Farming subsidies rise 74% in state

USDA payments at $370.7M in ’15

Arkansas farmers have received $370.7 million in federal “safety net” payments for losses in 2015, an increase of 73.9 percent from the year before, according to the U.S. Department of Agriculture.

In comparison, for losses in the 2014 farm year, Arkansas farmers received $213.2 million through Sept. 30 of this year, the USDA said.

The increase of $157.5 million reflects how steeply market prices have fallen for almost every agriculture commodity, Linda Newkirk, executive director of the Arkansas office of the Farm Service Agency, a division of the USDA, said Thursday. Only a few checks remain to be cut, Newkirk said, estimating that the payment process in Arkansas is 99 percent complete.

Newkirk said 76,830 payments have been made this year for 2015 losses. Divid-

vided by the $370.7 million total paid out, the average payment was $4,824.

Farmers can receive more than one check, because the safety-net programs also are based on prices for individual commodities, and most farmers grow more than one crop in any given season.

The payments are allowed under the 2014 farm bill, passed by Congress that year after a monthslong stalemate between the House and Senate.

Previous farm bills, normally passed by Congress every five years, issued “direct” payments to farmers regardless of market conditions or crop yield.

The 2014 law allows payments only when markets or crop yields are down. The payments, however, aren’t aimed at covering 100 percent of a producer’s loss.

The 2014 farm bill took two years to pass and was written at a time of high commodity prices.

Commodity prices have since fallen, and farmers nationwide likely are looking at a fourth-consecutive year of falling incomes, according to the USDA.

This is the second year of such payments under the new law. Farmers have to choose between one of two safety-net programs.

The Price Loss Coverage (PLC) program makes payments when market-year average prices are below certain reference prices determined by the USDA.

The Agricultural Risk Coverage (ARC-CO) program created payment rates for each county in the nation by comparing historical average crop yields and prices in each county with actual yields and prices.

Eric Wailes, a professor of agriculture economics and agribusiness at the University of Arkansas at Fayetteville, also said much of the increase in total payments from 2014 to 2015 is because “market prices are even further down, so there’s more exposure” to loss.

“As farm prices have softened, the program has done exactly what it was designed to do,” Wailes said.

“Again, as prices move up, the price-loss coverage payments will drop.”

Randy Veach, president of the Arkansas Farm Bureau, said Wednesday during the group’s 82nd annual convention that the next farm bill, which will come before Congress in 2018, will need some improvement over the current one.

“What we’ve got to have is a new farm bill that provides a safety net for all agriculture commodities,” Veach said. Cotton is one commodity that’s not covered under the current law.

He said the 2014 farm bill fell short of being fair to livestock producers.

The 2018 legislation likely will be another tough battle, Veach said.

“There will be more pressure from certain groups to not even pass another farm bill,” he said.

Newkirk, of the Farm Service Agency, also said the total number of payments made under each program during the two years also reflects the worsening market for commodities: 20,291 payments for 2014, and 76,830 for 2015 losses.

For the 2014 market year, 14,159 payments were made in Arkansas through the priceloss coverage program. Those payments totaled $196.3 million.

This year, for 2015 production, 41,887 payments have been made, totaling $293.5 million.

For the county-based program, 6,132 payments totaling $16.9 million were made for 2014 production losses.

This year, 34,943 payments were made, totaling $77.1 million.

Payment rates among counties vary considerably, and that has raised concerns among some farmers about the fairness of such a system, Wailes, the UA economist, said.

Payment rates also vary among commodities, because prices for some commodities haven’t dropped as much as prices for others.

Nationally, $5.8 billion has been paid out through the county-based program, mostly to cover losses sustained by corn growers, according to USDA data.

About $1.8 billion has been paid through the price-loss coverage program, mostly for growers of long-grain rice.

The biggest payments, to date, have been made to farmers in the Midwest, largely because of plummeting corn prices.

Based on a Nov. 8 report by the USDA that detailed state-by-state payments, Arkansas was among the top seven in payments.

Illinois was first in that report, with $914 million in payments through both programs.