Who is Right?

Here is another article that you can chalk up to the "it depends on how you look at things" card. From the Global Development and Environment Institute at Tufts University we find the article, "Boom for Whom? Family Farmers Saw Lower On-Farm Income Despite High Prices". This report seems to run contrary to the findings from the USDA about the 2008 crop year and how the high commodity prices effected farmers. As you can guess from the late post today I don't have a lot of time, but I encourage you to check out the report.

Here are a few quotes I pulled out. I would love to hear your thoughts.

"In 2008, the U.S. Department of Agriculture estimated net farm income of $89.3 billion, up slightly from the previous year’s record and 50% above the average for the preceding 10 years."

"2007 was a banner year for major crops, with prices significantly higher than they were in 2003, when we last examined this data. Between the two years, corn prices increased 87%, soybean prices rose 47%, and wheat prices jumped 91% in nominal terms. So how much better off were the higher-sales family farms? Quite a bit, as it turns out, but not from farming. Total household income was up 23%, from $59,623 to $73,260, but the entire increase came from off-farm income, which jumped from $30,375 to $47,245 and accounted for 64% of household income. Still, with total household income reaching $73,260 (in nominal terms), 108% of the U.S. average (well below the 128% that USDA farm sector averages suggest), one would have a hard time characterizing these farmers as well-off."

"Who did well, then? The largest commercial farmers were the only family farm subgroup in the USDA survey to show a net increase in income from higher prices in 2007. Very large commercial farms (family-owned operations making more than $500,000 in gross sales) saw a 46% jump in net income from farm sales, from $130,263 to nearly $189,547, easily compensating for their $12,196 drop in government payments between the two years. With off-farm income dropping only slightly between the two years, the 21% increase in total household income, from $220,971 to $267,130, came entirely from on-farm income, thanks to high prices."

There is a bit more in the article, but those are some interesting numbers that they are throwing around. Like I said, I'm sure it just depends on how you look at things ... but, who is right?

Saturday at the PFI Conference

Saturday at the Practical Farmers of Iowa Annual Conference was just as great as Friday, but in a different way. Of course because of the snow and the wind I woke up in Marshalltown and didn't have as far to travel to get to the conference, so in a way that was nice. Once I got there I had a great day attending the keynote by Joel Huesby, a session on the new Conservation Stewardship Program (CSP), a great lunch containing all Iowa food, my session on websites and blogging, a great little discussion with other beginning farmers, and finally a cluster group on alfalfa and grass mixes. It was a great day filled with lots of information! So, instead of detailing everything I just thought I would share some of the notes I took and then take time to disect things later.

• Here is the first thing I wrote about the CSP session, "apply through the NRCS". But, after that and lots of questions and discussion from the group I started writing things like this, "this is pretty confusing ... not sure if anyone will ever get it" and this, "there seems to be a disconnect on what is in the 2008 farm bill." That is not to say that it wasn't informational, but rather that things are so confusing that there were many different interpratations represented in the room. It kind of made me dislike governmental bureaucracy a little bit more.
• "EQIP: more interesting than CSP". Water systems ... inside fencing ... frost seeding clover in released CRP ground ... wind breaks ... need to find out about this.
• "Iowa Micro Loan Foundation: not ready yet, but very soon."
• "72 dpi for photos intended for the internet will help dial-up users view your website more easily"
• "Hmm, Kelli Miller had a quote on the 'Grow Your Small Market Farm' display that was about me! I guess I should attend those classes." (By the way, it looks like we will be signing up)

Like I said, those are just some thoughts and quotes from my notes. Even from that sampling I can tell how useful these two days were for me. Besides the notes I made many good contacts and picked up a bunch of great information. The way that I summed up the weekend for my wife describes it best I think ... "I learned a lot this weekend, and I also learned what I need to learn about". Basically, I did pick up a ton of information and then I also jotted down more information about things I wanted to research. At least I should have good blog discussion fodder for a while now!

