Copyright 2001 St. Louis Post-Dispatch, Inc.  
St. Louis Post-Dispatch (Missouri)
December 5, 2001 Wednesday Five Star Lift Edition
SECTION: NEWS; Pg. A1

LENGTH: 1396 words

HEADLINE: MONEY IS THE ISSUE IN FARM BILL DEBATE

BYLINE: Jim Getz Of The Post-Dispatch

BODY:
* Without help from Uncle Sam, many farmers would be broke. But opinions differ widely on how such payments should be divided up.

Farmers in the St. Louis region got $1 in federal subsidies last year for every $5 worth of crops grown -- a dollar they loathe but nevertheless keeps their farms and communities from withering.

"My choice is this: Either I take it or I don't pay my bills," said Alan Libbra, an Illinois farmer in northeastern Madison County who took about $318,000 in subsidies from 1996-2000.

"Farmers don't like to hear that we're essentially a ward of the government, that we're on a workfare program," he said.

Jim Deppe, a farmer near Washington, Mo., is more matter-of-fact. "I don't like them," he said, "but if they're there, you're silly not to take them. Most of the time, it's the difference between making a profit on the crop or not."

Deppe, 51, along with his brother Rich, 46, runs Deppe Farms, which at $602,876 was the second-largest recipient of federal subsidies in the St. Louis region from 1996-2000. The figures are from the Environmental Working Group, a research group in the nation's capital that has compiled a database of all subsidy recipients.

Senators from eastern and western states are set to debate their midwestern and southern counterparts as early as this week over how to equitably distribute money in the next farm bill.

Western and eastern lawmakers want money allocated toward a greater variety of crops and for conservation. But even if they do, subsidies for Illinois and Missouri corn and soybean farmers won't disappear.

Any number of factors contribute toward continuation of subsidies, farmers and experts say, including political contributions from agribusiness and politicians' desires to get farmers' votes for re-election, and a lack of discussion about alternatives.

But another factor is something everybody acknowledges: Reducing or eliminating subsidies would set off a ripple of economic pain that would even hit bankers in cities such as St. Louis.

"There's no doubt a removal of subsidies would cause a horrible upheaval in agriculture, that land prices would drop and rural areas would be in horrible pain," said Rich Pottorf, chief economist with Doane Agricultural Services in St. Louis.

Darrell Good, an agricultural economist at the University of Illinois, agreed.

"That has implications for a lot of people - people who have a lot of collateral in land, such as lenders or landlords, and people who depend on real estate taxes, such as school boards. The effects are tremendous. It would be from the impact on the economy in general, the likelihood of spillover."

Good said some banks in St. Louis have collateral in farmland. "Those folks," he said, "understand very clearly."

Pottorf said there are benefits that go beyond just the farmers. If the rural economy slumped, residents there would move into cities to look for work. In the meantime, they might be on welfare and food stamps. "You would have some additional social problems if you eliminated these payments," he said.

"The dislocation would be bad," said Libbra, who farms about 2,000 acres and handles about 2,000 head of cattle a year. "It would make the '80s, which were a bad farm crisis, look like a cake walk."

Focus on commodity crops

In the St. Louis region, the amount of federal money farmers relied upon last year ranged from 6 percent of their total revenues in Jefferson County to 32 percent of their total revenues in Jersey County. The percentage of total farm receipts from subsidies varies because only commodity crops such as corn, soybeans and wheat are eligible.

For example, Clinton County by far has the largest agricultural production in the St. Louis metro area, $121.3 million last year, but only 13 percent of its money was derived from subsidies. Jersey County farms generated $32.3 million worth of production, but subsidies accounted for 32 percent of that.

Does that mean Clinton County farmers are more efficient, and that Clinton County's towns, businesses and schools would weather elimination of subsidies better?

Not necessarily, Good said. Much of Clinton County's agricultural production comes from dairy farms, which aren't subsidized like commodity crops. Therefore, its reliance on subsidies appears lower. But Good is willing to bet that crop farmers there receive just as much per acre as farmers in Jersey County.

Certainly Jim and Rich Deppe have learned a lesson about diversifying into livestock - in their case, hogs.

All of the corn that the Deppes grow on their 3,300 acres is turned into feed for their 18,000 hogs. Sold in the commodities market, corn might fetch $1.80 or $1.90 a bushel; put into hogs, based on the price the livestock is sold for, those bushels become worth $3 or even $4.

"Subsidies are basically, if you're a crop farmer, just your profits," Deppe said. "After your inputs, the price of grain (in the commodities markets) is so low, you wouldn't make any money. Of course, we have more inputs, too - buildings, fixed costs. But I think in the long run, we're better than just strictly a grain farmer because they have to rely on these subsidies."

Libbra, however, disagreed with 1996's Freedom to Farm law, which eliminated minimum support prices for crops and the policy of paying farmers to keep some acreage out of production. Instead, farmers got greater freedom to choose which crops to plant and flat payments designed to decline over several years.

In the past, Libbra said, "The farm program said, we believe there is value to society to having broad-based family agriculture, that there are social ills cured by this, that good things come from this.

"It was targeted to help the people who needed it the most."

What we now have, Libbra said, is program whereby those who have the most, get the most.

But Deppe believes that allocation of the subsidies ought to be proportional to the size of the farm - bigger farms have higher seed, fertilizer, fuel and maintenance costs. In any case, he said, subsidies are keeping rural areas alive.

"I think it's a good thing," he said, "because the businesses keep going. Whatever you buy from them, they're going to make a little money on it. But in a way, it's still kind of sad that (crop) prices aren't high enough that we have to do it."

