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Mike McFeely, Published March 13 2009

McFeely: $500,000 isn’t a lot of money in farming

Either the Obama administration is getting bad advice, or the big-city hotshots running this country think farming has not advanced past the Ma and Pa Kettle stage.

The first scenario is bad enough. The second – the idea that farms are

80-acre plots run by simple folk who have a few chickens scratching around the yard – is inexcusable.

At issue is the proposal in President Barack Obama’s budget that calls for an end to direct payments – subsidies – for farmers who gross more than $500,000 in a year.

Not net. Gross.

Memo to the administration: This ain’t 1960.

That was a year when generating a half-million in revenue meant you were a massive corporate farmer. Today, it means you’re a family farm.

“It’s laughable,” said U.S. Rep. Collin Peterson, the Democrat from Minnesota’s 7th District who is chairman of the House Agriculture Committee.

Peterson said it’s not clear if the $500,000 figure came from Agriculture Secretary Tom Vilsack (unlikely, since he’s an Iowan who understands farming) or directly from the White House. Peterson suspects the latter, and offered this commentary: “It shows a complete lack of understanding of agriculture.”

That’s because while a

half-million in gross revenue sounds like fat-cat corporate farming to the uninitiated, it’s really not much more than a single stalk in a sea of corn.

The math is simple enough. Let’s say a farmer has 1,000 acres – not anything near a large farm in this day and age – and he has 500 acres in corn and 500 in soybeans. Suppose he has a decent year and harvests 90,000 bushels of corn and 20,000 bushels of beans.

At Thursday’s corn price, roughly $3.40 per bushel, that is $306,000 worth of corn. With beans at about $8.50 a bushel, that is $170,000 worth of beans.

That is $476,000 in gross revenue, which is nearly $500,000, which in the administration’s eyes would define that farmer as evil corporate agribusiness taking free money from the government.

Problem is, farming is an incredibly expensive business these days. Land costs are colossal, and rising. Ditto machinery. Ditto seeds. And fertilizer. And chemicals. The gross figure looks good, until the bills have to be paid. What’s left is the net profit, which doesn’t look nearly so bulbous.

Almost nobody disputes subsidies to huge, wealthy corporate farms should be limited. The devil lies in the detail of what defines huge and wealthy. Gross revenues of $500,000 would not be it.

Peterson says the $500,000 figure will not survive Congress, simply because of its absurdity. And changing direct payments would require reopening the 2008 farm bill, which Peterson says won’t happen.

That’s good news for the area’s family farmers. Now it’s time to educate the new president that Ma and Pa Kettle died decades ago.

Forum columnist Mike McFeely can be heard from 1-2 p.m. Monday through Friday on WDAY-AM (970). He can be reached at (701) 241-5580 or mmcfeely@forumcomm.com. McFeely’s blog can be found at www.areavoices.com/mcfeely