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New 2012 farm bill could end some crop subsidies

Brad Heinrichs watches as some 80,000 pounds of corn go into a grain elevator in Carleton, Neb.

Brad Heinrichs, hauling corn to a grain elevator in Carleton, Neb.

Kai Ryssdal: Today was a mercifully quiet day on the campaign trail. After Florida last night, the four Republican hopefuls have moved on to Nevada. The caucuses there are on Saturday. Nevada's one of the two states we're taking you to this week to shed some light on what really matters in this election: The Real Economy.

Nebraska is the other state, where farmers and the federal government have had a complicated relationship since at least the Great Depression. Agricultural subsidies are a big election issue in the Cornhusker State, and with all the new worries about the federal deficit, farmers are anticipating a change.

From Carleton, Neb., Marketplace's David Gura reports.


David Gura: Brad Heinrichs sits in the driver’s seat of an 18-wheeler. He’s a farmer in his late 20s, hauling corn to an elevator -- a grain storage facility -- and I’m riding shotgun. Heinrichs pulls onto a scale, and we weigh in.

Grain Elevator Operator: This time you’re going to go to the South elevator. You’ll dump in Bin 5.

Brad Heinrichs: Thank you.

Grain Elevator Operator: Thank you.

Just a few hundred feet further, and Heinrichs jumps out. He cranks open the hopper, and kernels flow through a metal grate beneath the truck. Some 80,000 pounds of corn rush down, then up, into a concrete silo that towers above us.

At today’s price, this load alone is worth close to $9,000. And some of what it costs to grow that corn was paid for by us. Taxpayers have subsidized agriculture in the U.S. since the 1930s. But Heinrichs, like a lot of farmers I talked to, says the subsidies system is changing.

Brad Heinrichs: You know, the farm safety net that my dad used, and the farm safety net that my grandfather used, will look totally different in five years.

Right now, it’s a pretty sturdy net that’s woven out of low-interest loans and government-backed crop insurance. And then there are “direct payments” -- $5 billion that’s doled out to farmers every year, based on how much land they own and what they’ve grown in the past.

Don Hutchens: Those are direct payments that will come to a farmer pretty much no matter what the conditions are.  And those are probably, the best guess, are going to be lost.

That’s Don Hutchens, the president of the Nebraska Corn Board. That direct payment program started in 1996. It was supposed to be temporary. But when lawmakers wrote the 2002 Farm Bill, the agricultural economy was in bad shape, so they made them permanent.

This year, Congress is supposed to write a new Farm Bill. And even though Hutchens lives in Lincoln, he can read the writing on the wall in Washington. There’s concern about the deficit. And Hutchens says the farmers he works with understand that.

Hutchens: You know, if there’s gonna be cuts in farm programs, they want to see those corresponding cuts in the federal spending level as well.

The Heinrichs family farms just down the road from the grain elevator -- maybe a mile away. Brad shares equipment, including that 18-wheeler, with his dad and his brother Landon.

Landon Heinrichs: I’m for change, as long as everybody changes a little bit.

Landon Heinrichs is a couple years younger than Brad, but he’s been farming longer.

Landon Heinrichs: I think that, yeah, there needs to be budget cuts. I don’t know how come you can’t balance a budget, because everybody on their day-to-day operation has to balance a budget.

Both brothers say they want to see cuts or changes to social welfare programs, including Social Security. Brad Heinrichs says commodity farmers are willing to do their part to reduce the deficit. Right now, they’re making good money from the market.

Brad Heinrichs: And I think that’s something that farmers want. You know, they want to be able to not necessarily depend on the government for their income.

But they still need some kind of protection, he tells me, in case corn prices tank, or there’s a flood. Those direct payments may disappear, experts say, but subsidized agriculture isn’t going anywhere. The way the government subsidizes will change. Brad Heinrichs says today, crop insurance is the most important part of the farm safety net. And last year, that federally-subsidized program paid claimants more than $9 billion.

In Carleton, Neb., I'm David Gura for Marketplace.

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

Brad Heinrichs, hauling corn to a grain elevator in Carleton, Neb.

