Associated Press
12-27-06
Farmers expect less federal aid as corn prices soar
DES MOINES, Iowa (AP)--Iowa farmers aren't counting on Uncle Sam for much
help this year.
With corn prices approaching record highs, government aid will likely be much
lower than the subsidies issued to farmers last year after Hurricane Katrina
forced the closure of all grain shipments along the Mississippi River.
Iowa growers and landowners collected $2.24 billion in subsidies last year--up
from $1.25 billion in 2004--and more than 10 percent of the total payments
distributed nationwide, according to data compiled by the Environmental Working
Group, a Washington-based group that tracks farm payments.
About $1.8 billion were subsidies linked to corn production, the analysis showed.
"It was a windfall situation, which normally we wouldn't expect to occur," said Bob
Bowman, a De Witt farmer who is president of the Iowa Corn Growers
Association.
Farmers face a much different market as 2006 concludes. The corn prices that
plunged in Katrina's aftermath have now soared above $3 a bushel thanks to the
booming demand for grain to make ethanol.
The U.S. Department of Agriculture estimates corn prices this year will average
about $3.10 a bushel, which nears the high recorded in 1995 after a poor crop
and is well above levels that trigger subsidies. That means farmers will get
relatively little from the government.
"That's the way the thing is supposed to work," said Dennis Topf, who runs T-4
Land & Cattle in Charter Oak. "You get it from the market instead of having to
depend on the subsidy or something."
Almost 120,000 Iowa individuals, partnerships and other entities received
government payments last year, with 55 percent of the subsidies going to 10
percent of the recipients, the analysis showed.
T-4 Land & Cattle received the most--nearly $1.2 million for farmland in the
western Iowa counties of Crawford, Harrison and Monona, and Ziebach County,
S.D. The payments included nearly $820,000 in subsidies tied to corn, the
operation's primary crop.
Topf and others across Iowa shouldn't expect help like that in the foreseeable
future, said Chad Hart, an economist at Iowa State University. Last year, the
combination of bumper crops and the stoppage in grain shipping pushed the
price of corn below $1.50 a bushel at one point. That, in turn, triggered subsidies
of 50 cents a bushel or more.
"We had so much corn in the state, and we had a hard time getting it out of the
state," Hart said.
Iowa ranked No. 1 in total subsidies in 2005 for the second year in a row, ahead
of Texas with $1.97 billion and Illinois with $1.75 billion.
The subsidies may have helped farmers survive a difficult time, but some are
pushing for changes as Congress debates the next farm bill.
The National Corn Growers Association is promoting a plan that could trigger
payments even when market prices are high--if growers lost crops to drought or
severe weather.
Under the proposal, subsidies would be based on changes in a farm's revenue
rather than fluctuations in commodity prices. With the current program, bumper
crops can trigger payments by lowering prices, which happened last year. A
drought, however, can increase prices and prevent subsidies even if farmers lose
their crop.
Some farm groups have been cool to the idea, which was developed by
economists at Iowa State.
Bowman hopes it gets serious consideration.
"It just looks like a lot fairer method of providing a safety net for everyone," he
said.