Tighter Payment Limits Would Harm Kansas Agriculture

HUTCHINSON, KS – Gary Feist, an Anthony, KS, cotton ginner, told Agriculture Secretary Mike Johanns today that the current farm program provides an important safety net for U.S. agriculture in a fiscally responsible manner – and it’s important the bill’s current structure be maintained for the legislation’s duration. 

Feist, speaking at one of USDA’s farm bill listening sessions at the Kansas State Fair here, also emphasized that Kansas agriculture would be harmed by more restrictive payment limits. He noted that analysis by the federal government’s Payment Limit Commission indicated that tighter limits on contract payments under the 1996 farm bill would have taken $53 million from Kansas farmers.

Feist, who also grows cotton in Manchester, OK, near the Kansas border, said that both the Commission and the Food and Agricultural Policy Research Institute (FAPRI) concluded that payment limitations affect cotton and rice farmers disproportionately compared to feed grain, oilseed and wheat farmers. He said limitations changes now likely will result in a production shift to other crops.

“If we are concerned about our competitiveness in the global market, then tighter payment limits only lessens that competitiveness by restricting operations to a size that is smaller than is economically efficient,” Feist said.

Feist pointed out that the farm bill includes limitations for each element of the program with payment limits being applied cumulatively to all program crops on the farm.

“In addition, we have an adjusted gross income means test that denies eligibility to participants with substantial non-farm income,” he said. “Importantly, no producer is eligible for more benefits than the farm unit is entitled.”

Feist said that proponents of lower limitations argue that “big” farmers receive the majority of benefits. However, he said it is important to remember that per-bushel or per-pound support is the same, regardless of the farmer’s size.

“Proponents of lower limitations argue that farming operations have become larger in order to capture farm program benefits,” Feist said. “While it is true that the average size of farms has increased over time, more restrictive payment limits would not alter that trend. In fact, a USDA-ERS study concluded that program benefits have not contributed to increases in farm size.” 

Feist said that advocates of lower limits cite farm programs as contributing to inflated land values and correspondingly higher rents, yet studies have concluded that tighter payment limits would have minimal impacts on land values and corresponding rents.

He also noted that changes in eligibility rules force changes in rental contracts with the possible consequence of forcing landlords to cash rent rather than share rent land.

“This change would adversely affect beginning farmers and small operators who are normally unable to obtain production financing on cash rent operations,” Feist said.