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First, there are factual errors (widely shared) that should be corrected. Farm subsidies for wheat, corn and other feedgrains started in 1961, (1964 cotton, 1977 rice, 1998 soybeans) not the Depression. Depression era programs ended in 1996. We had price floor programs paid for by farmers interest on price floor loans. Second, the 1996 farm bill failed and was followed by 4 emergence farm bills prior to 2002. Third, the Henrichs oppose "social welfare" but call their own welfare a "safety net." The farm subsidy database says Brad got $147,810.37 and Landon with $110,583.89, and those absurdly huge welfare numbers aren't at all explained here (Don Hutchens, $97,312.08). In fact, under pressure from corporate grain buyers, congress and the presidents lowered price floors 1953-1995 and then ended them. Corn fell by $1.3 trillion in today's dollars. The huge subsidies are to partly compensate for that (about $200 billion since 1961). Thus with their huge subsidies, these farmers actually have subsidized consumers below the living wage standard of prices of the past. The beneficiaries are CAFOs and grain companies that buy feed. Cargill probably gets annual gains below the previous standard as big as the entire farm subsidy database, since they benefit from the reduced prices on many crops, and globally, where the US sets prices. We've never needed any farm subsidies, but economically, farm commodity prices are inelastic, they don't self correct in free markets. We need to run farm programs like a business, not a welfare program, balancing supply and demand and setting a floor under prices and a ceiling over them, with supply reductions as needed, plus reserve supplies for shortages. If "corn prices tank," it will be a huge crash. Unlike the 1980s farm crisis, we have zero price floors plus free trade agreements. Here we had 7¢ corn during the depression prior to the New Deal. There's nothing to prevent that since 1995.

First, there are factual errors (widely shared) that should be corrected. Farm subsidies for wheat, corn and other feedgrains started in 1961, (1964 cotton, 1977 rice, 1998 soybeans) not the Depression (http://www dot ers.usda.gov/Data/farmincome/FinfidmuXls dot htm). Depression era programs ended in 1996. We had price floor programs paid for by farmers interest on price floor loans. Second, the 1996 farm bill failed and was followed by 4 emergence farm bills prior to 2002. Third, the Henrichs oppose "social welfare" but call their own welfare a "safety net." The farm subsidy database says Brad got $147,810.37 and Landon with $110,583.89, and those absurdly huge welfare numbers aren't at all explained here (Don Hutchens, $97,312.08). In fact, under pressure from corporate grain buyers, congress and the presidents lowered price floors 1953-1995 and then ended them. Corn fell by $1.3 trillion in today's dollars. The huge subsidies are to partly compensate for that (about $200 billion since 1961). Thus with their huge subsidies, these farmers actually have subsidized consumers below the living wage standard of prices of the past. The beneficiaries are CAFOs and grain companies that buy feed. Cargill probably gets annual gains below the previous standard as big as the entire farm subsidy database, since they benefit from the reduced prices on many crops, and globally, where the US sets prices. We've never needed any farm subsidies, but economically, farm commodity prices are inelastic, they don't self correct in free markets. We need to run farm programs like a business, not a welfare program, balancing supply and demand and setting a floor under prices and a ceiling over them, with supply reductions as needed, plus reserve supplies for shortages. If "corn prices tank," it will be a huge crash. Unlike the 1980s farm crisis, we have zero price floors plus free trade agreements. Here we had 7¢ corn during the depression prior to the New Deal. There's nothing to prevent that since 1995.

crop insurance is hard to understand, but your reporter should have looked atUSDA numbers. These numbers are an average of the last 10 crop years. Premiums paid $5.35 B - government subsidy of premium $3.82 B. Average loss of the last 10 years $5.13B . premiums paid over losses $200 M. goverment pockets this amount. Also Last years losses are estimated at $13.1 B, not the nine Billion cited in the report. numbers came from RMA.USDA.GOV.

"Both brothers say they want to see cuts or changes to social welfare programs, including Social Security. Brad Heinrichs says commodity farmers are willing to do their part to reduce the deficit. Right now, they’re making good money from the market."

REALLY? After all the years farmers received government handouts, now these guys think it would be acceptable to cut Social Security payments--which are the monies contributed by the retiree recipients? The Republican meme never changes, does it? For your information, Social Security payments to retirees are NOT an entitlement program or a welfare program. Some of us worked 40, 50 or more years and put money into the Social Security fund. We earned that money, saved it via Social Security and do not look on it as "welfare." I'm so glad "they're" making good money from the market. The retired often live on a fixed income, at the mercy of the almighty Market for any COLA at all.

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