Obama plan could cost Minnesota farms millions

The Obama budget calls for ending direct subsidy payments to any farmer who sells more than $500,000 in grain and livestock a year. The size of those payments is based on the number of acres and what crop they're producing.

Southwest Minnesota farmer Fred Dauer likes the president's plan.

"If you gross over $500,000 you don't need to get any help from the federal government," Dauer said, who farms about 700 acres.

He receives some payments from the federal government, but many of his crops, sweet corn, peas and alfalfa, do not qualify for the subsidy program.

"I try to raise enough gross revenue that I can justify being out here on my own," Dauer said. "And these big boys -- they just farm the federal government."

A soybean farm with $500,000 in sales is only going to end up netting about $36,000.

Dauer said large operations use the subsidy money to buy up land and squeeze their smaller neighbors out of business.

Whether that's true, there's a lot of money at stake for Minnesota.

According to the U.S. Census of Agriculture released earlier this month, there are about 6,700 farms in Minnesota that sell more $500,000 of grain, livestock and other products each year.

They represent less than one-tenth of all the farms in the state. But they generate almost two-thirds of the agricultural sales in Minnesota, some $8 billion.

Minnesota Congressman and House Agriculture Committee Chair Collin Peterson has indicated he's leaning against the Obama plan. Peterson told the Washington Times newspaper, "we just finished the farm bill last year and I don't think we'll open it up."

Sen. Saxby Chambliss, R-Ga., told the newspaper it is "premature to make any sweeping changes" to the farm bill.

Most major agricultural organizations also oppose the president's farm budget. Tara Smith with the American Farm Bureau Federation said the subsidies are needed to help farmers pay the increasing costs of planting a crop.

"A soybean farm with $500,000 in sales is only going to end up netting about $36,000," Smith said. "Farmers see a lot of money go through their fingers in a given year."

$36,000 is well below the U.S. median household income for 2007.

In his budget plan, President Obama said large farmers can replace the subsidy payments in part with what he calls "environmental services."

That includes renewable energy production like wind turbines. Farmers could also generate income by sequestering carbon on the land.

The president said he wants to maintain a strong safety net for farm families and beginning farmers. His plan will likely gain support from groups who favor small farms and more rigorous conservation practices on agricultural land.

However, it looks like the plan will face opposition from the representatives and senators who decide farm legislation in congress.

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