# ND amid top farm aid recipients



## R y a n (Apr 4, 2005)

ND amid top farm aid recipients

By Gilbert M. Gaul, Dan Morgan and Sarah Cohen, The Washington Post,
Published Tuesday, October 17, 2006

http://www.in-forum.com/articles/index. ... ction=news

WASHINGTON - In the spring of 2000, Congress decided to do something about its costly and politically driven practice of giving farmers a disaster payment each time a storm damaged their crops. The lawmakers voted to use $8 billion in new taxpayer subsidies to help farmers buy crop insurance to protect against losses. The insurance would replace the disaster payments and reduce government costs. But shortly after passing the Agricultural Risk Protection Act, Congress lost its fiscal will. One week before the presidential election, it passed a new $1.8 billion disaster bill to assist farmers hurt by bad weather. Two others followed in subsequent years, totaling more than $6 billion. Today, after a searing drought in the plains, farm-state legislators are pushing for billions more in aid.

The result is that farmers *often get paid twice by the government for the same disaster, once in subsidized insurance and then again in disaster assistance, a legal but controversial form of double-dipping*, a Washington Post investigation found. Together, *the programs have cost taxpayers nearly $24 billion since 2000.*

The government pays billions to help farmers buy cheap federal insurance, billions more to private insurance companies to help run the program and billions more to cover the riskiest claims. On top of all that, it spends billions more on disaster payments.

"It should be one or the other," said Mark Orebaugh, a flinty 52-year-old who has suffered several years of bad crops in southwestern Kansas. "There should be a permanent disaster program or crop insurance that is enough to cover my losses."

"Everybody says the money is free, but we're all paying," said Charles Fisher, a central California farmer who helped oversee government disaster payments in his area for a dozen years. "Washington unbundles the money, opens the window and turns on the fan." The money is blown all over the country, from New York to Nebraska to California, usually at election time, fanned by farm-state legislators.

A major share of the money goes to parched and flood-prone areas where farming is tenuous at best and "disasters" seem to happen every year, a review of thousands of records and interviews with dozens of farmers, economists, insurers and government regulators has found.

Farmers in Gaines County, a parched stretch of West Texas, collected nearly $66 million in the past five disaster bills. Cavalier County farmers in North Dakota, soaked by rain and floods, got $67 million. The money was in addition to $116 million the farmers in those two counties got in crop insurance payments.

*Just four states - Texas, Kansas, South Dakota and North Dakota - collected nearly four of every 10 dollars of the disaster aid handed out in the past decade, $3.8 billion in all, records show. Farmers in those states also collected $5.6 billion from crop insurance.*

Those farmers have come to depend on both crop insurance and disaster payments, which together allow for covering up to 95 percent of the value of their crops.
*
"Taxpayers are funding something good, the rural life," said Terry Aronson, a farmer in the flood-prone Devil's Lake area of North Dakota, who has received nearly $300,000 in disaster aid in the past decade.*

"No one wants to appear they are being chintzy with farmers," said Bruce Gardner, an agricultural economist at the University of Maryland and former top USDA official. "In spite of all of these increases in subsidies, crop insurance really hasn't made a dent in the disaster payments."

Reforms don't take

Over 25 years, Congress has passed three major "reforms" of the federal crop insurance program in an effort to sign up more farmers and reduce their dependence on disaster aid. Instead, the result has been a continuous cycle in which Congress expands crop insurance only to turn around and hand out more disaster payments.

In 2000, former House Agriculture Committee Chairman Larry Combest, a Republican representing West Texas, was instrumental in getting the most recent reform bill passed, which included $8 billion in new premium subsidies. He cited the "countless billions" in disaster payments that were undermining crop insurance.

In the Senate, Pat Roberts, R-Kan., argued that expanded insurance would result in "less need" for disaster aid.

The government would now pick up an average of 60 percent of the cost of farmers' premiums. Farmers jumped at the cheaper insurance. Today, about 80 percent of all eligible cropland - 240 million acres - is insured at some level.

Yet only four months after the bill was passed, Congress authorized $1.8 billion in disaster aid. That was followed by $3.1 billion for 2001 and 2002 crop losses and $3.5 billion covering 2003 and 2004. Still another $250 million was set aside for the 2005 hurricanes.

"In farm states, legislators have to appear they are doing something," said Art Barnaby, an agricultural economist at Kansas State University and an expert on crop insurance. "It can hurt them politically if they don't."

Combest, now a lobbyist representing agricultural interests, including crop insurance agents, declined to be interviewed. "I think I'll take a pass," he said. Roberts did not respond to requests for comment.

Disaster payments to farmers are a public record but, by law, the USDA keeps the names of recipients of crop insurance confidential. Thus there is no way to count how many farmers collected both and in what amount. However, interviews with farmers and government officials indicate farmers who get insurance payments also get most of the disaster money.

The USDA calculates how much to pay farmers in disaster money by first looking at how much they have received in crop insurance for losses. Farmers must show they have lost at least 35 percent of their crop to qualify for a disaster payment. The total of their insurance payments, disaster aid and sales revenue from remaining crops is capped at 95 percent of what they would have earned if they had harvested and sold a full crop.

