Once untouchable, farm subsidies may be on the chopping block

Minnesota farmers collect nearly $1 billion a year from the various federal farm subsidy programs. The programs distribute more than $10 billion a year to help farmers withstand lean years.

But, with both farm profits and federal budget deficits soaring, even strong congressional supporters of farm subsidies say cuts are coming in the 2012 budget.

"We know we're going to have to take some cuts," said U.S. Rep. Collin Peterson, a Democrat who represents Minnesota's 7th District. "We just want to make sure that we're not being singled out for more cuts than some other part of the budget."

One of those farmers facing the potential cuts is southern Minnesota farmer Rich Ristau. He belongs to what's probably the hardest working segment of the farm economy -- the dairy sector. Ristau said he knows milkers who haven't taken a vacation in 35 years. By comparison, Ristau is a bit of a slacker.

"My last vacation? The summer of 1985," said Ristau. That's only 26 years ago.

As if the milking isn't enough to keep him occupied, he also grows corn and raises beef cattle. During all the years of nearly continuous work, he's seen good and bad economic times.

At first, he refused federal subsidies. But some tough times forced him to take them. Last year he got about $4,000 from the feds in crop subsidies, and another payment of nearly $9,000 to offset low milk prices.

That's at the low end. The biggest recipients can receive annual sums approaching $5 million.

Other congressional farm leaders are also predicting change. The chairs of both the House and Senate Agriculture Committees say all farm programs are on the table for possible cuts.

Sen. Charles Grassley, R-Iowa, said he expects Congress to eliminate a $5 billion program called direct payments. The program subsidizes grain farmers even when they're making lots of money, which they have in recent years.

National Corn Growers Association member Anthony Bush said even farmers see changes ahead.

"Direct payments are just seen as a handout," said Bush. "In this time frame where Washington's on a budget diet, it's just something that they're looking at awful hard."

"Risk management programs sell on Capitol Hill; handouts don't."

Bush is a farmer from Ohio and he chairs the National Corn Growers Association policy committee. Last month, the group adopted a resolution to study how best to wean farmers from the direct subsidy programs.

Bush would like to see some of that money used to strengthen crop insurance, and other ways to manage the huge financial risks farmers face -- programs that pay farmers in bad times, but don't send them any money if they have a good year.

"Risk management programs sell on Capitol Hill; handouts don't," said Bush.

Critics of farm subsidies welcome the talk of cuts.

"There's a great amount of energy behind cutting some of these programs," said Don Carr of the Environmental Working Group. "But at the same time, you might run into walls erected by people from long, historic entrenched interests."

The EWG is a Washington-based organization that has fought to change the subsidy system. Carr, a senior policy and communications adviser at EWG, would like to see some of that money shifted to agricultural conservation efforts to reduce farm pollutants in rivers and lakes. But he's seen ag interests beat back subsidy cuts before.

Meanwhile, farmers like Ristau worry about the next downturn in the farm economy. The bad old years aren't that long ago. From 1998 until 2001, Minnesota farms suffered big losses, one study saying farms averaged a $26,000 loss each of those four years. Even with his long work hours, Ristau lost $100,000 on his milking operations in 2009. He says federal subsidies helped keep him in business.

"They're going to have to figure out something to keep us all afloat," he said.

While cuts seem likely, it's still unclear what the future farm safety net will look like.

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