Payment outflow expected to increase

 

By John Green

The Hutchinson News

 

A nuclear engineering professor at the University of Tennessee collected about $15,000 in federal farm subsidy payments in 2005 on Reno County land.

The professor, Laurence Miller, is a bit unique in that he manages the 400-acre operation long distance instead of leasing the land to a local farmer. The land includes ground near Sylvia, where Miller grew up, that he inherited from his mother and other acreage he’s purchased since 1987.

Yet Miller is not unique in that he’s among tens of thousands who receive farm payments though they don’t live on the farm, in the county or sometimes even in the state.

Of the $1.05 billion in farm program payments dispersed on Kansas acres in 2005, nearly a quarter of the money – and almost half the checks distributed – left the county where the land was farmed or held in conservation reserve.

The issue is particularly acute in the sparsely populated border counties of western Kansas, where some of the highest levels of subsidies in the state are paid.

Unless Congress changes farm policy, the outflow of payments is expected to grow as rural depopulation creates more absentee landowners.

Some recipients and industry analysts contend the payments are just part of the larger national farm economy. They say the money in many cases enables generations removed from the farm to keep acreage in agricultural production while maintaining at least an emotional connection to the land.

The problem, some farm economists say, is that the assistance is drawn away from the local rural economies it was intended to support. The subsidies also drive up land prices, they say, making it more difficult for new farms to get off the ground.

 

By the numbers

 

Farm subsidy data compiled by the non-profit Environmental Working Group, based in Washington, D.C., shows the vast majority of federal farm subsidy dollars for Kansas – more than $820 million or some 77 percent – stayed within the county that issued them.

In 41 of the state’s 105 counties, however, more checks were mailed out of the county than went to local addresses.

And in Morton and Hamilton counties, the numbers show, more recipients actually lived out of state than in those counties, though, again, more than 60 percent of the dollars went to residents of the county.

In all, more than 5.5 percent of the cash – $59.5 million in 2005 – was mailed to landowners living out of state or out of the country.

“The biggest reason behind it” said Troy Dumler, Kansas State University agricultural economist, “is that farmers typically rent a lot of the land they farm. If these farmers crop share, the landowner is entitled to a percentage of the commodity payments based on the crop share. Typically it’s one-third to the landowner and two-thirds to the farmer.”

 

Keeping it on the farm

 

Not all counties in the state experience the same levels of outflow.

In Labette and Nemaha counties in eastern Kansas about 90 percent of the money and 75 percent of payments stayed in county.

“I would say the majority of the farm ground in Labette County is farmed and owned by local people,” said Kitra Cooper, executive director of the local Farm Service Agency office. “We haven’t had the migration to urban areas. The people who were raised here in the farming community have tended to stay here and continue to farm.”

While the number of farms there has declined over the years, Cooper said the land, which includes a lot of pastureland, has stayed in the hands of locals.

By contrast, in Seward County less than half the dollars – about $7.4 of the $14.9 million distributed there – and only about a third of the payments went to local addresses.

Among all the state’s counties, the median level of distribution showed 77.8 percent of total subsidy money and 55 percent of all payments stayed in county for 2005, with about 16.8 percent of dollars and 15.4 percent of payments going to out-of-state landowners.

 

Leaving Kansas

 

Kansas FSA offices mailed subsidy payments to every state in the nation, as well as to a number of foreign countries in 2005, according to Environmental Working Group data obtained from federal U.S. Department of Agriculture records under Freedom of Information requests.

Recipients in neighboring states were the greatest benefactors, with the top two, both in terms of dollars and number of payments, being Colorado and Texas.

The 2,744 payments made to applicants in Colorado totaled $11.2 million, while Texas landowners obtained $7.1 million. Nebraska, Oklahoma and Missouri round out the top five states.

The next five states, in terms of most dollars distributed, were: California, $4.4 million; Arizona, $2.7 million; Illinois, $1.3 million; New Mexico, $1.3 million; and Florida, $1.24 million.