Are the Wheels Falling Off

This morning as I was searching around some of the websites that I like to read for good blogging fodder I found a November, 21 blog post by Allan Nation (on his blog). The post was titled, "A Wylie Coyote Moment In the Wheat Belt" and you can read it by taking the link above and scrolling down a little bit. The thrust of the article is about the falling wheat prices, but Mr. Nation can't resist a little prophecy about the corn market. Here are a few especially interesting quotes from the post.

"Currently, the input costs to grow this winter’s wheat crop are estimated to be around $6.00 a bushel, but elevators are only offering $3.17 for it. This apparent sure loss has not slowed America’s wheat farmers as they start to plant this year’s crop."

"According to one Oklahoma banker, growing this year’s crop will probably make them poor. He estimates that half of the net worth of his current farmer customers will be lost in 2009."

"Watch for a Farm Bailout bill in 2010."

Since in am ignorant in the growing of wheat I was wondering if someone could enlighten me on the "hows and whys" of wheat costing $6.00 a bushel of input costs. I'm not disagreeing with the number, I just don't know what goes into a wheat crop like I do corn or soybeans. But, one thing is for sure, I do understand why the wheat farmers are continuing to plant wheat even when the prices are so low ... because that is what they have been told to do and that is the only agricultural system they know.

I assume that many of the wheat farms are large scale mono-crop type operations and they probably are tooled up enough to just switch operations on the fly. Because of that they just plant wheat and some may even plant more ... because that is what our government wants.

As for corn having the same fate and the 2010 Farm Bailout Bill ... Well, I'm not sure what will happen with corn, but I do know that corn closed at $3.32 yesterday which is darn close to the break even point. As for a farm bailout ... what more could they do that they don't already do in the 2008 Food Stamp ...err... Farm Bill?

The Conservation Stewardship Program

I have heard and read that the updates to the Conservation Stewardship Program (CSP) was one of the highlights to the 2008 Farm Bill. I must admit that I didn't know much about the CSP until I started hearing/reading that so I looked it up and tried to figure out what it is all about. Like most governmental programs it was a little difficult to figure out, but I did just come across the "Conservation Stewardship Program Fact Sheet #9". You can check out the .PDF file for yourself by clicking on the link.

So, here are some of the "facts":

• The CSP used to be called the Conservation Security Program ... the name change is probably to make us feel good (I am just kidding).
• It is a program for farmers that are using or interested in using conservation practices on land that they are currently farming for row crops or pasture ... unlike the Conservation Reserve Program.
• It seems the new and improved version of the CSP is open to all farmers, not just those in certain watersheds as with the previous version. I would think this is a good thing for farmers out there that are actively farming and working on conservation at the same time.
• Whether or not you receive a CSP contract (5 year contracts) will depend on how many acres are enrolled and what conservation practices the farm is using and whether or not they are willing to do more. I'm still not totally clear on what kind of conservation practices they are talking about, but I'm sure that is because I just don't know enough about the program (old or new).
• The amount of the CSP payment will take into account three factors. 1) What are the environmental benefits. 2) What costs does the farmer have because of the measures. 3) Will there be some income lost by the farmer.
• You will be happy to know that the payments have been capped at $40,000 per year (per farm) instead of the "virtually unlimited payments" of other programs. (I'm being a little tongue-in-check here, but they did say those "virtually unlimited payments" can go to millionaires and corporations)

So, there you have it. Facts from the fact sheet ... with a few comments along the way. Like I said, I don't know too much about this program other than the fact that some people felt like it was one of the best parts of the Farm Bill for conservation minded farmers. I would love to hear from someone that knows more about it, or anyone else interested in agriculture policy!

A Follow Up to Yesterday's Post...

Yesterday I wrote about the $313 crop base payment that we were going to receive. Politics, subsidies, and current farm policy aside it really is money that we weren't planning on getting. In fact when I went in to sign-up the women at the counter actually said something along the lines of, "it's not a lot of money, but its nice to get something without having to do anything". Of course that isn't an entirely true statement because people are giving something to receive this payment...

Well, to be completely honest it is money that we weren't expecting to get and I'm not entirely sure how I feel about the whole subsidy thing. All of those things were churning through my mind lately and it seems they were running through my wife's mind as well because we have kind of come to the same conclusion.

