Southern Minnesota farmer Rich Ristau belongs to what's probably the hardest working segment of the farm economy, the dairy sector.
Ristau, who also grows corn and raises beef cattle on his farm near Janesville, knows milkers who haven't taken a vacation in 35 years. By comparison, Ristau is a bit of a slacker. His last vacation was in 1985.
During all the years of nearly continuous work, he's seen good and bad economic times. Even with his long work hours, Ristau lost $100,000 on his milking operations in 2009. Federal farm subsidies helped keep him and a lot of other farmers in business.
Minnesota farmers collect nearly $1 billion a year from the various federal farm subsidy programs. The subsidies are part of a federal system that paid farmers $16 billion in 2009, the most recent data available; however, with both farm profits and federal budget deficits soaring, even strong congressional supporters of farm subsidies say cuts are coming in the 2012 budget.
At first, Ristau refused federal subsidies, but tough times forced him to take them. Last year, he received about $4,000 in crop subsidies and about $8,000 to offset low milk prices.
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That's at the low end. The biggest recipients can receive annual sums approaching $5 million.
Change is afoot
The programs started nearly 80 years ago, during the Great Depression, when low farm prices threatened to depopulate the countryside. A coalition of farm state Republicans and Democrats in Congress have held the system together ever since, but now even they see reductions coming.
"We know we're going to have to take some cuts," said U.S. Rep. Collin Peterson, 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."
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.
Iowa Sen. Charles Grassley, a Republican, 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.
Even farmers see changes ahead, said National Corn Growers Association member Anthony Bush, an Ohio farmer.
"Direct payments are just seen as a handout," said Bush, chairman of the association’s policy committee. "In this time frame where Washington's on a budget diet, it's just something that they're looking at awful hard."
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A fair approach
Last month, the corn growers 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. They include 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," Bush said.
Critics approve
The talk of cuts is welcomed by critics, among them Don Carr, senior policy and communications advisor for the Environmental Working Group, a Washington-based organization that has fought to change the subsidy system. He’d like to see some of that money shifted to agricultural conservation efforts, to reduce farm pollutants in rivers and lakes.
Carr has seen agricultural interests beat back subsidy cuts before.
"There's a great amount of energy behind cutting some of these programs," he said. "But at the same time you might run into walls erected by people from long, historic, entrenched interests."
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Meanwhile, farmers like Ristau worry about the next downturn in the farm economy.
They lived through some tough years not long ago. From 1998 until 2001, Minnesota farms suffered big losses. One study said farms averaged a $26,000 loss each of those four years.
"They're going to have to figure out something to keep us all afloat," Ristau said.
While cuts seem likely it's still unclear what the future farm safety net will look like.
