South Dakota prides itself on its frontier spirit. We're a land of farmers and ranchers, as individualistic as we are self-reliant.

But that perception may not exactly match reality. Last year, records show, the state collected more than $721 million in federal farm subsidies.

When government-subsidized crop insurance is added to that, South Dakota's agricultural sector received more than $1.2 billion in assistance — more than twice what the federal government gave the state for Medicaid in the same year.

While the bulk of subsidy payments go to the crop-heavy regions of eastern South Dakota, several western countries have also collected a hefty share. Lyman County received $13.5 million last year, largely for wheat and corn. Pennington County earned $4.5 million, largely for wheat.

As congressional lawmakers sit down this month to negotiate the continuation of those payments under the farm bill, a debate is once again stirring across the country: Are subsidies a hand-up or a hand-out to producers?

The Environmental Working Group, a Washington, D.C.-based organization that studies agricultural issues, says many farm subsidies now fall in the latter category.

Craig Cox, the group's senior vice president for agriculture and natural resources, said his group believes producers require a safety net to protect them in the event of disaster.

"But what we have got today couldn't be further from the vision of a safety net," he said.

A handout?

Agricultural subsidies take many different forms, but the most controversial are known as "direct payments."

The program, which gives money to landowners simply for planting crops, was introduced in 1996 to wean farmers away from other subsidies and to switch to a more free-market model of farming. But lawmakers ended up extending the program beyond its intended life and those payments now cost the government about $5 billion a year.

As lawmakers hash out the details of the new farm bill, direct payments look like they may get the ax.

While Cox said while that's encouraging, what isn't encouraging is that lawmakers are planning to take about 75 percent of those savings and use them to expand government-subsidized crop insurance.

Cox said crop insurance has already become an increasingly problematic subsidy. On average, taxpayers cover about 60 percent of a farmer's premium. Taxpayers also pay about $1 billion annually to cover the administrative costs of private crop insurers and also cover them in case they suffer particularly heavy losses.

Consequently, Cox said, the expense of the program has ballooned. The program cost taxpayers $3.1 billion in 2001 and reached $14 billion last year.

Cox reiterated that while his group believes in a safety net to protect producers from disasters, like the October blizzard that killed tens of thousands of cattle across South Dakota, crop insurance had become far too generous.

He also said the expansion of crop insurance is particularly galling, and fiscally irresponsible, because it will likely coincide with cuts to useful subsidies in the farm bill.  Cox said lawmakers are planning to cut conservation programs by about 10 percent over the next decade. Those programs pay farmers for preserving land rather than farming it. 

In addition, Cox said, Congress is looking to cut somewhere between $4 to $40 billion over 10 years from the nation's food stamp program, which is tied to the farm bill. 

A hand-up?

Agricultural subsides have their defenders, including South Dakota GOP Congresswoman Kristi Noem.

Noem has a unique stake in the final shape of the farm bill. She was appointed last month to a conference committee of 41 lawmakers who are hashing out differences between the House and Senate versions of the bill. If they can reach agreement, the bill will be put to a vote in both chambers.

A former rancher and farmer in northeastern South Dakota, Noem said she supported the elimination of direct payments from the bill.

However, she defended the current subsidization of crop insurance and its proposed expansion.

"I really think we have reformed farm programs to the point where we have a basic safety net," she said.

Noem disagreed with the Environmental Working Group's assertion that the program is too generous. She said it is an essential part of the economics of American farming and provides stability to the sector through times of drought and disaster.

"Every farmer that I know of has to have crop insurance before they can get a loan," she said. "Before they can have an operating note to put a crop in the ground in the spring."

As for food stamps, Noem said cuts are necessary to reduce wasteful spending and cut down on fraud.

Noem is a member of the House Agriculture Committee that shaped the chamber's original version of those cuts. The committee's version proposed slashing $20 billion over 10 years, but that was later amended to $40 billion when it reached the House floor, which is controlled by Republicans.

Meanwhile, the Senate, which is controlled by Democrats, has proposed $4 billion in cuts to food stamps.

