Two years ago, farmers in the four-county Toledo metro area collected more than $10.5 million in direct payments from the federal government, a subsidy program that had become increasingly seen as a poor use of taxpayer money.
Starting this year, those payments disappear. In their place are federal safety-net programs that officials say will slightly reduce federal expenditures and better reflect the purpose of protecting the nation’s farmers in dire times, reports Tyrel Linkhorn via the Toledo Blade.
“The fundamental political problem that direct payments ran into is a question of fairness,” said Carl Zulauf, an agricultural economist at Ohio State University. “Is it fair farmers were receiving these payments when income was at record or near-record levels? We as a country decided that was not something we felt comfortable with.”
Direct payments were included in the 1996 Farm Bill as a temporary safeguard against bad years, but eventually became permanent. The subsidies drew heavy fire recently as farm income rose to record levels. Mr. Zulauf said as long as farmers met the basic qualifications, direct payments were made regardless of need. In the new system, payments will only be made when certain market conditions exist — either revenue declines or low market prices for grain and other commodities.
President Obama signed the five-year Farm Bill this year.
Agricultural observers say there’s a lot of changes farmers must consider in the new bill, but the implementation of those programs hasn’t yet been sorted out, making an already confusing choice even more complicated.
“What is making that a little harder on farmers right now is that the USDA hasn’t finished at this point setting all the rules and guidelines and essentially setting up the programs,” said Ron Sylvester, a spokesman for the Ohio Farmers Union.
The Ohio Farmers Union has organized a panel of experts to meet with northwest Ohio farmers later this week in Bowling Green in an effort to clear up some of those concerns.
Though the specifics of how the programs will operate are still murky, farmers who wish to participate must choose one of the two general paths.
The first, called price loss coverage, makes payments if the average market price for a crop is less than a previously set reference point. For example, corn’s reference point is currently $3.70 a bushel.
The second, called county agricultural risk coverage, kicks in when actual crop revenue is lower than the country’s benchmark revenue. Unlike price loss coverage, the county agricultural risk coverage applies to total farm revenue, not one specific crop.