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Proposed farm bill cuts direct payments, farmers shrug shoulders

Filed by KOSU News in Feature.
September 10, 2012

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The current farm bill lasts until September 30th, and it’s expected the next one will have some major changes. The Senate has passed one version, a House committee another. There are wide differences between the two, but they have one thing in common…they cut direct payments to farmers. It appears a short term extension of the current bill may be coming, with the bigger changes coming later. But if and when they come…what will that mean for our state’s farmers?

Let’s first lay out what a direct payment is. As you can probably guess, it goes directly to the farmer, year in and year out. There’s a cap on how much they get a year, and they can only make so much money.

“It was something that you could bank on. You knew what they payment was going to be each year, and you knew what you could take to the bank, each time that payment was going to be triggered and that it would come to you.”

As chair of the Oklahoma Farm Bureau’s Farm Bill Committee, Scott Neufeld has become very familiar with the legislation.

“The farm bill is not just a farm bill, it’s a food security bill, it’s a jobs bill, it’s an energy bill. It has all these components. It’s a nutrition bill.”

But today, we’re just focusing on the farm part of the bill. So getting back to these direct payments – depending on a formula dating to the 80’s, around somewhere between $10 and $20 an acre go out to farmers.

“Government payments in general are a fairly low percentage of an income.”

Direct payments have only been around since the mid 1990’s. When the government decided to stop buying grain to prop up prices, they added in the direct payment to act as a safety net. Now, they make up a small percentage of a farm’s budget, but farmers still got used to the money.

Steve Kienholz is a farmer in Billings.

“Of course that goes to pay bills, that’s something that farmers are going to have to realize, that we’re going to have to do without from now on. Because the way things are in the country, everybody’s going to have to cut back.”

Steve says he got about $21,000 every year, pretty standard. He’s a third generation farmer, working the land for the past 39 years.

“If I wasn’t farming, and I was looking into it, I would say ‘Well them guys are just getting a free ride’, and they don’t understand they’ve got to keep the American farmer producing and surviving.”


“Yeah, a lot of people do think that direct payments are unnecessary, and they’re paid to farmers regardless of production, and there definitely is that aspect to it too. But one thing to keep in mind that over the years, we have continuously lowered the cost of food however farmer’s input costs just continue to go up.”

Dr. Jody Campiche is an agricultural economist at Oklahoma State University.

So what’s the impact on you? Well that’s hard to say.

“In the US, we probably notice it a lot less than we would if we were in a developing country. But for the most part, I can’t say directly that farmers receive this amount of direct payments, and you as a consumer are going to receive this much off the cost of your beef or your milk, but it does help them with production costs.”

Despite the fact that direct payments help stuff farmer’s bank accounts and reinvest in their farms, most have accepted the money appears to be a goner..

“And  I think we’re just best to understand that we’re going to need to write a farm bill that doesn’t include that type of a payment,” says Scott Neufeld.

What makes it a little easier to accept is the proposed funding boost for crop insurance.

“I think it’s vital. Without it, there would be a lot of producers out of business.”

The House version adds about another 3.2 billion over the next 5 years, the Senate about 1.3 billion. The man behind this remaking of the bill is Oklahoma Congressman Frank Lucas. As Chairman of the House Agriculture Committee, Lucas has shepherded the bill.

As Steve Kienholz responds, “That’s an interesting question, I’ve never that about that. But since you mentioned it, yes, Mr. Lucas has really helped the farmers not only in this state, but in all states.”

Five billion dollars of direct payments could disappear, but in the end, it’s hard to see why this didn’t happen earlier. After all, farmers have accepted the change, and it doesn’t appear food prices are going anywhere either.

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