Of all those numbers, Noem said she preferred the committee's original $20 billion cut. But she said she hasn't settled on any specific amount as negotiations continue over the bill.

"I haven't drawn a line in the sand on any dollar amount," she said.

Any cuts, however, are not without controversy. While Noem maintains that those cuts would have a relatively benign effect on the country's neediest, anti-poverty groups disagree.

Jennifer Adach, a spokeswoman for the Food Research and Action Center based in Washington, said the House's original version goes far beyond reducing wasteful spending and fraud.

She said those cuts alone would mean two million low-income individuals would lose assistance, 210,000 children would lose free school meals, and 850,000 households would have benefits cut by an average of $90 a month.

What do producers say?

In order to gauge opinion from South Dakota agriculture producers about the state of subsidies, this month the Journal reached out to some of the biggest subsidy recipients in the state.

The Journal tried to contact the top eight recipients of subsidies between 1995 and 2012 (with the exclusion of a state agency that administers a federal conservation program). Three declined to comment and four did not respond to messages.

Barry Heiss, the farm manager for Lower Brule Farm Corp., said he personally believes agricultural subsidies should be scaled back.

Heiss's company is owned by the Lower Brule Sioux Tribe, which runs a farming and ranching operation on more than 8,000 acres of reservation land. Between 1995 and 2012, the company received $5.5 million in subsidies (excluding crop insurance), making it the sixth biggest recipient in that time period.

Heiss said he believes in a more free-market approach to agriculture. He said while his company has received some big subsidy payments, he believed it and other producers could survive without them, encouraging more innovation and efficiency.

"I believe in free enterprise," he said.

Heiss added that while he believes in a safety net for farmers, the subsidies underlying crop insurance may be too generous. He said because of government intervention there is virtually no difference in the price of the same insurance products offered by different companies. Like the sector in general, he favored a more competitive, free-market approach.

Wayne Smith, executive director of the South Dakota Farm Bureau, said he believes the crop insurance subsidization is at a fair level.

He said the history of American agriculture over the past 70 years has proven that producers need a helping hand.

If anything, he said, he would like to see forage producers receive the same kind of crop insurance that other farmers get.

"I think the crop insurance is very adequate, and possibly a little high, but lets remember we are talking about securing food for our country," he said. "We need a risk-management system of some sort."

(5) comments


Namaste Everyone, The sole purpose of a farm bill is to support all producers of food threw both good and bad times and ensuring it is healthy for the consumer as it makes its next step into the processers hand. We have failed in allowing other government departments to make decisions allowing Gmo's to being grown putting our children and ecology in harms way. Animal confinement is producing mutated viruses that no antibiotic can cure, they are sick all the time. We need a farm bill of traditional values, things that worked in the past and kept all of us in harmony with nature. Healthy food and water and children,. Ask a agrichemical to drink that pestiside before you purchase it and if he survives buy it. You should be able to eat and drink what goes into the soil. Lets not let these big corporations monopolize our food industry. Thank You, Namaste Timothy Two Toes Less Right Foot.

Prairie farmer
Prairie farmer

Corn is no longer $7! The local cash price is under $4. So if you want to comment at least be informed!

The other issue that bothers me is when groups like EWG quote figures, they include in subsidies is the LOAN payments that farmer take out against their grain after harvest. That Money is paid back but with the way the government accounting works, it is not subtracted from what is paid out, so the figure is inflated!

Go figure!


Why are we subsidizing corn? I can see some of the others but at over $7 a bushel, it is another corporate welfare for the rich.


"Corporate welfare for the rich"?? Do you understand how much it costs running and maintaining a farm or ranch? Sure, farmers may make good money when they go to sell their crops, but do you realize how much of that money is spent by the end of the year? This is our country's food supply - no, our welfare that we're talking about. If we don't take care of the farmers and ranchers that produce our food, we're going to have bigger problems to worry about further down the road.


Why don't I see any of the Tea Party speaking out against this government spending. Are some government handouts okay?

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.