| BOZEMAN (AP) – Federal subsidies and payments to Montana
farmers and ranchers over the past two years surpassed the net profits of
Montana’s entire agricultural industry, according to figures released by
the Montana Agricultural Statistics Service.
The federal aid has nearly tripled since 1995, the year before Congress
passed a farm program intended to eliminate subsidies gradually.
The annual report by the statistics service shows that in 1998, Montana
farms and ranches reported net income of $357 million. Subsidies and
payments that year totaled $358 million. In 1999, net agricultural income
was $482 million. Subsidies and payments totaled $488 million.
Many farmers and ranchers probably would not be in business without the
government payments, said Curtis Lund, deputy state statistician for the
Agricultural Statistics Service.
Myles Watts, an agricultural economist at Montana State University-
Bozeman, said nearly all of the recent subsidies are directed toward grain
growers.
“The cattle producers are a lot more independent,” Watts said.
Markets are one reason for the different degree of dependence: Cattle
ranchers have been helped by higher prices for live cattle, while wheat
prices have nose dived.
Montana has about 24,000 farms and ranches, which the statistics
service defines as operations that earn at least $1,000 yearly by selling
agricultural products.
Government payments averaged $20,327 per farm or ranch in 1999, the
equivalent of a full-time, year-round wage for one person at nearly $10 an
hour. Average net profits in 1999 totaled $19,852.
The amount paid to each farmer or rancher varies greatly, and not all
get government checks. Watts said probably fewer than 10,000 operations in
Montana are truly commercial, and many do not qualify for the aid.
The rise in subsidies and payments came despite a nationwide push to
reduce them.
The 1996 measure commonly known as Freedom to Farm was intended to open
foreign markets for U.S. farm products; to give farmers more flexibility
to plant the crops they choose so they can respond to markets; and to
eliminate subsidies gradually.
There has been some success in the first two areas, but in the third,
the opposite happened: subsidies rose.
In 1995, government farm payments in Montana totaled $190 million and
the agricultural industry made $408 million in profits. Since then, as
wheat prices have fallen, government bailouts, most directed to grain
growers, have increased by $298 million.
Similar patterns have occurred in other states that produce primary
crops such as wheat, corn and soybeans, Watts said.
“What it means is we’ve got a farm policy that isn’t working
right,” said Bruce Nelson, state executive director for Farm Services
Agency, which administers farm programs in Montana. “Four years into it,
farmers are more dependent than ever.”
Freedom to Farm called for subsidies to be phased out by 2002, Nelson
said.
Year 2000 figures are not complete but will be considerably higher than
the record 1999 levels, Nelson said. And the 1999 totals from the
statistics service do not include tens of millions in subsidized loans.
“It’s apparent to everybody that the policy was a failure,”
Nelson said. “The question is what shape it’s going to take in the
next couple of years.”
Much of the current agricultural economy’s condition is tied to low
wheat prices around the world.
Shortly after Freedom to Farm became law, a financial crisis hit the
Far East. That, coupled with huge wheat crops in China and other places,
put grain prices in the cellar, knocking about $4 off the price of a
bushel of wheat.
“Government dumped billions of dollars into the ag industry to keep
farmers on the land,” Nelson said.
Much of the increased federal aid in 1998-99 came in the form of “disaster”
payments. The disaster was low prices, caused largely by the Asian
situation.
But grain prices often fluctuate greatly, Watts noted. That’s a point
that Freedom to Farm opponents made in 1996.
Under old programs, payments were tied to crop prices and often
encouraged people to plant larger crops, to reap prices guaranteed by the
government. That extra production skewed world grain prices and forced
other countries to react with their own subsidies.
If the government can subsidize farmers in ways that don’t distort
worldwide prices by boosting production, it avoids violating international
agreements meant to open foreign markets, and that helps pry open doors
overseas, said Dave McClure, Montana Farm Bureau president and a Lewistown
rancher.
He added that Americans have the cheapest food in the developed world,
paying only about 10 percent of disposable income for a huge variety of
high-quality food.
McClure also said federal laws like the Clean Water, Clean Air and
Endangered Species acts impose costs on U.S. farmers and ranchers. If
those laws constitute good public policy, then perhaps taxpayers should
compensate farmers and ranchers, he said.
Other groups point out that farmers provide benefits like open space
and wildlife habitat for the general taxpayer and often do so without
earning much money.
Providing help in emergencies makes sense, said Ben Alexander, director
of the working landscapes program for the Sonoran Institute, a nonprofit
based in Bozeman and Tucson, Ariz. But the help can’t last forever.
“If you’re subsidizing people to do what’s fundamentally not a
good business model, you’re not helping them out,” Alexander said.
The Farm Bureau was a big booster of Freedom to Farm in 1996, and its
officials say parts of the bill – the increased flexibility and gradual
opening of foreign markets – remain good ideas.
But after the hammering that wheat prices have taken the past couple
years, talk of eliminating subsidies has become muted. |