|The New York Times, Dec 26, 2004 pA36
col 01 (43 col in)
Big Farms Reap 2 Harvests With Aid as Bumper Crop.
(National Desk) Timothy
Full Text: COPYRIGHT 2004 The New York Times Company
The roadside sign welcoming people into this state reads:
''Nebraska, the Good Life.'' And for farmers closing out their books
at the end of a year when they earned more money than at any time in
the history of American agriculture, it certainly looks like happy
But at a time when big harvests and record farm income should
mean that Champagne corks are popping across the prairie, the
prosperity has brought with it the kind of nervousness seen in
headlines like the one that ran in The Omaha World-Herald early this
month: ''Income boom has farmers on edge.''
Despite the fact that farm income has doubled in two years,
federal farm subsidies have gone up nearly 40 percent over the same
period -- projected at $15.7 billion this year, and $130 billion
over the last nine years. And that bounty is drawing fire from
people who say that at this moment of farm prosperity, the nation's
subsidy system has never made less sense.
Even those deeply steeped in the system acknowledge that it seems
counterintuitive. ''I struggle with the same question: how the hell
can you have such high government payments if farmers had such a
great year?'' said Keith Collins, the chief economist for the
The answer lies in the quirks of the federal farm subsidy system
as well as in the way savvy farmers sell their crops. Mr. Collins
said farmers use the peculiar world of agriculture market timing to
get both high commodity prices and high subsidies.
''The biggest reason is with record crops, prices have fallen,''
he said. ''And farmers are taking advantage of that.''
A farmer can sell his crop early at a high price, say, in a
futures contract, and still collect a subsidy check after the
harvest if prices are down over all. The money is not tied to what
the farmer actually received for his crop. The farmer does not even
have to sell the crop to get the check, only prove that the market
has dropped below a set rate.
''For those who can milk the system, it's been a great year,''
said Kent Miller, whose German great-grandparents were pioneers near
this tiny town. Mr. Miller operates a small farm and says he barely
made a profit this year on his 3,000 acres of wheat and millet.
Still, while Mr. Miller is a critic of the system, he is not
forgoing aid. Here in Cheyenne County, in the wind-raked western
edge of Nebraska, the fields are slumbering for the winter. Most of
the harvest is in. Mr. Miller was one of the farmers going into the
federal agricultural office to register for new checks after recent
swings in the market.
''I just signed up for new government payments today,'' Mr.
Miller said, standing inside the federal agriculture office for this
county. He described the subsidies as little help for ailing family
farmers. ''It's a Band-Aid on a large wound.''
Farm groups say the subsidies provide for a stable food supply,
and ensure that major sectors of American agriculture will be
competitive on the global market.
''When people ask me what the justification for this is, I point
out that in nearly every country in the world, you find government
involved in the food supply,'' said Bob Young, an economist at the
American Farm Bureau Federation, the powerful trade group for major
But because nearly 70 percent of the subsidies go to the top 10
percent of agricultural producers, the recent prosperity is not seen
or felt among many small to medium-size growers who keep the
struggling counties of the Great Plains alive.
Though some retailers in places like Iowa and Kansas say the
boost in farm income promises a good Christmas season, merchants
here say they are not experiencing any gains. All around western
Nebraska, in places like Chappell or Lorenzo, storefronts are
boarded and the merchants who remain complain of the difficulties of
Even though Cheyenne County is one of the few bright spots in the
economic desert of the rural Plains, its recent job boom has nothing
to do with agriculture. A major outdoor goods company, Cabela's, has
its world headquarters in Sidney, and its giant retail store is a
draw off Interstate 80.
''It's been real slow, and usually December is a good month for
us,'' said Brian Thacker, who sells new trucks and cars in Sidney,
the biggest town in the county. But he said farmers complain about
not having enough money even in good years.
''If it's raining, they complain; if the wind is blowing too
much, they complain,'' Mr. Thacker said. ''It just seems like
they're never happy.''
Ed Miller, who owns a family feed and seed store in Sidney that
caters to small farmers, said his business was not up despite the
increase in farm income, because most of the big corporate farms
that are doing particularly well do not buy from the local seed
So it is not surprising that the current subsidy system is
drawing home-grown criticism from people like Senator Chuck Hagel,
Republican of Nebraska, who says it is only widening the gap between
larger and smaller farmers, while not helping rural America.
The subsidies have also drawn criticism from farmers who grow
fruits, vegetables and nuts -- nearly half of American agriculture
-- but have nothing like the elaborate safety net in place for corn,
cattle, wheat and hog producers.
