WASHINGTON -- Tim Burch’s family farm in southwest Georgia has been buoyed by federal farm subsidies in years when cotton and peanut prices have plummeted.
That safety net is threatened this year, Burch said, as Congress moves forward on a new farm bill, aiming for tens of billions of dollars in cuts by remaking the federal subsidy system. The result earned bipartisan support in a Senate committee last month, but a group of Southern senators including Georgia Republican Saxby Chambliss refused to back the bill, saying it’s a raw deal in particular for peanut and rice farmers.
In a phone interview last week, Burch, of Baker County, said a new proposed insurance plan would be inadequate.
If prices drop too far, “there wouldn’t be a way for me to cover cost of production or to pay my bank, so it’s going to make it hard for me to borrow money,” he said.
The political argument is tricky at a time when commodity prices are at record highs and farms are outperforming the rest of the economy. Farmers say that will not always be the case.
The farm bill that passed the Senate Agriculture Committee would eliminate direct payments to farmers in order to create a new insurance program. It created a dispute that is more regional than partisan: Most of the committee members are from the Midwest, including Chairwoman Debbie Stabenow, D-Mich., and ranking minority member Pat Roberts, R-Kan. Four of the five dissenters in the committee vote were Southern Republicans.
“In the South, with peanuts and cotton, we have a different kind of agricultural complex than the bean-and-corn complex in the Midwest, and it seems like our discussions fell on deaf ears,” Georgia Commissioner of Agriculture Gary Black said.
For peanuts, Chambliss and others are pushing a program to pay farmers if prices drop too low.
Most of the crops covered in the insurance program -- such as corn and soybeans -- are traded on the Chicago Mercantile Exchange, making prices easy to establish and insure against. Peanuts are not traded on the exchange and thus are more exposed to wild price swings. Also, Chambliss said many peanut farmers will switch crops depending on what prices look like for the coming year. That skews results for an insurance program that measures coverage based on farmers’ crop yields over a five-year period.
“There is very little benefit to peanut farmers that is available under that proposal,” Chambliss said.
Cotton producers will be covered by a new program developed by the National Cotton Council that Chambliss described as “a crop insurance plan on steroids,” brought about in part by an international trade dispute with Brazil.
The changes are born out of deficit-cutting targets from the deal struck last summer to raise the federal debt limit. When congressional leaders divvied up the savings, they deemed $23 billion in trims over the next decade were to come from agriculture. The farm bill is scheduled to be reauthorized every five years; the current one expires in 2013.
The Senate bill comes up with $24.7 billion in cuts, including $17.6 billion in savings from the switch from direct payments to insurance.
“We will give farmers the assistance they need when there are losses, and it will be based on what they actually plant,” Stabenow said at the April 26 hearing. “The era of direct payments is over.”
A companion bill has yet to emerge in the Republican-controlled House, and it likely will be much different. The farm bill includes spending on nutrition programs such as food stamps, which House Republicans have shown far more eagerness to cut than farmer payments.
Republican Rep. Jack Kingston of Savannah pointed out that nutrition programs have grown into the vast majority of agriculture spending and thus should bear more of the cuts.
“If they don’t get the food welfare portion of the farm bill reformed, I’m going to vote no,” said Kingston, who presides over agriculture spending on the Appropriations Committee. “Because it’s getting out of control.”
The food stamp program expanded dramatically as unemployment spiked and the 2009 stimulus bill increased benefits. Spending rose from $50.4 billion in fiscal 2009 to $71.8 billion in fiscal 2011.
The Senate version of the farm bill saves $4 billion on food stamps over a decade by limiting states’ use of food stamps in coordination with low-income heating assistance. Many advocacy groups -- including the National Conference of State Legislatures -- voiced public opposition to the cut.
Bill Bolling, executive director of the Atlanta Community Food Bank, said any cuts to food stamps would be difficult to handle after back-to-back years with 30 percent increases in food bank demand.
“I think we’re making progress, so I don’t want to sound all negative,” he said.
But, Bolling said, “as those cuts come it will put pressure on the local providers, food banks and emergency providers.”
Republicans are pressing for more nutrition cuts. A House panel recently passed a bill on a party-line vote to cut $33 billion from food stamps over 10 years. Republicans said they were merely closing loopholes and cutting waste and fraud, while Democrats said an important safety net was being slashed.
Chambliss said he was not ready to back those cuts -- which have virtually no chance of passage in the Democratic-controlled Senate -- but he wanted to see more balance between farm and nutrition savings.
The House will likely be a friendlier audience for his concerns. Chambliss said he is in frequent contact with House Agriculture Committee Chairman Frank Lucas, R-Okla., about the plight of the peanut, and he expects his concerns to be reflected in the House product.
Kingston said the Senate opposition means “the House Southerners would maybe have a little more leverage, a little more influence.”
Back in Baker County, Burch, who serves on the Georgia Peanut Commission, said he hopes the efforts for a peanut carve-out come through. As it stands, he said, the bill is like "one shoe" to fit all different commodity crops.
Said Burch, "Somebody's going to be uncomfortable."
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