By Gene Meyer | Kansas Reporter
FAIRWAY — Disaster money has become one of Kansas biggest cash crops.
But don’t blame the heat.
Rather, blame the bureaucracy.
The payments are a big deal in the Sunflower State.
The federal government paid Kansas farmers and ranchers nearly $160 million in 2010, the latest year for which totals were published, the U.S. Department of Agriculture’s National Agricultural Statistics Service reports.
In fact, disaster payments that year were Kansas’ sixth-largest cash crop.
Expect another bountiful harvest this year. The choking drought is more widespread than any in decades, and crop prices are bumping into near-record territory.
Kansas farmers and ranchers are used to disasters and the disaster declarations that drive up that federal spending. Fifty of the same Kansas counties declared disaster areas last week were disaster areas a year ago because of drought in western and central Kansas.
Some farmers were hit with losses yet still produced a statewide 449 million bushels of corn, which was the fourth-largest crop since 2000, and the state’s most widely grown feed grain, according to the Kansas Agricultural Statistics, USDA’s crop reporting agency for the state.
Actual costs are difficult to forecast because disaster payments are entitlement programs, much like Medicaid.
“We don’t know what the costs will be,” said Adrian Polansky, USDA’s top executive in Kansas.
But think tens of billions.
“After just about any sort of crop damage, Congress jumps in to declare a ‘disaster’ and distribute millions of dollars to farmers, whether or not particular farmers actually sustained substantial damage,” analyst Chris Edwards wrote in a 2009 Cato Institute report that puts federal spending for all farm subsidies — including disaster payments and subsidized crop insurance — somewhere between $10 billion and $30 billion annually. The institute is a libertarian think tank in Washington, D.C.
U.S. Agriculture Secretary Tom Vilsack last week declared 82 Kansas counties — more than three quarters of the state — federal disaster areas, making farmers there eligible for various low-cost loans and other measures to cope with the expanding drought.
The Kansas counties are among 1,016 in 26 states nationwide, declared disaster areas July 11 — a single-day record, the USDA says.
And the cash is coming more quickly.
The USDA says it has found a way to get low-cost loans, relaxed grazing restrictions and other drought relief to farmers and ranchers about 40 percent faster than before.
The big reason so many counties were deemed disaster areas goes beyond the widespread drought, though that counts, of course. The USDA streamlined the way it determines how badly individual counties are suffering from natural disasters — the so-called Secretarial designation.
“By amending the Secretarial disaster designation, we’re creating a more efficient and effective process,” Vilsack said.
Previously, county agriculture officials assessed crop losses in their counties and submitted those reports to governors or agriculture secretaries, who would send those county-by-county reports up the line to D.C.
On June 11, the USDA changed that process, at least where gauging drought damage is concerned. The agency now simply looks at maps its weather scientists created, and if a county falls within an area hot and dry enough for long enough to hurt crops, it qualifies as a disaster area.
Craig Cox is senior vice president for agricultural and natural resources at the Environmental Working Group, a nonprofit environmental research and advocacy organization in Washington, D.C.
He says such measures make it harder to curb the kind of wasteful farm spending his group looks for. Streamlining the process for declaring agricultural natural disasters may assure more of those disaster declarations will occur in the future, Cox said.
More declarations equal more money.
U.S. farm policy encourages farmers to buy crop insurance to help offset the cost of potential losses, such as those expected in Kansas. But even that’s a bad deal for U.S. taxpayers, too. The feds subsidize the effort by picking up about two-thirds of the more than $7 billion annual cost of the insurance programs that, in the priciest policies, protect farmers from falling prices as well as failed crops.
“If we use things such as subsidized crop insurance and disaster declarations to protect farmers too much from the consequences of a crop failure, we believe that many will plow and plant land that shouldn’t be plowed and planted,” he said.
No risk, no worries.
Record high commodity prices — corn is selling for more than $7 a bushel on Chicago future markets — are a powerful draw when risk is removed, Cox said. If farmers plant on poorer land, more of those crops would probably fail, he said.
Even so, insurance programs are a better deal for taxpayers than the previous remedy, which before 1966 had legislators approving billions of dollars to help farmers whenever the need — they thought — arose, said Dale Moore, a public policy executive with the American Farm Bureau Federation in D.C.
The federation, the nation’s largest general farm organization, has insurance affiliates that deal in a reported $300 million in crop insurance premiums annually. The sophisticated coverage — including price protection for part of a crop as well as crop-loss protection — are good deals for the producers who choose them, Moore says.
“It’s like a major medical policy for crop insurance,” he said.
The U.S. Agriculture secretary or president — through the Federal Emergency Management Agency — proclaims agricultural disasters so frequently that Kansas officials aren’t always sure how many old ones are still open and in use by farmers.
In fact, the IRS and SBA won’t know for several months the cost of that help, such as tax breaks for ranchers who sell cattle prematurely because of scorched ranges, or low-cost loans to small-town business owners hurt by the drought.
Other providers of more immediate disaster help tend to speak in terms of immediate challenges rather than overall totals. It’s difficult, even, to simply identify the number of major agriculture disasters in Kansas.
“We have 12 open FEMA disasters going back as far as 10 years,” said Sandy Johnson, the Kansas Agriculture Department’s disaster planning chief.
Farmers and ranchers covered by those earlier declarations are still paying off money they borrowed to rebuild after floods, tornadoes, blizzards and other calamities — in addition to droughts.
But Sharon Watson, public information officer for Kansas Division of Emergency Management, counted 15 open FEMA disaster declarations as of July 17, all declared after flood, tornado or storm damage as long ago as 2006. Loans and other recovery help from U.S. Agriculture secretaries are run by USDA’s Farm Service Agency state office in Manhattan.
The loan payments are coming. Eventually.
Lee Hartford is a state deputy director for FSA who supervises lending.
“We’re still getting loan payments from declarations back in the 1970s,” Hartford said; some farmers had to refinance their disaster loans when farm credit and prices collapsed in the mid-1980s.
Polansky, FSA executive director, says about 217 Kansas farmers or ranchers are repaying about $7 million in outstanding disaster loans borrowed before the latest disaster was declared.
As for what loan demand the current drought might bring, “we have no way of knowing,” Polansky said. Congress appropriates whatever is needed for the loans.
“Right now, we’ve got $69.6 million we can use,” Polansky said.