Farmers — Federal chickpea program won’t help much
By Blake Nicholson
BISMARCK, N.D. — Garbanzo bean farmers say a federal program that was supposed to provide them with a safety net is largely worthless because the government has underestimated the value of their crop.
Garbanzo beans, also known as large chickpeas, are used in salads, stews and hummus, a popular Middle Eastern dip often served with pita bread. They are considered more valuable than the small chickpeas usually ground into flour.
The farmers who grow them had long wanted to participate in a federal farm program called a marketing loan, which essentially sets minimum crop prices and provides aid to farmers who can’t sell their crop for that amount.
"As you go into this new farming situation with possibly $4 diesel fuel and high rates for fertilizer, and you go to the banker for a loan ... it makes it real tough when you don’t have some type of a safety net," said Jim Evans, an Idaho farmer who grew chickpeas for more than three decades before recently retiring.
Government officials said just getting the crop added to the farm program was a battle. Large chickpeas aren’t a big commodity in the U.S. — the largest crop on record was 119,000 acres in 2006 — and industry officials have said the addition of a safety net isn’t likely to increase acres.
"There simply was no support for what the industry was asking for within the (Senate) ag committee or elsewhere," said Sean Neary, spokesman for Sen. Kent Conrad, D-N.D., who pushed for the federal program. Large chickpeas are grown mostly from the Pacific Northwest to the Upper Midwest.
Opponents say marketing loans could lead to increased production that might cause prices to drop. Neary said some also believed that the industry wanted the minimum price set too high.
Marketing loan programs set a floor price for a crop. They provide interim financing for farmers so they can hold off on selling their crops at harvest, when prices are usually low, until later, after prices have risen. If prices don’t rise, the government makes up the difference between the marketing loan rate and the market price.
Farmers wanted Congress to set marketing loan rate for garbanzo beans at 18 cents per pound. Congress agreed to the program but set the rate at 11.28 cents per pound — a level the industry says is laughable.
"My rule of thumb — I can’t grow chickpeas unless there’s 18 to 20 cents on the board for them," said Evans, 53, who farmed in the Genesee, Idaho, area, the heart of the region where large chickpeas are grown. He testified before Congress in March 2007 in support of the 18-cent rate.
Mark Schmidt, 38, who grows about 2,300 acres of large chickpeas in northwestern North Dakota, said he would stop growing the crop if market prices dropped to close to the marketing loan rate.
"My cost of production is about 21 cents a pound," he said. "If we get down to that 10 or 11 cents, there wouldn’t be any sense raising any."
The Congressional Budget Office estimated a loan rate of 11.28 cents would cost the government $8 million over 10 years, Neary said.
"To increase it to 18 cents would have cost much more, potentially upsetting the entire farm bill negotiation," he said.
Tim McGreevy, executive director of the USA Dry Pea and Lentil Council, said getting large chickpeas included in the federal farm program at least makes growers eligible for other types of subsidies.
But Evans said farmers would prefer a decent marketing loan program that helps them sell their crop for a decent price.
"I don’t really want a government handout," he said. "But I do want to have some sort of safety net."
Without a marketing loan program, farmers in recent years have locked in prices by signing contracts with chickpea buyers before seeding the crop, said Mark Watson, 38, who farms in Alliance in northwestern Nebraska. He expects them to continue to do that.
"I think the guys that are comfortable growing chickpeas will continue to grow them, and no one else is going to," Watson said.
Garbanzo bean prices have been good through the years and relatively stable compared to other crops. Evans said in his 35 years of farming, he has never seen a price below 16 cents, and large chickpeas right now are bringing about 26 cents.
But given the way other crop prices have fallen in the recession, "you could go from 26 cent chickpeas to 16 cent chickpeas before the crop year is over," Evans said.