Farm Safety Net

Greg Schwarz is my colleague on the Minnesota Corn Growers Association, and he recently published a useful, thoughtful article in the Minneapolis StarTribune. He covers some great points about the importance of agriculture, crop insurance, and economic stability. Enjoy his thoughts below:

We all rely on the farm safety net
GREG SCHWARZ, Star Tribune

Counterpoint
The weather has been so wild and so unpredictable this year that it's not just farmers who are complaining about it. Here in the Corn Belt, it's been cold and damp for so long that it took us forever to get our crop in.

Parts of the Southwest wheat belt are parched, while millions of acres in the vast Mississippi Delta region are underwater. But being subjected to the unforgiving whims of Mother Nature is a central aspect of being a farmer.

Decades ago, our elected leaders recognized this fact and decided that in order to have a safe and ample food supply, we needed to have farm safety net policies in place to ensure that unpredictable weather doesn't knock America's farmers out of business and leave the country short on food.

It's the future of a key aspect of the farm safety net -- crop insurance -- and whether or not it will be viable after the upcoming federal budget cuts, that keeps me awake at night. As a business owner, I understand the importance of balancing a budget, and I hope Congress does, too.

But if Congress eviscerates crop insurance or other farm policies that are but a dot on the federal budget but are so important to our unique sector of the economy ("Farming: Of equity and evolution," June 2), then all Americans and a rapidly expanding global population would feel the pinch.
Crop insurance is an example of a federal program that provides a tremendous amount of benefit per dollar of federal investment.

For example, in 2010, for a relatively small federal outlay combined with private monies from the farmers who purchased the policies, the government was able to leverage a $4 billion investment into an astounding $80 billion in liability coverage for America's food, feed and clothing crops.
That's a $20 return on every dollar invested.

This amplification is possible because crop insurance combines the best of government and private sector to help protect farmers from adversity -- promoting a safe, affordable, ample food supply for our citizens and for the world.

The government helps farmers underwrite a portion of their premiums to make crop insurance more affordable, and the private sector provides the policies and coverage that kick in when needed.
So if disaster strikes -- whether in the form of floods or free-falling grain markets -- crop insurance means that farmers aren't thrown to the wolves and that they live to provide food, fiber and energy for this country yet another day.

This security helps farmers farm better and is a fundamental reason why America has the most dynamic agricultural sector in the world. The modern crop insurance model is a great example of the ability of the public and private sectors to partner, harmonizing their efforts and increasing their benefits.

And crop insurance is very popular among farmers nationally. In fact, more than 1.1 million policies covering 256 million acres across the country were written in 2010 to deal with risks. And when you consider that the agricultural sector produces the food that we eat, the ethanol that we use as fuel for transportation and is a significant economic engine in the United States, it seems that it might be worth protecting.

Now I understand that when Congress starts trimming the budget, everyone is going to argue that their specific program deserves protection. While I can't speak for other aspects of federal spending, I can attest to the fact that crop insurance and other aspects of farm policy work for me.
Without a doubt, they are the policies that keep family farms like mine in business and our nation food secure.

It is important to note that nearly $12.45 billion total has already been cut from crop insurance in the last several years. That's sobering news for a farmer like me, because I know how much I need crop insurance to protect myself from disaster and how important it is for farmers to have crop insurance to secure a loan.

Agriculture is one of the only industries to have already made big sacrifices to help trim budgets. And, there isn't much left to cut -- farm policies account for less than one-quarter of one percent of federal spending.

Further reductions will only weaken our country's food supplies and punish our state's workforce -- one-fourth of which depends on agriculture for jobs. The United States needs to be put back on firm financial footing. But sacrificing food security and one of the economy's lone bright spots is not the best path to get there. We'll all sleep better knowing there will be food on the table tomorrow.

Greg Schwarz is the president of the Minnesota Corn Growers Association and a third-generation Minnesota farmer who raises corn, soybeans and turkeys in Le Sueur County.

http://www.startribune.com/opinion/otherviews/123661619.html

Mostly Planted

We're still doing some planting at our farm, but I saw this article in the West Central Tribune showing that most farmers in the area have caught up in the last couple weeks.

Here are some important excerpts from the article, which was well written by Gretchen Schlosser of the West Central Tribune:

"An estimated 80 to 90 percent of the area corn crop has been planted, with some farmers already finished planting while other farmers struggle against continued rain and wet soils to get the seed into the ground.

In Kandiyohi County, Farm Service Agency executive director Wes Nelson estimates that 85 to 90 percent of the crop is in. Farmers to the east of Willmar are further along in the process, but those with land to the south and west of town are facing a slower planting pace.

That progress closely matches the weekly state crop-weather report, showing that 88 percent of the corn has been planted, compared to 100 percent last year and a five-year average of 98 percent. As of Sunday, 54 percent of the corn crop had emerged, also well behind the 92 percent last year and the five-year average of 82 percent.