''We don't get payments, and we don't want them,'' said Tom
Nassif, president of the Western Growers Association, which
represents farmers in the nation's biggest agricultural state,
California. ''We believe the marketplace should decide who stays and
who goes. And we certainly shouldn't be paying people not to grow.''
Farm production has doubled over the last 50 years, while the
number of farms has fallen by two-thirds. Economists say about
150,000 of America's 2.1 million farms produce 70 percent of the
major food crops. But only certain crops -- wheat, corn, cotton,
soybeans and sunflowers among them -- qualify for subsidies.
Every subsidy payment in the country can be found on a Web site
put together by the Environmental Working Group, which advocates an
overhaul of the farm payment system. The site has become a must-read
for farmers, and receives about a million hits a day, the group
According to those records, which are supplied by the Agriculture
Department, Mr. Kent Miller, the wheat and millet farmer, received
$18,449 in subsidies last year, and a total of $189,254 over the
last nine years.
His neighbor down the road, a wheat farmer named Ronald Jessen,
was paid $424,387 over the last nine years, according to the
database. Mr. Jessen's father, Raymond, got $485,096 in government
money, and his brother, Michael Jessen, got $356,769. They are among
the 10 biggest recipients of wheat subsidies in Cheyenne County,
which is the state's top wheat county.
Over all, Nebraska got $7.5 billion in government farm payments
over the last nine years.
The Jessen family wheat farm, despite getting more than $1.2
million in subsidies in that time, is not a gold mine, Ronald Jessen
said in an interview. ''You've got to look at all the expenses,'' he
said. ''A new combine can cost $200,000. When I do my taxes, the
crop breaks even. My profit is what I get from the government.''
Still, Mr. Jessen said he was not proud to be harvesting so much
''Most farmers will tell you they would rather get paid for
what's in the elevator rather than from the government,'' he said.
Other farmers and some critics say that corporations, extended
families and partnerships are taking advantage of a system that has
little relationship to the ebbs and flows of food supply, and
rewards them most in times like now, when farmers should seemingly
be able to get by without government help.
''It's shocking the extent to which taxpayers subsidize this
select group of people whether they're having a good year or bad,''
said Ken Cook, director of the Environmental Working Group. ''I call
them the red ink states.''
Any farm entity -- often a corporation -- can collect up to
$360,000 per year. Some of the biggest payments are to farmers who
can show a ''historic pattern'' of having grown one of the big
commodity crops. In a system that supporters say is intended to
ensure economic stability from year to year, farmers do not actually
have to grow the crop to get the money. For other payments, a farmer
is required to show involvement in helping to run or manage the
Mr. Kent Miller, who is struggling to run his family farm on his
own, says big farms will line their subsidy payroll with family
members who have minimal involvement.
''Typically, you get 10 relatives who all get the payments, but
maybe for 6 of them, the only time they come out to the farm is for
Christmas,'' Mr. Miller said.
While the big farms are having record years, much of rural
America is continuing to decline.
Senator Hagel voted against the 2002 farm bill that is the
framework for the current subsidy system. At the time, he said,
''these lopsided payments encourage and subsidize overproduction''
and would ''only widen the disparity gaps between large and small
In a hearing last August, Mr. Hagel said the Great Plains states
were in a continued downward spiral, even with record farm income.
''Half the rural counties in America lost population in the 2000
census,'' Senator Hagel said in the hearing. ''And three out of four
rural counties experienced below-average economic growth, despite
the record level of farm subsidies.''
The highest year for subsidies was 2000, when farmers received
$22 billion in payments. Their income was only $47 billion that
year. This year, with farm income at $73 billion, is the first year
when farmers set a record for earnings, while subsidies were still
among the highest in recent years.
This record year raises the question of what would happen to
American agriculture if the government stopped making such large
payments. Mr. Collins, the chief economist at the Agriculture
Department, said it was possible that farmers would produce the same
amount of food in a pure free market.
Some farmers say they could go cold turkey and make it on their
own. Others say they would go under. But the thing many agree on is
that working the land, even in good times, is not something they
would recommend to their children.
''Out here, the joke is that anyone who tries to get their kid to
go into farming is encouraging a form of child abuse,'' Mr. Kent
Photos: A storefront in Chappell, Neb., hints at the tough times
in rural communities in the Plains despite record farm income and
more subsidies.; Kent Miller, a Nebraska wheat and millet farmer, is
a critic of subsidies, but he is not forgoing aid. ''It's a Band-Aid
on a large wound,'' he says. (Photographs by Kevin Moloney for The
New York Times)
Chart: ''Farm Income''