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Subsidies outpace Montana farm profits

Federal subsidies totaled $330 million more than all the profits of Montana’s ag industry over the past five years, a new report shows.

By SCOTT McMILLION
Chronicle Staff Writer

The Montana Ag Statistics Service’s annual report, a joint project of the state and federal governments, tallies up all sorts of facts about agriculture. A new one was released last week.

If not for federal farm subsidies, Montana’s ag industry would have lost $170 million in 2001 alone, the report says. In that year, profits came to $304 million. Government subsidies were $476 million.

That year was not an aberration.

Between 1997 and 2001, ag earned profits of $1.67 billion. During those years, farmers took government checks worth $2.05 billion. Profits outpaced federal subsidies in only two of those years, by $50 million in 1997 and by $6 million in 1999.

"That’s what happens when you have a string of droughts," said Jake Cummins, executive director of the Montana Farm Bureau, the state’s largest ag group. "We’ve got parts of the state that haven’t been this dry since the Great Depression."

Government payments to farmers include crop subsidies, disaster payments and fees paid to idle marginal land for conservation purposes. They more than doubled between 1997 and 2001, soaring from $231 million to $476 million.

At the same time, wheat production plummeted on the dry prairies while prices drifted lower in the international markets. Sales of crops fell from $1.1 billion in 1997 to $618 million in 2001. Beef prices rose during the same period, but not by enough to offset the losses in grain.

In Montana, most subsidies are related to wheat production. If the drought doesn’t break this winter, conditions could worsen, Cummins said.

"It’s tough and it’s getting tougher," he said.

The subsidies are the result of a strong farm lobby getting its big slice of pork, according to Terry Anderson, director of the Political Economy Research Center, an economic think tank in Bozeman.

"Perhaps defense does better" at claiming bacon, he said.

One of the critical aspects of farm subsidies is that they support agricultural land prices, he said.

"If you took the subsidies away, land prices would fall," he said.

That means banks and implement dealers have a big stake in the subsidy program.

"Their business depends on these subsidies as much as the farmers do," Anderson said. "Financial markets don’t want to be left holding the bag when farmers aren’t doing well."

The subsidies probably benefit the entire state, Anderson said, partly because of the state and local taxes farmers pay. ($142 million in 2002)

"It’s the nation subsidizing farm states in the name of supporting the family farm," Anderson said.

The report also found that 1,000 Montana farms stopped producing last year, something Cummins attributed to wealthier farmers buying out their neighbors and consolidating operations. Any operation with $1,000 or more in agricultural sales is defined as a farm by the Ag Statistics Service.

In general, bigger farms are able to reap bigger subsidies.

Congress recently passed an $80 billion farm bill that Anderson criticized for encouraging farmers to use more pesticides, more herbicides and more intensive farming techniques.

That bill will last through 2007.

Scott McMillion is at [email protected]

http://bozemandailychronicle.com/articles/2002/12/17/news/02subsidies.txt

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