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Farmers waiting for ‘other shoe to drop’ on commodity prices

In the 30 years he’s been farming, John Thaemert says there have been three years when he felt as optimistic about the wheat outlook as he does in 2008.

Two days before Thaemert, the president of the National Association of Wheat Growers, said that, nearby spring wheat futures briefly touched an astounding $25 a bushel on the Minneapolis Grain Exchange.

But Thaemert says farmers have seen plenty of other years when wheat futures were trading below the loan rate, which is why his and other farm organizations are pushing so hard for a new farm bill.

“We simply can’t forget about the farm bill,” Thaemert said in an interview at the Commodity Classic in Nashville. “We need a safety net to make sure we can keep farmers on the land and rural communities from disappearing when prices decline.”

“We think we have a budget number,” he said, referring to reports the Agriculture Committee chairmen and the administration officials had agreed to spend $9.6 billion over the CBO baseline. “We need that amount.

“We hope to get a farm bill on the president’s desk – and that he will sign it – within the next two weeks.” (Thaemert, a wheat farmer from Sylvan Grove, Kan., was interviewed on Feb. 28.)

He said the $9.6 billion would not provide funding for the loan rate and target price adjustments Wheat Growers have been seeking in the new farm bill. But it will continue direct payments.

“Direct payments are the most WTO-compliant part of the commodity title,” he said. “Farmers can budget for it, they can show that to their lender and it can help offset the deductible for federal crop insurance coverage.”

Senate Ag Committee Chairman Tom Harkin seemed to acknowledge the political clout of the Wheat Growers and other farm groups when he was asked about direct payments on Feb. 28.

Harkin said he suggested a cut in direct payments during the committee mark-up of the farm bill but didn’t have the votes to pass it. The administration hasn’t shown much interest in reducing direct payments, either.

Instead, Agriculture Secretary Ed Schafer and Deputy Secretary Chuck Conner seem more interested in beating up on commercial-sized farmers who provide 70 percent of the nation’s crops, as Kansas State University Economist Barry Flinchbaugh noted at the Commodity Classic.

The payment limit reforms the administration is pushing won’t fill the $10 billion to $12 billion gap between the CBO baseline and what the Senate bill envisioned for commodity, conservation, energy, rural development, and nutrition programs.

Flinchbaugh says administration leaders and other farm bill foes seem to think high prices for corn, soybeans and wheat have eliminated the need for a farm safety net. “We hope these prices are here to stay, but we know they will go down at some point,” said Thaemert, who also holds down a banking job when he isn’t farming or traveling for the NAWG. “They haven’t repealed the economic cycle.”


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