Farmers hope for new funds

By Heather Mangold
City Editor

Government funds for farmers, as a result of the 1996 Farm Bill, will decline if a new bill is not written in 2002.

The 1996 Farm Bill will provide farmers with market transition payments for seven years. The bill was enacted to help farmers adjust to market changes. Unless the government, under Bush's new administration, writes a new farm bill in 2002, that payment will end with the bill's expiration.

Falling crop prices, depleting U.S. product markets and large amounts of food being produced around the world are the reasons for these hard times, according to Otto Doering, a professor in agriculture economics.

Allen Kemper, a Tippecanoe County farmer, said that the government program is not entirely promising because the government has not followed through with some promises it made in the 1996 Farm Bill.

"The government promised us three things," said Kemper.

Those promises included expanding international export markets; adding funding to research for value added products from corn, soybeans, beef and pork; and installing a payment plan to help farmers make a transition into the new era of markets.

The agriculture industry needs this because of falling prices that are alarming for most farmers.

"Today, the price that farmers receive, on a dollar equivalent, is less than what farmers got back in the depression," said Kemper, "and consequently, all input prices are higher in comparison."

As well as falling market prices, farmers are facing soaring land, fertilizer and fuel prices.

In fact, fertilizer and fuel prices have doubled, according to Kemper.

Kemper tries to find solutions for his economic problems, but finds it difficult when costs to make and produce his crops are more than the costs that he reaps from their sales.

"You can only squeeze so much out of your cost production and then you have to get creative with ways to come up with money," said Kemper.

One creative solution has been the use of genetically engineered crops, which is beneficial for farmers with production, according to Marshall Martin, also a professor of agriculture economics.

"Fifty-four percent of soybeans and 25 percent of corn acreage is planted with genetically engineered crops," said Martin.

Genetically engineered crops were designed to control excessive insects and weeds.

When options run out, farmers turn to government programs for help, according to Doering.

There are three main areas in which the government is involved in agricultural aid. They are conservation and environmental programs; programs relating to crop insurance and risk and price support; and income transfer programs.

Conservation and environmental programs are used for manure management and removal, soil erosion and improving water quality. They also enable the government to rent land from farmers so that the farmer will be able to afford to keep the land out of planting rotation for conservation purposes.

The Environmental Quality Incentive Program is a program designed by the federal government to share costs with farmers for facilities, special projects, enhancing air and water quality and similar projects.

Insurance and risk programs were designed so the government could offer crop insurance to farmers. However, the government itself does not offer the money. It subsidizes prices. Farmers pay a premium and the government pays the farmer if money is lost for crops. According to Doering, the government recently increased the subsidies for this program so that more farmers will be able to participate.

The 1996 Farm Bill changed the way income transfers and price supports are provided for American farmers.

"Freedom to Farm" was the concept initiated by this bill that gave farmers the choice to grow any crop they chose and still receive government support.

"In the past we always had programs to support the price to help the farmer for each individual crop," said Doering, "For example, wheat farmers used wheat programs and soybean farmers used soybean programs."

"Freedom to Farm" took all the money that the government would normally give to all different commodities and divided it up among all farmers. Farmers then receive a payment that represents the average of what their kind of farm received in the past.

With the income transfers and price supports that the government provides, farmers do more shifting of the crops that they plant and can always count on this payment, no matter if prices are high or low.

Grain and soybean prices are expected to remain low this year, said Martin. He hopes the government will provide several billion dollars for farmers but said everyone must wait for the new Bush administration to come together.

Farmers hope for new funds

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(765) 743-1111 ext. 250

City editor:
Heather Mangold

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Purdue Exponent 2001