Examining just the top 500 payment recipients in a given county offers a small snapshot of the program.

In Finney County, for example, which ranked third in the state in total farm payments, 33 individuals from 15 states were among the top payment recipients.

The largest number of people getting checks was in Texas, but the biggest chunk of out-of-state money –$108,500 – was distributed to four people in Nebraska. Money also went from Finney County to Florida, Washington, Arizona, California, Colorado, Indiana and Wisconsin.

 

Back in Kansas

 

Reno County topped the state in 2005 in the total number of farm payments issued – 2,957 – while the county ranked 11th in total dollars paid, at $17 million.

The high number of recipients also put the county second in the state in total number of payments going both out of county and out-of-state.

The payments, however, were relatively small. So, though 430 people out of state received checks, only six – including the Tennessee professor – were in the top 500, with their combined 2005 payments totaling $71,885. The others were from Georgia, Texas, Kentucky, Oregon and Utah.

“The sizes of farms in Reno County are smaller than some of the others, and the county’s size is larger than most all other counties in the state,” said Brad Sherman, who directed the FSA office in Reno County for nine years before recently moving to Harper County.

“The only county larger area-wise is Butler and that’s mostly grass over there,” he said.

The average payment that went to local farms in Reno County was about $7,580, while the average out-of-state payment was less than $1,700. That compares to a statewide average of $12,165 in county and $2,870 out-of-state.

The highest average in-county payment for 2005 was in Haskell County, eclipsing $50,000. The county had 357 recipients. Eight counties, all in western Kansas, topped an average $30,000 per farm.

The highest out-of-state payment average was in Wallace County, where payments to about 180 landowners averaged $7,600. The top 10 counties, again all in western Kansas, averaged more than $5,000 per out-of-state payment.

Most of the crops in western Kansas are irrigated, resulting in higher yields and, subsequently, higher subsidy payments, Sherman said.

 

A good thing

 

Sherman said he believes allowing the subsidy payments to go to landowners, even though they may be out of county or state, is a good thing.

“For instance, when my mother passes away, I’ll be an out-of-county landowner not on the farm land,” Sherman said. “That land has been in the family a long time, for three generations. I want to keep it. I don’t want to be forced to sell.”

The payments would allow him to pay the taxes on the land and maintain it, and maybe make a little income, Sherman said.

Miller, the Tennessee professor, who said he visits his Reno County land a couple of times a year, incorporated the farm last year, giving stock to his wife and children.

They may decide to have someone else run it, Miller said, like hundreds of others who rely on farm management companies.

Regardless of what they do, Miller said, it’s appropriate for all landowners to have access to government payments.

“We’re in interstate commerce,” he said. “The (subsidy) money is not being generated in Kansas. It’s from all over the country, New York and elsewhere. It flows into Kansas.”

“There are multiple reasons for farm subsidies,” Miller said. “But the main one is to stabilize production and prices. And the impact is to keep food prices low.”

K-State’s Dumler, however, said the effect of payments going to absentee landowners is that they become capitalized into land values, forcing those values up. Even if out-of-county landowners were prohibited from getting direct subsidy payments, he said, they’d get a share.

“If the tenant is cash rent and gets all of the government payments, the landlord knows he’s getting those payments and will ask for higher rent,” Dumler said. “That drives rental prices up on the land. So the true beneficiaries of these government programs aren’t necessarily farmers, but landowners.”

Increasing the value of the land, he said, makes it more difficult for beginning and younger farmers to get involved in agriculture because it requires such a large investment. One university study suggested that if government payments were reduced or eliminated, land values would fall by as much as 30 percent, Dumler said.

“A historical justification for the farm program is that it’s helping save the family farm,” Dumler said. “But if a percentage of the payments aren’t going to the family farm, they’re not helping the family farm. Another justification was it helps support the rural community, especially if tied to agriculture. But again, if a large percent of payments aren’t going to the rural community, it makes it tough to justify that argument for subsidies.”