50 years behind western MN and IA in terms of drainage, but that is changing fast. Pastures, fences, rock piles, abandoned farm groves, etc. are disappearing, tile is going in, and waterways are being straightened, much like the landscape in the 80's and 90's changed in western MN where I grew up.

With commodities prices where they are at, the farmers/land owners are able to justify the expenses and still make money. I don't agree with some of it (drainage, rolling native prairie) but it is their right to make a living the way they choose to, and I really like the idea of a $1 McDouble instead of a $10 McDouble.

There is a propaganda machine cranking up in SD right now, its a combined marketing effort between the corn growers association and the corn utilization council. http://www.trueenvironmentalists.com/

Radio, TV, and print ads showing how farmers are true stewards of the land, etc. While I agree that most farmers care for the land and want to see it healthy, there are many involved with this campaign that would like you to believe that wildlife benefits more from 160 acres of corn vs. 160 acres of grass. If I can find some of the "letters to the editor" from our local newspaper regarding how great farming is for wildlife, I will post them up. Very interesting to hear what "the other side" is saying.

[Scott M]

That's quite the web page carpshooter. Yikes.

I think we can agree that massive chunks of land in full tillage crop production isn't good for wildlife. And we can further agree that a farmer is a participant in a capitalist society, responding to the market, so he really can't be blamed for trying to make his living. I think the solution lies in how the farm bill is structured. As BobT laid out, it really controls a lot of fiscal policy and subsidies. If we can clearly lay out in dollars and cents, the value of ecosystem services, wildlife habitat, carbon sequestration, etc., compared to what we are getting economically from today's unsustainable monoculture, we could rearrange how the market operates. However, it's an almost hopeless cause. Of 10,000 economists, maybe one is a natural resources economist. It's a collosal uphill battle just to challenge people's way of thinking. Many would and will argue against such valuation methods. It's the difficulty of managing common property resources, of tallying costs of nonpoint source pollution, of complete environmental regulation. It's the challenge of applying a cost or value to wind and water soil erosion, not using best conservation management practices, of using public waters for drainage, how each decision effects the environment and what it is worth. It sounds draconian, but without some regard, some way to value what we have left of habitat and air, land, and water quality, we're going to continue seeing it slip away to next to nothing.

[bowhunternw]

It makes one want to throw up when you look at some of those numbers. I know some of those farms, one that I know recieved $4,000,000 in subsidies between 95 and 09. There is zero reason to have crop subsidies at the current values.