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The end of direct payments?

Agriculture.com Staff 02/27/2009 @ 12:48pm

With corn prices getting uncomfortably close to $3 a bushel, you may not feel like a wealthy farmer, but under President Barack Obama's proposals for the USDA budget next year, you probably are.

On Thursday, Obama's Office of Management and Budget proposed phasing out direct payments to farmers "with sales revenue of more than $500,000 annually."

Right away, the mainstream media picked up that number and ran it down the field –to the wrong goal line, in my opinion.

Here's how CNN's website put it:

"On agriculture, wealthy farmers would get less money from the federal government -- and none, three years down the line -- under proposals in Obama's first budget."

Everyone remotely connected to the business of agriculture knows that you can have a lot of revenue flow through a farm and not much left to show for it. And we're not talking a huge acreage to hit $500,000 in revenue.

I divided the Obama administration's proposed cap of $500,000 by a pessimistic price of $3 a bushel and a so-so yield of 150. At that price and yield you'd need to harvest just overt 1,100 acres of corn. If the price is a little better, say $3.50 and you've got a respectable 200-bushel yield, you could harvest just over 700 acres.

Here in Iowa, the idea of changing direct payments made the evening television news and the front page of The Des Moines Register. Needless to say, it's not too popular in the red counties that didn't vote for Obama, maybe even in some of the newly blue rural counties that did.

With corn prices getting uncomfortably close to $3 a bushel, you may not feel like a wealthy farmer, but under President Barack Obama's proposals for the USDA budget next year, you probably are.

Before getting too carried away, we need to remember the President's budget is almost always declared dead on arrival when it hits the halls of Congress. The nation's legislative branch, not the President, writes our laws and sets spending levels. Even Obama, who remains popular with two-thirds of the public, if not farmers, will find his budget ideas going through major surgery.

So, unlike Republican leaders in the House and Senate Agriculture Committees, Harkin isn't upset by the idea of tinkering with direct payments.

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