Soybean progress is estimated at 25 percent, Nelson said. That ranges from farmers finished with the crop to those who have not even started on beans because they are still working on getting the corn planted.

In Renville County, FSA director Byron Hogberg estimated 80 percent of the corn and 30 percent of the soybeans are planted. Like Kandiyohi County, there is a wide range of planting progress, with those with land in the central and southern portion of the county still waiting for the rain to pass and the ground to dry out.

Tuesday was the last day for farmers to plant corn and have full crop insurance coverage. Likewise, the final day to plant soybeans and have full coverage is June 10. Nelson urged farmers to be in contact with their insurance agents to provide information on their crops and do the appropriate paperwork. Some farmers will need to file prevented planting claims while others are going to switch to early season variety corn hybrids. Still others will likely switch from planting corn to soybeans.

Getting the crop planted is just the first challenge of what could be a very difficult crop year. Demand and crop prices are high, while farmers will likely face yield reductions from the late planting and putting seed into less than ideal soil conditions. “Some of the farmers are done, but they ‘mudded’ it in,” Nelson said. “We’ve got a lot of issues now — time is just one of them.”

According to the crop-weather report, 53 percent of the state’s soybean crop has been planted, compared to 93 percent last year and a five-year average of 89 percent. Ninety percent of the sugar beets had been planted as of Sunday, still lagging the 98 percent five-year average. Progress has also been slower on vegetable crops, with 74 percent of the green peas and 29 percent of the sweet corn planted. The five-year averages for those crops are 91 percent and 59 percent, respectively."

Now we need some sunshine and warmth to help the crops grow!

Face of a Giant Agribusiness

My blog just got published on the Huffington Post, which is a major national media outlet:

The Face of a Giant Agribusiness

According to some, I am a giant agribusiness -- the worst kind of factory farmer.



What qualifies me for this dubious distinction? Nothing except that, based on U.S. Department of Agriculture (USDA) figures, my farm falls in the biggest six percent of U.S. farms. And these farms account for the bulk of federal farm policy support.

It sounds pretty damning, which is why it is the top talking point used by opponents of farm policy looking to dismantle a system, they say, is too tilted to agribusinesses and oppresses small, family farms.

But there's a lot more to this story than a 10-second sound bite would let on. For example, the USDA considers anyone with sales of more than $1,000 to be a farm, so that six percent figure is a little misleading.

The weekend grower on the side of the road selling tomatoes from her garden would be a farmer in the government's eyes. Ditto for the young retiree trying his hand at wine-making.

Ironically, my business is probably more in line with what most of us consider a farm. It is family-run. It was passed down to me from my father and grandfather. It is a full-time effort to support my wife and kids.

And, in order to make it my livelihood, it has sales exceeding $500,000.

Again, that figure can be spun to sound really bad, since most people don't know the difference between revenue and profit. But remember, the $500,000 represents gross sales, not how much money the farm or farmer is making.

A farmer may produce half-a-million dollars worth of goods but might have to spend just as much to grow the crop, making it a break-even proposition and sometimes a losing one.

Seems odd to call these farms corporate titans, especially when you consider that the Small Business Administration classifies most businesses as "small" if their gross sales are under $7 million a year.

How much profit could a "giant corporate farm" like mine hope to generate? The USDA puts profit margins in agriculture at 10 to 15 percent.

So under favorable circumstances -- Mother Nature cooperates, market prices are fair, oil doesn't spike and you don't run into any problems like equipment breaking down and needing expensive repairs -- that $500,000 in sales could generate between $50,000 and $75,000 in profit a year, according to the USDA's estimates.

No corporate executive in his or her right mind would get into such a risky business with such little profit upside. That's why 97 percent of U.S. farms are still owned by families, not by corporations like Cargill, or ADM, or Kraft.

I recognize that some may construe this article as a complaint about farm profits or an attack on smaller farm operations, but that is not my intent.

Farm prices are way up right now and near an all-time high -- and as a result, federal spending is way down. And I know that if America is going to meet tomorrow's food and fiber needs it will take farms of all shapes and sizes.

Smaller, organic growers are part of this puzzle, as are larger, conventional operations like mine, which supply more than three-quarters of our country's food and fiber.

As Secretary of State Clinton said this weekend, "We must redouble our commitment to sustainable agriculture and food security."

She's right. If this nation is going to keep pace with an exploding global population, and if it's going to do it in a sustainable way, then responsible farmers of all sizes have to come together in supporting and encouraging technology and best management practices.

In addition, America needs to urge the next generation to to get involved in farming, despite the low profit margins and risk, to replace aging growers who are retiring.

Our farmers and ranchers are a thin green line standing between a prosperous nation and a hungry world. It's time to refocus on holding all parts of this thin green line instead of tearing it apart with manipulated numbers and disingenuous spin.

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I hope you enjoy my two cents - seems like many other people are agreeing with me!

Sincerely,

Noah Hultgren
The Farmlandman.com
320-894-7528