Rice Farming

 - Rice Producers Forum -

Archaic farm law
keeps safety net in place

By Dwight Roberts
President and Chief
Executive Officer
USRPA

Since the 1930’s, agricultural policy has been established in the hallowed halls of Congress through the negotiation of legislation known as Farm Bills. Beginning with the Agricultural Adjustment Act of 1933, Farm Bills have been written, rewritten and rewritten again to protect producers against all kinds of maladies, from low prices to natural disasters. The 2007 Farm Bill is no exception.

As has happened in the past, critics have come from all directions requesting reapportionment of funds, a more WTO compatible bill, more responsibility from the producers, etc…, each time beating a different drum beneath the same old banner. One of the most shouted battle cries for this round of negotiations has been, “Stop paying rich farmers and put the money where it actually helps people.”

On the surface, an uneducated person might think this statement has merit and take it at face value. A knowledgeable person, on the other hand, would definitely want to see all the facts. It is true that there are many non-producers who collect government payments, and it is also true that there are “farmers” who have learned to manipulate the system. However, before we scream for justice, let’s take a look at the system itself.

Permanent farm law dates back to the 1930s
By Federal law, the 1933 Farm Bill is what is known as “permanent law,” and each Farm Bill since then is in truth an amendment allowing for the short term extension of new provisions. In the case that a current Farm Bill expires without a replacement, all farm programs revert back to “permanent law,” or the 1933 bill. As archaic as this may seem, it is comforting in the sense that there will always be a safety net in place (even if it is slightly out of date).

Now, as we have mentioned, each Farm Bill is an amendment to the 1933 act, and many of the definitions remain overlooked or unchanged. Under “permanent law,” the definition of a viable farm is any person who produces over $1,000 per year GROSS! This would mean that a livestock producer with three cows or a farmer with four acres of soybeans is considered to be a viable farm and is eligible for farm program payments!

What constitutes a viable farm?
According to USDA, there are a total of 2,113,470 farms in the United States, and, of these, 1,180,560 fit into the category of between $1,000 and $9,999 in gross annual income. This is almost 56 percent of all “farms” in the U.S.! A very minor revision in the definition could remove over 50 percent of the farms that receive payments from the roster. I wonder if that would qualify as “reform?”

Before anyone decides that this is yet another stroke against the “small farmer” by the “corporations,” please remember that these farms are making between $1,000 and $9,999 per year gross revenue, not net profit. This does not consider taxes, inputs, or any other production considerations. At a 10 percent profit margin (something most producers would kill for), this would translate into $100 to $999 per year total net profit!

It is very hard to sustain a person on $999 per year without another source of income, in which case they are definitely NOT a viable farm. Instead of the many different “reforms” out there for consideration, perhaps it would be more helpful to start by fixing the original problem, instead of trying to band-aid it yet again.

For more about USRPA, visit www.usriceproducers.com.