If this is money we weren't expecting to get why don't we take the opportunity to give instead of just buying something for ourselves or for our farm. It might seem like a little out of the box, but we like the idea! I'm not completely sure what we will come up with, but since we are involved in this farming thing my vote is to buy some animals for people through Gospel for Asia.

**I should mention that I'm not advocating that everyone does this with their subsidies, that is up to every ones own viewpoint ... this is just something cool we could do because ours really isn't that much

Thank You New Farm Bill...

Sorry for another late post... I just wanted to take a moment this morning to say thank you to the United States Government, the taxpaying people of America, and all those who worked so hard on the 2008 Farm Bill. It is really wonderful to have people so concerned about the agricultural community in the United States that they find a place in their wallet for us lowly farmers ... errr ... landowners. I mean I can't believe how gracious everyone is to find some spare change for little ol' me!

**end of sarcasm**

Really, I don't know all of the ins and outs of the 2008 Farm Bill, but there are plenty of interesting things that I'm learning about now that I'm a landowner. For example we recently received a call from the FSA office in our county telling us that we had until September 30th to sign-up for our crop base under some new provisions in the new Farm Bill.

The long and short of it is that because we own 40 acres of land (26 acres of which are "tillable") we are entitled to some money. $313 to be exact for our corn base, soybean base, and wheat base. We have 14 acres (I believe) included in our base so it works out to roughly $22.36 per acre of the base. And to top it all off we don't have to do anything to receive that money. We don't have to plant crops, we don't have to have a management plan, and we don't have to have them inspect it. All we have to do is own it.

So, why didn't I turn it down? I would like to think that I would turn it down on principle ... and maybe at some point I will, but for now we took the payment because of the future sales. Although the base isn't important to us it could possibly be important to someone down the road if we had to sell and then it could make a difference.

It is an interesting provision in though...

Does the Farm Bill Make the Grade?

I realize that the 2008 Farm Bill is kind of old news at this point, but since I didn't spend much time writing about it I thought I would include some tidbits from a recent article in "The Practical Farmers of Iowa" newsletter. They interviewed a few PFI members and asked them to grade the Farm Bill and give some of their thoughts about the positives and negatives. The grades and comments that followed were very interesting. I would love to hear some of your thoughts on the Farm Bill or on the grades and comments given by these Iowa farmers.

The four different farmers gave the bill a "D", "B-", "C-", and another "B-". That averages out to a solid "C" grade ... which does mean that overall it received a decent passing grade. But, it is also obvious that they weren't overly excited about the contents of the bill either. Let's start with the positive comments.

All four of the respondents were pleased with the changes to the Conservation Stewardship Program, which I admit is a program that I know very little about (check out the link to read more). Also, it seems like they were happy with some of the changes in the beginning farmer supports. I for one am going to look into some of those changes and see if there are any new benefits for us. Finally, a couple of the mentioned the positives of the growing "organic" segment of the bill.

The dislike portion of their responses were very interesting. They were interesting because not everyone had a huge list of dislikes, and in some cases had more positive to say than negative. But, it was also very interesting (and telling) that all four of them listed the same thing as one of their dislikes. Care to guess what that was...?

"(Dislike) The continued high subsidies for unsustainable ag production. (How will it impact your farm) The high subsidies for corn and soybeans will mean a continuation of commodity farming for most of my operation - I have to go were the profits are."

"It is frustrating that Congress again failed to pass commodity payment limitation reform in this Farm Bill."

"As far as commodity programs, they failed to put limits on payments."

"The lack of reform in the commodity subsidy program was discouraging."

I think it says a lot that these farmers (which come from slightly different backgrounds/viewpoints) all pointed to the lack of change in commodity subsidies as one of the major downfalls in this bill. I also think the first quote above says a lot about our agricultural industry. I'm not quite sure where I would grade the 2008 Farm Bill, but I suppose I would call it average ... for now.

2008 Farm Bill Passes

Well, the 2008 Farm Bill was finally passed yesterday by the Senate 81-15 and in the House earlier with 318 yes votes. That means that there will be no veto from the President and a bill that was supposed to be done a couple years ago will finally be signed. But, is it a good farm bill? I have been trying to follow as much as I can, especially when there was talk of letting CRP acres out early, and have just a few thoughts after reading THIS ARTICLE from FoxNews.com. I would also be interested in hearing your thoughts on the new Farm Bill.

