Large farms may have to pay more to insure crops

Marketplace Contributor Jul 5, 2012

Large farms may have to pay more to insure crops

Marketplace Contributor Jul 5, 2012

Sarah Gardner: A look now at the dividing gap between rich and poor Americans in farm country. The House Agriculture Committee leadership rolled out its version of the new five-year farm bill today — 550-plus pages.

We sent Iowa Public Radio’s Clay Masters out to talk to small and big farmers about how the bill might affect them.

Clay Masters: Aaron Lehman is a fifth-generation farmer. He has around 600 acres of corn and soybeans in central Iowa. That’s considered a small farm in the United States.

Aaron Lehman: We provide all the ownership, all the management and all the labor for our operation.

Lehman just finished applying herbicide to one of his soybean fields. Now he’s folding in the long metal arms of his decade-old sprayer. He has to jam a screwdriver into one of its hinges.

Lehman: This one’s been causing me problems, it’s supposed to easily fold.

For years, Lehman received what’s known as direct payments. That’s money from the fed whether he produced a crop or not. This year, he got around $8,000. But those direct payments are going away, which will save the government about $5 billion a year. Lehman says he’s fine with that.

Lehman: Restrictions need to be tighter. The farm program is taking some big cuts; there’s less money for this farm bill than the last farm bill by far.

But it’s a balancing act. How much can the government scrap without hurting farmers? Lehman says there’s still room for cuts — he looks to those gigantic farms that just seem to get bigger ever year.

Lehman: I can’t help but feel some of that’s fueled by direct payments going to large operations, subsidies going to large operations. Those guys have probably been expanding more than anybody in the farm world.

Lehman says that troubling. He thinks there are opportunities for small- and mid-sized farm to expand, but Lehman says taxpayer money shouldn’t be used to prop up huge farms.

Lehman: If you want to farm three counties’ worth of farm ground — fine, go at it, but the rest of us aren’t going to help pay the bill.

Under the Senate’s version of the bill, farmers who make more than $750,000 a year would receive less government money in the form of crop insurance subsidies.

Kevin Ross: In my mind, it’s a discrimination on certain farmers versus another.

That’s Kevin Ross. He’s the president of the Iowa Corn Growers Association.

Ross: Assets don’t exactly, necessarily mean profits, and we tie a lot of money in risk every year.

In other words, Ross says just because a farmer looks rich on paper doesn’t mean they’re wealthy. A lot of that money has to be reinvested right back into the farm.

Let’s get another farmer’s take — Marc Benson. He farms around 500 acres in southeastern Iowa. Benson couldn’t live the lifestyle he’d like on this farm alone; he also works part-time as a seed dealer for ag giant Pioneer.

Today, he’s out surveying his fields. He pulls up a stock of corn and cuts it open with his pocket knife.

Marc Benson: The interior of the plant is very healthy, nothing’s bored into it, so it’s looking good right now.

Benson says limitations on crop insurance wouldn’t affect his business, but some of the farmers he sells seeds to could take a hit.

Benson: I can see two sides to that: we have some big customers, that would affect them, but when the government’s subsidizing it, they get to have some say in it.

Those wealthier farmers would have to pay more of their own money to insure their crops. The Senate version of the bill could be the best offer on the table. The farm bill now heads to the House, where even bigger cuts to farm programs are expected.

In Des Moines, I’m Clay Masters for Marketplace.

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