Doug Olson is a survivor. The Stoughton-area farmer credits his continued success to two factors: competitive expansion and government subsidies.
"Without subsidies a few years ago," says Olson, "a lot of guys wouldn't be farming right now."
Between 2003 and 2005, subsidy payments to corn growers in Dane County topped $48 million, according to a new Environmental Working Group database (www.ewg.org). Olson is the third-highest subsidy recipient in Dane County for this period (see list).
The group's database, drawn from U.S. Department of Agriculture archives, shows that Dane County corn growers received more subsidies than those of any other county in Wisconsin. The total for 2005 was more than three times as high as in 2003.
Since then, the commodities market has changed considerably. Prices and production are up across the Corn Belt, so there may be few, if any, corn-subsidy payouts for 2007.
As the September deadline for a new five-year national Farm Bill nears, the debate over farm subsidies is heating up. Some critics charge that the current subsidy system has a negative impact on agriculture, the environment and the food supply. Lawmakers in Congress are considering proposals for major change.
U.S. Rep. Ron Kind (D-Wisconsin) has co-sponsored legislation to phase out subsidies and replace them with so-called risk-management accounts. Called the Food and Agriculture Risk Management Act for the 21st Century, or FARM-21, it proposes an IRA or pension-like option that would allow farmers to draw on resources when times are tough and accumulate credit when prices are good.
The current subsidy system, critics say, mainly benefits large-scale processors exporting cheap commodities to reap huge profits. While consumers may get all the high-fructose corn syrup they can handle, farmers have been left with cents on the dollar in the commodities market.
"If there were fair prices, then there wouldn't be any subsidies," says John Kinsman, president of the Madison-based Family Farm Defenders. "It's a political problem. If people understood what was going on, they would demand change."
Earl Butz, secretary of Agriculture under Presidents Nixon and Ford, developed the current subsidy system. It replaced a system of grain reserves that began during the New Deal as a buffer against low production years and variable prices.
The reserves program "wasn't perfect," says Kinsman. "But it was much better than the subsidies system."
Kinsman believes it would be "a disaster" to abolish the subsidies system without putting a price-support system in place to safeguard against market volatility. It was fluctuations in the market that caused subsidies to skyrocket in 2005.
That year, corn production was high, prices were low, and just prior to peak harvest, Hurricane Katrina knocked out a primary shipping lane. (About 20% of Wisconsin's corn is exported down the Mississippi River to the Gulf of Mexico.)
Wisconsin subsidy payments are based on the amount of planted acres and historical yield averages for a given area. In years that farmers earn less due to market factors, subsidies close the gap. Larger farms collect larger payments because they generally own more land and produce more.
"If you peel these [Environmental Working Group] numbers apart," says John Biondi, president of C5-6 Technologies, a biotech firm in Middleton, "you'll see that large corporate agribusiness guys are the ones working the system...collecting the bulk of the money."
Huge factory farms are not the norm in Wisconsin - yet. Smaller family farms, of 250 acres or less, still make up the bulk of the state's farm acreage.
Biondi, whose company is a commercial partner in the UW-Madison's biofuels initiative, believes the subsidy system's days may be numbered. Smaller farmers, he says, are benefiting from reasonable market prices due to demand driven by ethanol.
With regional ethanol plants buying more corn, farmers can get a better price. And many of the plants are cooperatives owned by the farmers themselves, making it an even better deal.
This year, the nation's total planted acreage of corn is up 19% from 2006, a rise driven heavily by demand for biofuels. It is the largest planted crop since 1944.
Although Biondi admits that corn is not a very efficient source for ethanol, he is discouraged when the environmental community is critical. It's a crucial first step, he says, and "the key to breaking out of this terrible system of subsidies, of selling grains at below the cost of production."
Bob Olson, president of the Wisconsin Corn Growers Association, notes that subsidies go back into the farm economy. "Subsidies are all pass-through money," he says. "You give me a dollar and I'll spend it."
Costs of production for corn farmers include seed, nutrients, fuel and land rental - on top of living expenses. Subsidies help small family farmers make it through times of depressed market prices or low yields.
When prices are down, Olson says, farmers cut costs however they can. When prices are good, as they have been recently, farmers can afford to rent more land and upgrade equipment. "My John Deere dealer is having a heck of a year," he says.
Rep. Kind's FARM-21 bill seeks to bring farm programs into compliance with international trade agreements. It also promotes regional economies and healthy food choices for kids. This would presumably benefit initiatives like Madison's Homegrown Lunch Program, which tries to get locally grown food into school cafeterias.
Kinsman, who is also secretary of the National Family Farm Coalition in Washington, D.C., feels that Kind's plan "isn't bad." It's superior, he says, to a bill proposed by Rep. Collin Peterson (D-Minnesota). But Peterson, protests Kinsman, "listens to the agribusiness lobby instead of the farmers."
The best plan, says Kinsman, is the one being proposed by his group. The Food from Family Farms Act proposes a price-support system to limit market lows and a food and energy security reserves program.
"A fair price to farmers will bring a fair price to consumers," he says. "The current system rewards a lot of people, but doesn't reward the farmer or the consumer."
In the end, Kinsman says, any overhaul of the Farm Bill must, at the very least, allow for "the rights of producers to produce in dignity, at a profit, and in an environmentally sustainable manner."
Top 10 individual corn subsidy recipients in Dane County: 2003-2005
1.Kurt Wileman, Edgerton, $381,473 2.Kraig Wileman,Edgerton, $381,460 3.Douglas Olson, Stoughton, $341,362 4.Dennis Acker, Waunakee, $313,269 5.Nancy Kippley, Middleton, $297,250 6.Jerome Wagner, Middleton, $276,205 7.John Waddell, Marshall, $242,985 8.Rolf Forshaug,Black Earth $242,848 9.Gilbert Rauls, DeForest, $238,558 10.James Wileman, Edgerton, $237,498
Source: Environmental Working Group
