North Dakota, October 3, 2004 -- CropChoice news --
Dan Morgan Washington Post, 10/03/04: Grain
farmer Allan Skogen is just the kind of efficient, market-savvy
farmer Congress had in mind in 1996 when it sought to
revolutionize U.S. agriculture by giving growers more
freedom to decide what to plant while phasing out traditional
To reduce risks and increase productivity on his 5.5
square miles of rolling North Dakota prairie, Skogen
uses all the tools of technology and science -- from
herbicide-resistant strains of bioengineered soybeans
to a new device for his combine that calculates the
number of bushels of corn and wheat he is getting every
few hundred yards.
is in the Air.
Building off the WTO ruling against subsidized
cotton Loni Kemp sees a more viable future
for American farmers. She argues the government’s
handouts are actually holding American farmers
But in one essential respect, Skogen is still deeply entrenched in the farm
system of the last century. Despite bin-busting crops
and strong prices over the last four years, he relies
heavily on checks from the federal government. Since
2000, his farm has received about $158,000 from Washington
under a program that gives grain, rice and cotton farmers
an annual allowance in good times and bad.
Last year -- a banner year in agriculture -- the government
paid farmers $6.7 billion in such "direct payments,"
and $5.4 billion in other types of subsidies, according
to figures from the U.S. Department of Agriculture and
the Washington-based Environmental Working Group. Over
the past nine years, the government has paid out more
than 10 times that amount in total subsidies -- a $130
billion government outlay.
Skogen's situation bears witness to a persistent dilemma:
Even as American farms grow bigger and more efficient,
they still demand and receive financial help from the
government. Their productivity is itself part of the
problem, experts say, because it perpetuates a cycle
of bigger crops to meet growing world demand while prices
per bushel or bale stay at about what they were three
While the system benefits many huge, highly profitable
farms as well as smaller producers, few in either political
party favor ending the flow of federal dollars that
last year went to 1.8 million farmers and generated
business and income for banks, real estate brokers,
businesses and local governments throughout the Farm
Belt. Both political parties are mindful that wheat,
corn and soybean farming are vital to such presidential
battleground states as Minnesota, Missouri, Ohio and
Such broad-based political support has made agriculture
a laggard in the movement heralded after the GOP takeover
of Congress a decade ago to reorient the economy toward
unfettered markets and reduced government support. That
philosophy was the bedrock of the Republicans' "Freedom
to Farm" legislation passed in 1996.
But subsequent droughts, floods and market upheavals
forced Congress to back down. With passage of 2002 legislation,
Congress once again embraced more generous subsidies.
Those subsidies have come under fire from fiscal conservatives,
developing countries and other groups.
"Farm subsidies are America's largest corporate
welfare program," said Brian Riedl, federal budget
analyst for the conservative Heritage Foundation. "The
majority of the payments go to large agribusinesses,
which promotes the consolidation of farms. It's the
Developing nations, meanwhile, have refused to participate
in a new round of multinational trade talks without
a pledge from the United States, Europe and other wealthy
countries to reduce their $300 billion in annual agricultural
In a case that some farm groups say could bring down
the whole subsidy system, a World Trade Organization
panel recently ruled that an array of U.S. cotton subsidies
-- though not the direct payments -- was illegal. An
appeal is planned.
"Seventy percent of farmers aren't getting any
subsidies," said Rep. Ron Kind (D-Wis.), who led
a battle in 2002 to shift more money in that year's
farm bill from subsidies to conservation. "I don't
think that's the way to encourage diversity in our food
Instead of paying farmers cash, he said, the government
should help them with improved health care, more agricultural
research and conservation programs.
Congressional defenders of the farm program take strong
"The so-called world market is not a free market
by anyone's definition," said Rep. Charles W. Stenholm
(D-Tex.), who played a key role in writing the 2002
farm bill. Stenholm said he would be willing to end
all farm subsidies if other countries follow suit, which
"As long as you have Europeans subsidizing wheat
exports and marketing boards in Canada, you're going
to see continued market influence by governments,"
Stenholm said. "We have the most efficient farmers
in the world, but most of them can't compete with government-imposed
Experts agree that Congress has, in fact, made strides
in breaking from the old New Deal-era farm system that
strictly controlled what farmers planted, how much land
they used and even what they got for crops.
The 1996 farm bill was intended to wean farmers off
decades of government price supports and directives,
and allow them to plant crops that were bringing good
prices in world markets. The bill stressed supporting
farm income with the cash payments unrelated to what
farmers grew, rather than having government support
prices by purchasing surplus crops.
The new, more flexible system brought about sweeping
changes. Wheat and barley growers in the northern plains
converted millions of acres to higher-value soybeans,
a crop that was not covered in the more rigid farm subsidy
programs of earlier years.
But in the late 1990s, with farm prices crashing, Congress
rushed back with billions of dollars in "emergency"
payments. In 2000, the payments soared to a record $27.5
billion. The 2002 farm bill continued the direct payments,
but also improved the "countercyclical" payments
for which farmers were eligible when prices fell below
certain targets: $2.63 a bushel for corn and $3.92 a
bushel for wheat.
In a further show of political muscle, farm state senators
a week ago attached a $2.9 billion drought, flood and
"disaster relief" provision to an unrelated
Skogen is keenly aware how this agriculture spending
may look to urban dwellers, but he makes no apologies.
"From the outside, you look at it and say: Why
would you give anybody more money when they have a good
year?" he said. "But it's really much broader
than that. It's food security for the country, it's
schools, it's county government and all the things we
need out here to inhabit North Dakota."
The steady cash, he said, enables him to weather bad
years, get credit from banks and constantly upgrade
his operation in a region buffeted by the vagaries of
weather and a world economy. He used the first of two
annual checks this year to purchase the yield-measuring
device for his combine.
At dusk one late summer day, as a wind howled and the
temperature dropped to near freezing, Skogen's son drove
a wheat combine that stirred up clouds of dust and chaff
and sounded like an approaching subway train. When conditions
are right, the harvesting goes late into the night and
lasts from mid-August to November.
Skogen and his wife still live in the modest homestead
to which his Norwegian American grandfather and father
came in the 1940s, after losing another farm in the
Depression. From 480 acres in the 1940s, the farm grew,
and Skogen's son was able to enter farming. Skogen credits
the stability provided by federal farm programs.
"Without that, I can't imagine how North Dakota
would survive," he said. "That's the only
profitability in the business." He said that in
a good year he nets about $20 an acre on the 3,500 acres
he owns and rents, enabling him to clear about $70,000.
But that figure includes his government allowance, which
in 2003 was about $58,000.
That is a modest return, he said, on a $3 million to
$4 million investment in land, two combines worth $180,000
each new, one tractor-trailer, two trucks, four cultivators,
a spraying machine and silos that can store 250,000
bushels of grain.
Risks are extensive, from weather to world markets
that can fluctuate wildly if Romania dumps low-grade
wheat on the European market or if the Brazilian soybean
crop is better than expected. This year, local grain
elevators have marked down some wheat because of poor
Farm programs "nourish communities and promote
family values," Sen. Byron L. Dorgan (D-N.D.) said,
and Skogen contends they are a small price for consumers
to pay for cheap food. But as trade and budgetary pressures
mount, some agricultural economists question whether
consumers would feel much impact if subsidies ended.
"If you took away direct payments, you would have
adjustments, particularly on the margins where farms
are less profitable," said Keith Collins, chief
economist at the Department of Agriculture. But he said
the most efficient farms would keep producing food.