The Montana Farm Bureau Federation and the Montana Grain Growers’ Association have expressed strong concern at several aspects of the Obama Administration’s 2010 Budget Proposal for the United States Department of Agriculture. The proposal would have an extremely detrimental affect on family farms and rural communities both in Montana and across the United States. Obama’s proposal to phase out direct payments to farmers with more than $500,000 in sales revenue over the next three years ignores the effect of falling commodity prices and the dramatic rise in input costs producers have had to factor into their operations. In addition, it has a $250,000 commodity program payment limit.
Bing Von Bergen, MGGA President, said, “It just doesn’t make sense to cut subsidies to farmers based on gross sales when our input costs are historically high and recent grain price volatility has made our income so unpredictable. It’s entirely possible that a farmer could see a negative net return and still see a cut in their safety net support.”
MFBF President Bob Hanson agrees, “Farm Bureau opposes eliminating direct payments. Eliminating direct payments to farms with sales of more than $500,000 would put 75 percent of the U.S. food supply at risk. Although these farms represent a minority of the total number of farms in the United States, they produce the vast majority of this country’s safe, abundant and inexpensive food supply.”
A single farm with $500,000 in sales could be supporting multiple members of a farm family, such as a father, adult sons and adult grandsons and their spouses and children. According to the most recent data available at USDA, more than 12 percent of farmers who are part of a farm operation with sales greater than $500,000 still have negative household income due to ever-increasing input costs, including fuel, fertilizer and equipment.
“This issue would go away if they’d look at net receipts, not gross receipts, for their maximum values,” Hanson points out.
“Larger farms have proportionately greater risk, yet produce the vast majority of this country’s food and fiber, and should not be discriminated against in the farm safety net,” Hanson explains. “Let’s face it—we’re talking about keeping your food safe, available and affordable. That means ensuring that agricultural producers in the United States can continue to provide food even when markets drop. Do we really want to see our producers go out of business and most of our food become imported, if available at any cost?”
In addition, the budget proposes cuts to federal crop insurance subsidies to both companies and farmers. Von Bergen continued, “This is like adding insult to injury. Crop insurance is critical to producers in high production risk states like Montana and our growers have consistently purchased as much coverage as they can afford at current subsidized levels. If crop insurance becomes more expensive, growers won’t be able to afford higher levels of coverage and will rely more on government funded disaster programs.”
Both organization vow to take their concerns to Senator Max Baucus, Senator Jon Tester and Representative Denny Rehberg, pointing out they recently passed a fiscally responsible Farm Bill that has already addressed these issues, and on which various interests groups have been able to provide their input.