Libbra fears that a continuation of larger producers getting the most money will lead to more concentration within the industry - and that could be bad for small town America.

"When people my size get pushed, the businesses they use get pushed out with them," he said. "... That just kills these little communities, kills the employment and kills the tax base."

Luther Tweeten, an agricultural economist at Ohio State University, understands these arguments and agrees the pain would be horrendous. He also agrees with criticism from the Environmental Working Group that the biggest producers are getting the most money while many farmers get nothing. But unlike the Environmental Working Group and others, he believes that eliminating all subsidies is the only fair thing to do for everyone - short-term pain for long-term gain.

"It's a huge lift to those counties," he said of subsidies, "but it's a false prosperity because it's based on the political whims of Congress. What if we get into a tight budget and have to cut back on spending?"

Libbra has other ideas: Enforce the rules better, don't allow multiple family members to get payments for the same farm; limit total payments to each farm; subsidize the portion of crops that stays in the United States, not that which benefits huge exporting agribusinesses.

At Doane, Pottorf sees an honest debate as the only hope of reforming the programs - and maybe the expected U.S. Senate debate between the coasts and the Heartland will provide that.

"Farmers get farm payments in part because they have risks - weather risks, primarily - that other businesses don't," he said. "But I don't think we know of any alternative that would work better, and part of the reason is we don't know what 'better' is. Is it better to give small and medium-sized farmers more, or does that subsidize inefficiency and makes us less competitive in the world market?

"I don't know, but we're certainly not having the debate we need to sort that out."

NOTES:
Reporter Jim Getz:; E-mail: jgetz@post-dispatch.com; Phone: 618-659-3639

GRAPHIC: PHOTO, GRAPHIC; (1) Color PHOTO by ODELL MITCHELL JR. / POST-DISPATCH - Illinois farmer Alan Libbra rounds up cattle Tuesday on his farm in northeastern Madison County. Libbra complains that the current federal farm subsidy payments favor large agribusiness corporations over smaller family farms.; (2) Photo by ODELL MITCHELL JR./POST-DISPATCH - Alan Libbra (left) and Chris McCulla check cattle Tuesday at Libbra's grain and livestock farm in Madison County. Libbra was treating the cow for health problems; the pair were listening to see whether the cow had belched. Libbra, who farms about 2,000 acres, says many farmers dislike the idea of subsidies, the feeling "that we're essentially a ward of the government."; (3) Graphic / Chart by POST-DISPATCH - Top 20 subsidy recipients in St. Louis area;
Farm                          Location;Edward L. Niemeier            Edwardsville;Deppe Farms Inc.              Washington, Mo.;Heitzig Farms                  Jerseyville;Kessler Farms Inc.            Augusta;Zachry Farm                    Carlyle;Vahle Farms Inc.              Jerseyville;R&S Brothers Inc.              Hoyleton, Ill.;Rodger Rinderer               Highland;Dean Seger & Sons Inc.         St. Jacob;Wittenauer Farms              Waterloo;Dennis D. Nagel                Highland;Mark Bohnenstiehl             Edwardsville;Mayes Farms Inc.               Elsberry;Orville Kombrink Farms Inc. Caseyville;
Glendell H. Farms Inc.        Waterloo;David H. Mueller              East Alton;Gueldener Farms Inc.           Moro;Heberer Brothers Inc.         Belleville;Mid Rivers Farms Inc.         St. Charles;Douglas Wiesehan              St. Charles;; Subsidies received;
Farm                           1996-2000;Edward L. Niemeier            $613,098;Deppe Farms Inc.                602,876;Heitzig Farms                  600,562;Kessler Farms Inc.             514,192;Zachry Farm                    510,034;Vahle Farms Inc.               489,047;R&S Brothers Inc.               476,741;Rodger Rinderer                447,802;Dean Seger & Sons Inc.          442,032;Wittenauer Farms               415,930;Dennis D. Nagel                406,266;Mark Bohnenstiehl              403,359;Mayes Farms Inc.               391,568;Orville Kombrink Farms Inc.    391,188;Glendell H. Farms Inc.         388,709;David H. Mueller                388,538;Gueldener Farms Inc.           388,588;Heberer Brothers Inc.           384,707;Mid Rivers Farms Inc.          383,820;Douglas Wiesehan                379,611;; (4) Graphic / Chart by POST-DISPATCH - Area farms' reliance on subsidies in 2000; ;
Total farm receipts     Federal subsidiaries;County          (in millions)           (in millions);ILLINOIS;
Clinton          $121.30                    $16.17;Jersey             34.30                    11.10;Madison            75.66                     18.09;Monroe             46.82                    11.26;St. Clair          65.74                    16.30;; MISSOURI;
Franklin           37.46                     3.90;Jefferson          12.93                      .77;Lincoln             47.11                     9.36;St.Charles         32.79                     8.87;Warren             19.67                      4.36;;
TOTAL             511.69*                  101.57;Illinois        7,022.33                  1,950.23;Missouri        4,566.97                   872.98;; Percent of receipts;
County         from subsidies;ILLINOIS;
Clinton             13%;Jersey               32%;Madison             24%;Monroe              24%;St. Clair           25%;; MISSOURI;
Franklin            10%;Jefferson            6%;Lincoln             20%;St. Charles         27%;St. Louis            8%;Warren              22%;;
TOTAL               20%;Illinois            28%;Missouri             19%;; * Total may not reflect the sum of individual receipts because of rounding; ; Sources: Illinois Agricultural Statistics Service, Missouri Agricultural Statistics Service and the Environmental Working Group; ;

LOAD-DATE: December 6, 2001