Local farm leaders say local agriculture will benefit from the five-year U.S. Farm Bill signed by President Barack Obama earlier this month, but not as much as it should have.
The farm bill, which spends about $100 billion annually, offers up a number of reforms to the way the U.S. Department of Agriculture attempts to promote farming and food production in the U.S. Only about 15 percent of the spending in the law directly pertains to agriculture; the rest is spent on the federal food stamp program, which was cut by about $800 million annually.
One of the major changes in the farm bill is the elimination of the direct payment subsidy system in favor of an expanded federally subsidized crop insurance program. The direct payment system had increasingly come under political fire in recent years for providing payments to farmers, often with very large farms, even during years when those farmers were doing well. It also paid some farmers whose fields were not in production.
Montgomery County District 1 Legislator Martin Kelly said he supported the direct subsidy system because it was of benefit to small farmers as well as large ones. Kelly, who served as the Montgomery County Farm Bureau president from 2012-13, said he owns a small business called Ag Solutions, which does bookkeeping for farms, and he's seen the importance of farmers receiving federal subsidies.
"The general public sees that farmers are getting these subsidies, but in reality these subsidies are pretty much a band-aid for shortages of income. Businesses cannot keep afloat and run above board on these subsidies alone, so they're a short-term fix and they do help and I think it's a necessity," Kelly said. "And once the farmer received those subsidies the farmer had to pay income tax on them."
Under the expanded crop insurance program, farmers must choose between crop insurance protection that will pay them if crops fall below certain prices or a farm revenue insurance program that will protect them if revenues fall below set levels. The bill also directs the Department of Agriculture to develop and implement a federally subsidized whole-crop insurance market. The whole-crop insurance policies will cover multiple types of crops within the same farming operation. This change moves beyond the traditionally insured grain crops and gives fruit and vegetable growers access to more insurance, which in turn is meant to help them gain access to credit for expanding their operations.
Kelly said the expanded insurance is one of the good things in the farm bill.
"I think the fruit and vegetable industry has been growing throughout New York and this is something they've been looking for," he said. "Now the grain farmers have been in forefront for many years, but now we have these other sectors that are growing in popularity."
Steve Ammerman, spokesman for the New York Farm Bureau, said his organization is pleased with the expanded insurance program for fruit and vegetable growers.
"This is something that will really help New York state agriculture. The expanded safety net for many of our fruit and vegetable growers is something we didn't have before. A number of them were really left out in the cold. If disaster struck, there was no way for them to recoup their losses because programs just weren't available for the crops that they grow," Ammerman said.
New dairy safety net
The farm bill eliminates the Milk Income Loss Contract program, which had provided dairy farmers with direct price support payments when income from the sale of milk fell below certain levels. The new dairy safety net is called the Dairy Producer Margin Protection Program, an insurance program that will pay out to dairy farmers when the national margin on milk sales falls below certain levels. The margin is determined by income over the feed cost to produce milk. The premiums for the margin insurance program are fixed and subsidized.
"We feel this is definitely more beneficial to New York dairy farms. It will allow farmers to better plan and help them deal with some of the bigger swings in production costs that they couldn't really do under the previous program. The margin program will take more of the feed cost into account," Ammerman said. "When feed costs go very high, and there is a very narrow margin on the price of milk and the price of feed, this program will give our farmers a little more stability in dealing with those price swings."
Fulton County Farm Bureau Vice President Lee Hollenbeck said Fulton County farmers are generally pleased with the new farm bill, but are disappointed the bill doesn't change the way the federal government regulates the price of milk. Hollenbeck said dairy farmers, particularly in New York state, have been lobbying the federal government to reform the federally controlled milk pricing system to allow for higher prices of milk going for the production of yogurt, but that wasn't included in the farm bill.
"This is a problem we've been working on for years. The federal government has to get away from that Minnesota-Wisconsin price ordering system they put in place after the Great Depression, which was a long time ago, and get more in place with the modern times and have a Northeast milk pricing order and changing the tiers," Hollenbeck said.
The federal government's current milk pricing system mandates prices for milk sold for different purposes. Milk sold for fluid consumption, known as class 1 milk, gets the highest price, while milk sold for production of yogurt is class 4 milk, which has the lowest mandated price.
"It's no wonder the yogurt people are doing so well; they're not paying (high prices) for the milk," Hollenbeck said. "They've got to change this. A lot of state officials have asked me, 'Are we going to have enough milk to supply Fage with their expansion?' and I say if we pay the farmers, we'll have enough milk."
Ammerman said the Farm Bureau had been lobbying for a provision in the farm bill that would have authorized the USDA to conduct a study of the potential affect of bringing the class 4 yogurt milk price up to parity with the class 1 price, but they weren't able to get it into the bill.
Although it represents only a small portion of the new law's spending, the farm bill does pledge hundreds of millions of dollars for agricultural research, particularly advanced agricultural research at universities.
It's not clear exactly how much is going to universities, since much of the five-year farm bill's budget represents money authorized to be spent but not yet appropriated in the annual budgeting process. And other funding will come in the form of competitive grants that must be matched by the private sector. Still, experts say, it appears to represent an overall increase to public research schools. All of the research funding from the last farm bill continues and grows in some areas, such as specialty crop research, including work on citrus diseases. Another addition is $200 million to create the Foundation for Food Agriculture Research. The money for the nonprofit organization is guaranteed but also has to be matched through private investment. The aim of the foundation is to boost cooperation between industry, academia and private foundations, and research will focus on safe, efficient and sustainable food production, innovations to boost the economy and fight global hunger.
Ammerman said U.S. Sen. Charles Schumer, D-New York, helped secure a $20 million grant within the farm bill for studying the expansion of the maple tree industry in three states including New York. He said the massive, more-than-1,000-page bill also contains funding for helping rural areas expand broadband Internet service, as well as funding for promoting farmers markets.
"These are measures that will help to connect farms to consumers," he said.
The Associated Press contributed to this story.