At the end of February, a watchdog group known as Taxpayers for Common Sense held a webinar titled, Farm Bill Panel — Midwest Voices. The conversation revolved around farm safety net programs in the farm bill: crop insurance, commodity subsidies, and conservation supports.
As published on its website, TCS is “a nonpartisan budget watchdog that has served as an independent voice for the American taxpayer since 1995.”
Agriculture experts and farmers — John Campbell, Dr. Cory Walters, Scott Kinkaid, and Wendy Johnson — were guest panelists, while Sheila Korth. a senior policy analyst at TCS, moderated the conversation.
Korth began the discussion with background on farm bill spending. She stated a well-known fact: The majority of farm bill spending goes toward nutrition programs (SNAP) and broke down how much money actually goes to other programs.
“When you’re looking at the crop insurance program, and commodity subsidies together — which we will refer to generally as farm subsidies — when you take out the nutrition spending in the farm bill, for every $4, roughly three of those dollars are going to farm subsidy programs and the other $1 is going toward conservation programs,” she said.
She then added, “ The Federal Crop Insurance program has become one of the most expensive farm safety net programs in recent years. The Congressional Budget Office now expects the Federal Crop Insurance program to cost taxpayers around $12 billion each year. That program provides subsidies for both private insurance companies and agricultural producers, and subsidies for those producers, to purchase crop insurance. …
“There are around 140 different crops that are eligible for crop insurance, but most of the subsidies, both within crop insurance and commodity subsidies, flow to around five crops. The one important point about crop insurance subsidies, is that they’re non-transparent to taxpayers and they’re currently unlimited. The government accountability office has found that these subsidies flow to people with net worth in the billions and millions of dollars.”
Korth then discussed how commodity subsidies will cost taxpayers around $4 billion each year.
After covering a few facts about the farm bill, Campbell, a former undersecretary at the U.S. Department of Agriculture who has worked on farm bills and has experiencing in the farming and ranching industries, spoke up.
Campbell started out by comparing what’s going on in the agriculture industry globally to the farming crisis in the 1980s.
“Farmers forcibly occupied the Department of Agriculture,” he said. “They drove their tractors to Washington, tied up traffic parked on the mall.”
He reminded the audience that, during this time in history, it was an inflationary period and farmers were caught in a cost-price squeeze. A Russian grain embargo, high interest rates, and rapid land inflation had preceded this in the 1970s, which also led to a lot of debt against land. While farm debt levels are not nearly as high as they were in the ’70s, there is definitely an inflationary period and a second year of cost-price squeeze, with lower incomes.
Government programs since the ’80s have worked to correct different aspects of the farming industry, from market orientation, to program efficiencies.
However, within the conservation programs, there are discrepancies, Campbell stated.
“When it comes to other policies, such as conservation, the track record’s not as good. The CRP [Conservation Reserve Program] was established to control wheat supplies, primarily in the high plains, and much of that original land that was put in the CRP almost 40 years ago is still in the CRP,” he said. “Efforts have been made over the years to modernize the CRP and better target it but because of acreage caps and budget caps, those efforts have not been as effective as we would have hoped.”
“There’s a plethora of other discretionary conservation programs that are not CRP,” Campbell continued, “but they are underfunded and oversubscribed. There’s always more farmers wanting to use these programs and there is money to put on the ground.”
Because the commodity programs are 75 percent of the spending in the ag portion of the farm bill, they drive farmer behavior, according to Campbell.
“The conservation programs kind of try to offset the incentives for production that come from the other programs, but they simply are overwhelmed,” he said. “There’s no way the conservation programs can offset the incentives for production and the commodity programs.”
His issue is that he said farm programs don’t address the issues within the ag community concerning conservation efforts, and tend to make them worse. That’s where the Inflation Reduction Act comes into play.
“The Inflation Reduction Act has potential to make programs more abundant on a landscape level, meaning millions and millions of acres,” Campbell said. “The act, though the biofuels program, has the potential to really turbocharge the adoption of regenerative farm practices and the reduction of carbon scores on the farm.”
The next speaker, Walters, has roots in Montana farming and is an associate professor at the University of Nebraska Lincoln in the Department of Ag Economics. He has written a paper on crop insurance subsidies and their impacts.