Meeting halfway

Congressional sponsors of disaster legislation offer a variety of reasons for their bills. They say federally subsidized insurance doesn't cover all of a farmer's losses, and disaster aid fills the gaps. It helps stabilize rural economies. And it offsets rising fuel and production costs while securing cheap food for Americans.

"Any suggestion that things are good in ag country does not meet the reality test," Rep. Jerry Moran, R-Kan., chairman of a key House agriculture committee, observed in a floor speech last year. His office recently helped coordinate a day of lobbying by farmers and agriculture groups pressing for billions in aid for the 2005 and 2006 crop years.

To get those costly disaster packages passed, their sponsors spread the money around. Recent disaster bills include millions for cottonseed producers and pecan and sugar beet growers; set-asides for farmers in Virginia and North Carolina; and $7.2 million for a transportation project benefiting a sugar-grower's co-op in Hawaii. Since 1990, legislators have muscled through eight major disaster packages and several smaller provisions covering every year except the past two, including money for clams, oysters, shellfish, hay, sod, shrimp and lobster.

Many of the recent disaster packages have been shoehorned into large appropriations bills, including a military construction bill in 2004. That means legislators do not get an opportunity to vote directly on the subsidies.

"The problem with ad hoc disaster programs is that in order to get them passed, they throw in everything but the kitchen sink," said Tom Buis, president of the National Farmers Union. The industry group favors overhauling the present system to make it more rigorous while still targeting farmers in need. "There's a lot of ways we can do this better. We need to start looking at the underlying cause of the problem, not just the symptoms."

Buis added that farmers don't expect to have all of their losses covered by disaster payments. "They're not being made whole now," he said. "What we have is a horrible public policy that needs to be fixed, so we help farmers who truly have a need." Among the ideas being considered by Buis and others is guaranteeing a portion of a farmer's income.

In recent months, legislators from the Plains states have pressed for billions more in disaster aid to cover the past two crop years, contending farmers have been decimated by drought and rising costs. The Bush administration opposes the additional aid, noting that crops were at "record or near-record" levels in 2005, and millions would go to farmers who do not really need the money.

In a letter to Agriculture Secretary Mike Johanns, Sen. Kent Conrad, D-N.D., wrote that not all farmers have "had the good fortune to produce above-average crops," adding that the $4 billion wouldn't "come close to making farmers whole."

A case close to home

Conrad's home state highlights how disaster aid has become a kind of perennial safety net for risk-prone farmers. *North Dakota ranks second, behind Texas, in total disaster aid, with almost $1 billion in the past decade. Its farmers have suffered through floods and droughts, with many getting payments over and over.*

Federal agricultural disasters have been declared five out of the past six years in Cavalier County, where farmers grow wheat and barley on flat wind-blown fields in the northeastern corner of the state. *In 2003-04, none of the farmers' applications for aid were turned down, records show. "There was no reason to turn any down," said Michele Schommer, who heads up the local office of the Farm Service Agency. "The whole county was bad."*

Although accounting for 2 percent of all farms in the state, Cavalier County has received more than 7 percent of the state's disaster payments in the past decade. *The average payment of $113,000 per farm was more than double the state average, and nearly 20 times the national average.*

At 6,300 acres, Dettler Farms is among the biggest in Cavalier County. It has collected disaster payments each time they were available in the past decade - $450,000 all together. The farm has also received insurance payments nearly every year, said Steve Dettler.

Last year "was the worst year ever," Dettler said. Rains came during the planting season in June. "You couldn't get into the fields."

Dettler and other farmers are counting on more help. In late August, Conrad staged a rally of 400 farmers in Bismarck supporting a multi-billion-dollar aid package to help farmers and ranchers in the western part of the state, which has been beset by drought. He was joined by Gov. John Hoeven.

The drought has actually helped Cavalier County by drying out fields that had been flooded. Farmers there are harvesting one of their best crops in a decade. But Dettler said he hopes there is a disaster program to cover his 2005 losses.

"We depend on it being there every other year," he said. "It's an election year, and everyone's involved this time."

Conrad said "it's a key and legitimate question" to ask how much aid farmers should get. But he added, "We're in something extraordinary. Go to the Gulf Coast, they have 100 years experience with hurricanes. We don't say, 'Enough' to Florida, or to California and earthquakes, wildfires and mudslides. As a matter of national policy, we help out areas that have natural disasters."

An annual dilemma

*How much risk should taxpayers expect American farmers to bear on their own?*

Mark Orebaugh struggles with that question while sitting at the kitchen table in his modest home northwest of Dodge City, Kan. He has received hundreds of thousands of dollars in federal crop insurance in the past four years. An additional $116,000 has arrived in disaster payments.

Finally, after a long pause, he answers that he could tolerate up to a "20 percent" crop loss. "I don't think 20 percent is a disaster," he said. "I could probably handle that if you average out the good and bad years."