About two-thirds of the bill would pay for domestic nutrition programs such as food stamps and emergency food aid for the needy. An additional $40 billion is for farm subsidies, while almost $30 billion would go to farmers to idle their land and to other environmental programs.

-There is where the money is going. I guess I don't have too much to say about that one that wouldn't possibly get me in trouble so I will just throw it out for informational purposes. Although, I wish they would knock a few bucks off of that $30 billion for environmental programs and let me take my land out ... I feel like a properly managed grazing system would be better that just a bunch of scrub brush taking over a pasture.

But drastic cuts to subsidies were not possible, lawmakers said, because of the clout of Southern lawmakers who represent rice and cotton farms that are more expensive to run.

-Gotta keep everyone happy I guess, but the only way that we can get rid of subsidies is to slowly wean people off of them. Maybe next time...

"This bill has reform in it," said Senate Majority Leader Harry Reid. "Could we have done more? Perhaps. But if we'd done more we wouldn't have gotten a bill."

-I love that quote ... "Could we have done more? Perhaps." Yep, sounds like a lot of thought about what is actually best was put into this bill.

The farm bill also would eliminate some federal payments to individuals with more than $750,000 in annual farm income — or married farmers who make more than $1.5 million.

-Government money for farmers who make $750,000. I realize we are addicted to cheap food and it is the subsidies that keeps stuff cheap, but at what point do we realize that it may be a little absurd?

There is a lot more stuff in the bill of course and you can read about some of it in the article, but these are just a few of the things that really stuck out to me. So, what do you think?

Paying Your 2008 Food Bill

According to an article I read in the February 13, 2008 issue of the "Iowa Farm Bureau Spokesman" if you are an average American you have already earned enough money by the beginning of February to pay for all your food for the entire year. According to the statistics you spend around 9.9% of your disposable income on food. As I read through the article I had a couple of thoughts ... The first thing that popped into my mind was, "wow, that is nice that we are such an affluent country that we can do this so quickly". Then I thought, "hmmm, is this something to be proud of?"

Let me through out a few more statistics from the article. It says, "consumers have to work 52 days a year to pay for health care, 62 days a year to pay for housing costs and 77 days a year to pay their federal income taxes." But, they only need to work about 35 days to feed their family for the year. The conclusion of the Farm Bureau is that this is a good thing and only proves how great American farmers are at being efficient in raising livestock and growing grain.

The first question that pops into my head is this ... How many days from those 77 days it takes to pay our taxes are needed to subsidize the farming and food industry? I think we need to factor that in if we are going to get a true representation. Here is another question ... How much of the food produced in this country is consumed by this country, and how much do we import? I truly don't know the answer to that one, but would be interested in hearing if anyone knows.

On the surface this seems so great. Our food is cheap and thus we have more money to spend on other junk! But, is cheap affordable preservative and hormone packed food a good thing? Would be be better off as a country if it took say 15% or 20% of our disposable income to feed our family for the year? Would they be getting higher quality food and then in turn be more healthy?

This is what Iowa Farm Bureau President Craig Lang has to say, "They also need to know that a $4 box of corn flakes has a nickel's worth of corn. But a lot of work goes into making that nickel's worth, and Iowa farmers are proud to be responsible growers and do their part in feeding the nation and a growing world population." So, CORN flakes only take a nickel's worth of CORN? It's going to take a lot of corn flakes to sustain farming families across the country!

I'll end with this. According to the statistics in the article, "of every dollar spent for your food item at the grocery store, 38 cents is for labor; 24 cents is for packaging, transportation and advertising; and 19 cents is was spent by the farmer on input costs". That totals up to 81 cents of which only 19 cents are left for profit. That profit needs to be divided by the grocery store, the food manufacturer, and then the farmer. How much do you think your farm neighbor receives in the deal? And we are proud of this...

What would the US be like if a large portion of the population began purchasing their food directly from the farmer ... cutting out the middlemen and getting a higher quality product ...