“How do you conceptualize the role of insurance and your net income distribution? How do you use that to your advantage to strategically behave into the future?,” he posed to the audience.
Walters expressed how policy design is tough, and even though he’s an advocate for crop insurance, on the subsidy side of it, there are a lot of pressures and unintended consequences.
“Subsidies exist to encourage participation, and this is a very short run thing,” he said. “We get to start and stop it every year, so there’s subsidies sitting here for this upcoming year. We have a few weeks, for our spring crops here in Nebraska, to decide what contract we’ll have and there’ll be subsidies associated with that. … But, me as a farmer, or any farmer, the programs exist to think about the long run. What’s going to happen over the next 2, 3, 4, 5, 10 years?”
This is where many farmer’s heads are, and they are thinking about how to position themselves to survive, according to Walters. Their question is: What do crop insurance premiums do?
He explained that premiums lower the cost to participants, and increases the return over time. The only way this happens, Walter said, is through indemnities.
“The basic understanding there is you’re going to get back indemnities that you didn’t pay a premium for; the subsidies paid those premiums. So, you’re going to get that back.” he noted. “We found that those premium subsidies have led to consolidation into fewer and larger farms, to some degree. So, what can we do about it?”
The answer, he advised, is education. Teaching farmers what insurance does allows them to know how to behave with it. With 90 percent of farmers participating in insurance, the question is whether they have put that money into land value, which makes it more difficult for people who don’t understand the system to continue to compete.
The final two panelists included farmers. Scott Kincaid is a farmer from northeast Nebraska. There, he and his sons farm own a multi-generation farm that has grown a variety of things, from hops to cover crops, as well as farmed no-till for years. Wendy Johnson is the owner of Jóia Food Farm in Iowa, where she produces sheep, chicken, pigs, and cattle. She has increased wildlife habitat and implemented conservation practices on her operation.
Johnson started her portion of the panel discussing the rich soils in her area, and across much of the Midwest, and how those should be protected. She argued that “monocropping” and other intensive systems with corn and soybean farming are washing and blowing away a lot of the soils.
“So, it begs the question ‘What have we improved conservation wise; what have some of these programs done to help us?’” Johnson asked. “Every single farmer, of any type, is trying to stay in the business of farming, and it’s proving itself to be more difficult each year. So, when you’re trying to stay in the business of farming, you do what is supported, and when we think of growth in the Corn Belt, it means buying or renting more land.”
Johnson offered this example: “There’s a farm that’s close by mine that I’d like to buy. It’s a perfect design for grazing, adding organic small grains, but to afford that farm and to be able to pay the bank each year, due to it’s high corn suitability rating, I’d have to grow corn on every acre of that every year to make payments. So, this dis-incentivizes me to grow anything else.”
She suggested that the policies, risk mitigating strategies, and ag financing are all in place to help keep farmers growing only corn and soybeans.
“You add onto that, the aging farmer population and there’s little way in for farmers who want to start out because of the increasing cost of land and property values due to corn, and this really competitive mindset based solely on production alone, and we’re in this kind of downward spiral toward a few wealthy owning all the land, who, in the end, might not even be farmers,” she said.
She posed another question, “What if we use some of these similar tactics to promote diversity? Let’s shift the policy to value the land differently. It’s now not affordable to new farmers to access land, but we could be growing lots of different foods, and different types of foods that scale here, state and federal policies that promote diversification like subsidy reform.”
“Not just for a few commodities, but for local foods to our schools, our institutions, hospitals, nursing homes, and company cafeterias,” she added. “Policies that promote and value ecosystems and practices to conserve them.”
She also suggested more seed research outside of corn and soybeans and incentivizes for growing other crops.
She ended with, “I think our farm bill needs to be preventative versus business as usual. I think with a preventative long-term strategies, that’s going to save taxpayer dollars over the long haul.”
The 2023 farm bill has yet to be passed. Disagreements around spending between politicians are largely to blame, but understanding the needs of everyone can help shape a bill that will actually benefit the many people affected by this massive piece of legislation.
Markie Hageman Jones majored in agribusiness at Fort Hays State University. She is actively involved in her state Cattlemen’s Association, Young Farmers chapter, and National Cattlemen’s Beef Association. Her AGDAILY.com articles can be found here.