But Orebaugh is uncertain and looks to his banker, Leon Flax. Flax has worked with Orebaugh and other farmers for years. "I don't know," he says, shaking his head. "Not this year. I don't think you could handle anything this year."

A late freeze hit some of Orebaugh's crops. Then the temperature soared to 100 degrees in June and remained there for weeks, baking his wheat, corn and grain sorghum. The claims adjuster has already been by once, and Orebaugh expects him back soon. He hopes to collect about $200,000 in crop insurance.

Like most Kansas farmers, Orebaugh is heavily insured. With the help of government subsidies, he has covered up to 75 percent of the yields on the 6,000 acres he owns or leases.

Orebaugh said the insurance alone is not enough. To begin with, it only covers about 70 percent of a farmer's losses. In addition, if a farmer suffers poor harvests in back-to-back years, his insurance policy, which is based on his average yield over four years, covers less. This is a major sore point with farmers.

"I'm not sure what more we can do," said Rebecca Davies, a regional director for the crop insurance program in Topeka, Kan. "We have coverage (plans) of up to 85 percent. What more could you ask for? They still pass disaster programs."

Kansas farmers have gotten $421 million in disaster payments since 2001, among the highest payouts nationally. That is in addition to $1.3 billion in insurance payments to farmers and $680 million in federal subsides to help farmers pay their premiums.

For Orebaugh and most Kansas farmers, the federal insurance is "a good deal." *In the past four years, he has paid $81,730 in premiums but collected $295,796 in claims, or $3.62 for every $1 he put in.* That's higher than the state average, but Orebaugh farms on the western side of Kansas, where water is scarce and much of the farmland isn't irrigated.

"There's just no water," he said. "We probably should never have developed those (fields) when we did 30 years ago because the water table was declining."

Orebaugh's grandfather emigrated from Germany in 1901. "He crossed two of the most fertile valleys in the country, the Missouri and the Mississippi, and settled in western Kansas," Orebaugh said. "Why he ever landed in this godforsaken valley, I don't know."

A drought has plagued much of western Kansas, including Ford County, where Orebaugh farms, since 2000. Orebaugh has had two good crop years out of the past six. "This year is going to be a wipeout," he said.

The good years help to average out the bad. "I use the money to pay back my loans," Orebaugh said. He quickly adds that he rarely gets ahead. "That's why we need disaster assistance. It's the only way we can pay back our loans."

This year, Orebaugh took on an additional 1,000 acres in his operation, and has higher costs and a bigger bank loan, about $230,000. "Talk about a case of bad timing," he said. Now, he is "praying" for another disaster bill. "We don't like it any more than the taxpayers do. With disaster assistance, we're at the whims of the politicians," he said. "But we need something. I don't care what you name it. "It's feast or famine here. Economically, does it make sense? Probably not. Philosophically, I don't know. Americans want cheap food, and they want it when they want it."

-------------------------------

WOW! 

I knew it was happening but when you lay much of it out in numbers...

Ryan


----------



## dieseldog (Aug 9, 2004)

Whats your point Ryan you city people buy AFLAC coverage to cover your wages if you have a disaster and can't work to earn the paycheck you deserve. Why can't farmers have some level of certainty to have a decent income coming in? Also big numbers look great but it is the number that remains afte all bills and living expenses are paid that really matter. The gross income doesn't mean crap. It is the NET income that counts.


----------



## joespiek (Nov 25, 2003)

At least the farmers work and try to make a living without the aid. Better the gov't gives the aid to people who are actually trying to earn a living and just fall into a rough patch through no fault of their own than giving the money to welfare cases that don't even bother looking for a job.

The gov't is going to tax everyone the same amount they do now, at least some of the money is coming back to ND.

I don't farm but would rather my taxes help out people who do than some bum just trying to work the system.


----------



## Dick Monson (Aug 12, 2002)

As a life long farmer I agree with parts of that article. There are too many farming the programs instead of the land. All farmers chose their location and profession. If they choose to locate their hamburger stand in a flood prone or drought prone area it is a lick on them, not the tax payers. Nor should taxpayers be ripped year after year for a bad decision. Everybody knows of ground that never should have broken up, yet it qualifies for a farm payment of some kind. Lots of CRP in that catagory. It does not reflect well on us and is nothing to be proud of. There are a litinay of wetlands today being drained for the payment and nothing will be done about it. Nothing. I know of several that are burned off every year for the prevented planting payment and they have never ever been seeded in my lifetime. All of you pay for this.


----------



## water_swater (Sep 19, 2006)

Farming is still a tough gig, to be profitable it now takes 12+ months of work, there is also one thing the government wants to provide to its citizens cheap foo B.by paying these farmers to keep farming and helping them through the bad times they are increasing the amount of food in circulation that would not be there otherwise thus keeping the price of grain down, so you can choose to pay your taxes and not know exactly where your money goes or drop that and possibly pay exhorbitant food prices like the Russians, or possibly be hungry, be carefuly what you wish for it might come true.[/img]


----------

