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Senior Advisor

Agriculture With No Farm Bill

What do you think agriculture, especiallly farming, would look like if there were no Farm Bill as it directly affects farmers?  Let's look at SNAP (food stamps), foreign food aid and the ethanol mandate and those things separately.   Assume they  continue to exist because they are really urban, foreign policy and envirionmental policy issues.  Figure food safety continues.

 

No subsidies, no crop insurance, no research or any other program directly or primarily aimed ast supporting the farmer.

 

What would farming look like this year?  Next year?  In 5 years?  In 20 years?  Would you prosper?  Would you manage differently?  Do you think you could run acceptable risk by using non-government risk management practices such as private/commercial crop insurance?  Futures, options and forward contracts or grow under contract?

 

Would farms get larger in size?  Would a crop disaster bring federal relief spending no matter what?  Would the dairy industry disintegrate, consolidate, or what?  

 

I am not talking about whether or not you use the Farm Bill provisions for your farm today or not, I'm talking about how the industry would adapt if the big picture changed.

 

Regardles of whether you think you'd like it or not, what do you think farming would look like?

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44 Replies
Honored Advisor

Re: Agriculture Wtih No Farm Bill

It might be instructive in this projection to look at those areas of ag that are " outliers" to speak already.  Look at unsupported enterprises like poultry and swine, for example.  

 

Support there comes mostly via SNAP and other feeding program purchaess, like school lunch programs.  Purchaeses may be direct, as a particular commodity for kids to receive on the cafeteria tray, or privately discretionary, as with SNAP...and less so with WIC..  

 

Loss of research monies for ag would really crush the land grant universoty system, don't you think?  Shortterm, we might get by without much Innovation in ag.  Longer term, if you aren't moving forward, you are essentially losing ground.  

 

Loss of conservation funding would be very detrimental over time, I think.  Many aspects of abd strategies for public purposes like water quality conservation are not possible to cover out of a cashflow from production ag, without cost shares.   

 

People  are already scared silly by the proprietary nature of a lot of modern ag...the whole patent and seed saving argument has been had here before.  That concentration and control woild only intensify, in light of lost publicly- owned research options, logically speaking.  

Senior Contributor

Re: Agriculture Wtih No Farm Bill

I think for one land values and cash rents would fall.  You would see the chemical and seed companies do more private research. 

To me since I'm classified as a small farmer for row crops,  I wouldn't miss the federal funding stuff,  Since anyone that has 1500 acres of beans or more gets there crop insurance cheaper per acre then what I get charge,  Hell I'd like to see it all go away.   

University extension has its place though so, that should stay in place.   

 

I think you would see some larger farmers and some smaller specialiest producers

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Senior Contributor

Re: Agriculture Wtih No Farm Bill/$42/acre in Subsidies

High yields- The crop insurance subsidy amounts to only $42/acre for most Iowa farmers. Can I ask what your crop insurance subsidy is? I am curious about the crop insurance costs in other states. Thanks.

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Senior Contributor

Re: Agriculture With No Farm Bill

Jim- for an average Iowa farmer the combined crop insurance and direct subsidy is only $62/acre, not alot of money per acre, but on my 1,575 acres it adds up quickly, close to $100,000/year just on my small Iowa farm operation. If you are a BTO, it would be much, much, more. Losing this would probably not drop farmland values very much, maybe less than $500/acre or so. since $62/acre is only around 8% of your total net profit. Sure losing 8% of your profits wouldn't be fun, but at current profit levels we could probably handle it. Where it gets hairy is if corn fell back to $3.50 a bushel. Then $62/acre would be almost 33% of my net profit per acre, now that would hurt!!!

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Senior Advisor

Re: Agriculture With No Farm Bill


@rswfarms wrote:

Jim- for an average Iowa farmer the combined crop insurance and direct subsidy is only $62/acre, not alot of money per acre, but on my 1,575 acres it adds up quickly, close to $100,000/year just on my small Iowa farm operation. If you are a BTO, it would be much, much, more. Losing this would probably not drop farmland values very much, maybe less than $500/acre or so. since $62/acre is only around 8% of your total net profit. Sure losing 8% of your profits wouldn't be fun, but at current profit levels we could probably handle it. Where it gets hairy is if corn fell back to $3.50 a bushel. Then $62/acre would be almost 33% of my net profit per acre, now that would hurt!!!


It is easier for a camel to pass through the eye of a needle than it is for a rich man to enter the Kingdom of Heaven.

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Senior Contributor

Re: Agriculture With No Farm Bill

Yes, r3020. I will not say that losing the combined $42/acre in Crop Insurance Subsidy and the $20/acre in Direct Payments wouldn't hurt, but at corn prices over $5 the hit wouldn't be to bad. But on $3.50 corn, the loss of this $62/acre would be painful, at least for me. My break-even on corn is $2.52 so I am better off than the guys who have a break-even of say $4.75 a bushel. That is the problem, my land cost now that all my farmland loans are paid for is only the $25/acre in Iowa property tax. The guys who are paying say $300/acre in a farmland loan will take this loss of $62/acre much worse. Guess before you take this $62/acre away from all farmers, you better let them pay off the farmland loans first since they banked on this $62/acre as revenue to help pay off there farmland loans.

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Senior Contributor

Re: Agriculture Wtih No Farm Bill/$42/acre in Subsidies

I was talking about my cost per acre

at that year it was $9/ac about for my less then 250 acres of beans,   and for the same coverage it was $2.50 an acre for over 1500 acres.   

I know that the 70-75% levels are the most subsidies 

 

 

I looked at my crop insurance thing.  last year I have a price of  $12.55 for soybeans with a approved yield of 43 bushel  and my subsidy was $12.56/ac on

to put it in prespective my total premium was $19.90/ac  and my subsidy was $12.55/ac  so I paid roughy around $7.40/ac plus my administration fee.   

I think a good way to compare subsidy an acre would be precent of total???   so If I did the right calcuation my is subsidized around 63%  double check my math.    

 

I'm sure that the banks would slow down on their borrowing on cash rents around here without crop insurance. 


my corn guarantee is 120 bushel and the last ground that cash rented was $310/ac    

 

 

Senior Contributor

Re: Agriculture Wtih No Farm Bill/$42/acre in Subsidies

Highyields- no, your 63% is in the ballpark, mine is 61%. This means that the taxpayer is paying 61% of my total crop insurance bill and I believe the average is in the 59% to 65% range depending on location of the farmland, but don't quote me on that. Anyway, it can add up if you are a BTO running 5,000 acres. That would be around $210,000/year for an Iowan BTO guy, guess not chicken feed at that level.

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Veteran Advisor

You forgot one Kaye - cow /calf producers - except for so...

You forgot one Kaye - cow /calf producers - except for some equip $$$

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