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April 1, 2014

Where will the farm bill take us?

Farmers unhappy about the end of direct payments

Robin Roberts farms 1,000 acres in Marshall County, and the past five years have been good ones financially.

But Thursday, Roberts was contemplating the end of direct federal payments to farmers, and the impact it’s going to have on his Plymouth farm.

“How’s anybody supposed to survive on these prices?” Roberts asked a group of Farm Bureau economists at a Farm Bill seminar in Rochester. “Anybody trying to farm at these prices is going to be bankrupt in five years.”

Farmers are facing the reality that direct payments – a part of successive farm bills since 1995 – are now a thing of the past.

As a result, farmers say, food prices will increase, and the food supply is going to become less stable.

“What it means is that the price of food is going to stay high,” Roberts said. “If you don’t keep a [financial] cushion, food prices are going to go up and down.”

The Farm Bureau, which was deeply involved in the three-year effort to pass a new farm bill, supported the end of direct payments, which weren’t tied to prices, and which went to farmers whether they planted anything or not.

In place of the politically unpopular direct payments, the Agriculture Act of 2014 offers expanded crop insurance, which pays out if crop prices fall too far, or if farm revenue falls below certain benchmarks.

Talk to farmers like Roberts, and it is clear there are concerns about where the new farm bill – which provides up to $89.8 billion for crop insurance over the next 10 years – is headed with price supports.

Under one of the new programs, Price Loss Coverage, corn farmers would start to receive payments if the U.S. average market price falls below the reference price. For instance, the “reference price” for corn is $3.70 a bushel.

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