We Called It: Low Prices will lead to Big Payouts
Big agriculture payouts could be coming, courtesy of American taxpayers, who are forking over money through lavish new subsidy programs established in the recently passed farm bill.
Carl Zulauf, a professor at Ohio State University and Kansas State University professor Art Barnaby agree that big federal payouts are in store.
The reason: a mild summer in the Corn Belt has made for excellent growing conditions. Last month, the U.S. Department of Agriculture predicted that the U.S. corn crop would come close to breaking last year’s record of 13.9 billion bushels.
But with a glut of high-quality corn comes lower prices. In the last 90 days alone, corn prices have dropped 30 percent.
Zulauf’s latest estimate pegs the 2014-15 season average corn price at $3.60 per bushel, compared to roughly $6.89 per bushel in 2012. For growers enrolled in the federal government’s new county-based Agriculture Risk Coverage program, which pays farmers when their crop sales revenue drops below a certain level, this low price could mean $30 to $90 per acre payouts, according to Zulauf.
If he is right, Zulauf believes this scenario “could spawn the largest commodity program payouts since at least 2004 and the prospect of some growers quickly hitting the new law's $125,000 payment limit.”
We told you so.
Way back in January, EWG predicted that the new farm bill would almost certainly cost more than expected, due to price and revenue guarantees. We said it would likely wipe out some of the savings touted by farm bill supporters.
Just one month later, when a USDA report predicted falling crop prices, we wrote that it might mean big federal payouts. In March, yet another report, this time from the respected Farm and Agriculture Policy Research Institute, signaled that farm bill costs could soar due to falling crop prices.
Now, as harvest time approaches, and as we previously predicted, instead of $16 billion in savings promised by Congressional supporters of the farm bill, taxpayers could be funding big payouts to farmers enjoying a bumper crop.