Fed’s financial safety net may not catch some Minnesota farmers



Warning bells have been ringing for a year that growing grain right now is a losing money business.

The price per bushel offered for corn is at least $ 1 lower than what farmers need to make a profit. This is when the federal subsidy safety net is supposed to kick in and catch stressed farms before they start a financial free fall.

But for some Minnesota farmers, that safety net has big holes, and it’s going to cause big differences in federal payments to corn growers for their 2015 crop.

The obscure system of crop subsidies could produce a scenario in which farmers in some counties receive a substantial payment for last year’s harvest, while neighbors across the county are left with nothing.

What makes the payment scenario particularly painful is that farmers choose to participate in the Agricultural Risk Coverage Program, or ARC. The other option was a plan specifically designed for low grain prices that could ultimately do more for farmers over the five-year life of the farm bill.

Over 90 percent of eligible farmers chose ARC, with many believing it would pay more than the alternative.

CRA payments are calculated county by county. Areas likely to get nothing include major corn growing regions like Nicollet, Lyon, Pipestone and Stearns counties.

In contrast, farmers in Dodge County can get up to $ 84 an acre. For 500 acres, that could mean a federal payment of over $ 40,000.

“It’s everywhere. In the southern third of the state, you go from zero to $ 84 an acre,” said Kent Thiesse, a farm management analyst at MinnStar Bank in the southern town of Lake Crystal. Minnesota.

Farmers who get nothing can only hope to receive a lot of money, he added. “It can make the difference between barely breaking even or a loss to a profit.”

The program’s payment formula takes differences into account. The return is the most important variable in the calculation.

The greater the difference between the 2015 return and the five-year average, the smaller the payout. This is because the program assumes that above-average performance means big profit and less need for federal support.

But corn prices are so low that even farmers with good harvests will find it difficult to earn money.

“I have been concerned about the ARC system from the start,” said Minnesota 7th District DFL U.S. Representative Collin Peterson, who helped draft the 2014 Farm Bill, which included the ARC program.

“When prices go down or down, it offers less protection, which puts people in the position of not having help when they need it,” he said.

If grain prices remain as low as expected, more farmers could face low payments in the last three years of the program, he said.

There does not seem to be a chance that the program could be changed to equalize payments to farmers in different counties.

While some minor adjustments have been made, no big changes are underway, said Mike Schmidt, associate administrator for policies and programs at the Farm Service Agency, a unit of the US Department of Agriculture.

“The formulas and the process are pretty prescriptive in law,” Schmidt said. “We would have to reopen the farm law to make major changes. “

Reopening the Farm Bill would mean that all parts of this huge bill could be changed. Several members of the House, including Peterson, say there is no way Congress will do it.

Correction (Mar 22, 2016): An earlier version of this story misidentified the town where Kent Thiesse’s MinnStar bank is located. This is Crystal Lake. The story has been updated.

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