2015 crop insurance offsets low ’16 prices

USDA safety net has changed from earlier subsidies

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SPOKANE — The federal government will pay about $95 million to 26,500 Washington farms to help offset the lowest crop prices in 10 years.

The money is part of the U.S. Department of Agriculture’s expansive safety net program to rescue farmers from years of poor harvests or low prices. Across the United States, farmers who enrolled in the government’s farm program will collect $7 billion.

Much of the money destined for Washington will go to farmers who grew wheat, barley, corn, canola, peas and lentils during the summer of 2015. Drought and record heat gripped the state, cutting yields and fueling the worst wildfire season in state history.

For example, the average wheat yield in 2015 was 50.4 bushels an acre. This year, the yield was 71.5 bushels an acre, said Mary Palmer Sullivan with the Washington Grain Commission.

Making matters worse, prices for the 2016 crop began a steady slide after the harvest. By Thursday, the price of the most common wheat grown in Washington sat at $4.50 a bushel delivered to Portland. That’s well below the recognized break-even point for Washington farmers after the cost of seed, fuel, fertilizer, equipment, land leases, insurance and other costs of doing business, said Michelle Hennings, executive director of the Washington Association of Wheat Growers. In 2014, that price was $6.55 a bushel on average.

The payments for last year’s struggle are arriving weeks after farmers across the country — including in Washington — brought in this year’s bumper crop.

Northwest Farm Credit Services, the region’s largest agricultural lender, noted the rub in a Thursday report.

“Northwest wheat producers’ yields are bursting bins, but low prices are squelching profits,” the statement read. “Year over year, U.S. wheat supplies are up 17 percent and global wheat supplies are a record 745 million metric tons … The USDA projects 2016-17 all-wheat prices at $3.30 to $3.90 per bushel, at or below producers’ cost of production.”

Gordon Stoner, president of the National Association of Wheat Growers, said: “The program payments being announced today will provide a needed cushion for farmers during these tough economic conditions in wheat country.”

The USDA predicted in August that national farm profits would fall 11.5 percent to $71.5 billion during the past year because of low prices. That would be the lowest mark in seven years.

The money to farmers this year is different from the historic payments that put a spotlight on farm subsidies in the 1990s and 2000s, said Judy Olson, the Washington state executive director of the USDA’s Farm Service Agency.

Legislation passed in 2014 ended the practice of automatic payments to farmers. The new Farm Bill established what Olson described as a true safety net that allowed farmers to enroll in crop-specific programs that would trigger federal payments determined by crop prices and yields.

“In previous bills, farmers got a payment regardless of price and yield,” she said. “This time there are years when there’s no payment.

“It’s a true safety net that fluctuates with need.”