Barry Flinchbaugh

(Jim) Good morning folks. Welcome to That’s My Farm. I’m Jim Shroyer your host. We’re in luck because actually we’ve got a treat for you, we have Dr. Barry Flinchbaugh, well-known ag economist speaking tour about his perspective of the new Farm Bill. So don’t go away. we’ll be right back.Closed Captioning Brought to you by the Kansas Soybean Commission. The Soybean Checkoff, Progress Powered by Kansas Farmers.

(Jim) Good morning folks, welcome to That’s My Farm, I’m Jim Shroyer your host. And today we’re in luck because we have Dr. Barry Flinchbaugh with us, a renowned ag economist. At least that’s what you told me earlier. (Barry) Oh is that it? (Jim) So, Barry what is this deal about… in the new Farm Bill about taking food stamps, nutrition out of the Farm Bill? (Barry) Well, it’s an ideologic battle, it’s a partisan battle, it goes way back. People question why would you put foods and nutrition programs in the Farm Bill. (Jim) Right, right. (Barry) Farm Bill is to be conservation, commodity programs, trade, credit, etc. Why would you put foods and nutrition programs in there? And of course, foods and nutrition programs represent about 82 percent of USDA’s budget. So, we’re talking about real dollars. And if you go way back, Senator Dole from Kansas and Senator McGovern from… (Jim) The Dakotas. (Barry) The Dakotas, South Dakota decided to do that. And a news reporter said to Senator Dole, “Why would you do this?” And he said “Food, farmers agriculture, there is a connection isn’t there?” And that connection is every bit as strong as today as it was then. But it’s become… (Jim) A political football? (Barry) Political football, left and right, right wing versus left wing… (Jim) I think you can add nuts to that. Left wing nuts and right wing nuts. (Barry) Yes, yes. And there’s 400 urban districts in the House, U.S. House. There’s 35 rural. Need I say any more? (Jim) Yea. (Barry) You know, who needs who? (Jim) Right. (Barry) And there has to be a reason for urban congressmen to vote for farm bills. (Jim) Right. (Barry) And with food stamps in there, they have no choice. But it has all become part of this idealogical battle and as I’ve said many times, it’s time for a good dose of moderation. The Farm Bill passed in February of ’14. Those programs are in there. And people think, well it’s settled. Well, it’s not settled because food stamps for example is an annual appropriation, requires an annual appropriation. So, when we do the budget every year that’s gonna come back up. And the last thing farmer’s need is to reopen this Farm Bill and have this battle all over again. (Jim) Right. (Barry) It’s tough enough to win it and we did win it. (Jim) OK. Well, hang on here we have to take words from our sponsor here, so folks, we’ll be right back after these words.

(Jim) Welcome back to That’s My Farm, I’m Jim Shroyer. And we have Barry Flinchbaugh still with us here, he didn’t run off after that break. So Barry, let’s talk about the Farm Bill a little bit. What is in the Farm Bill that you really, really like? (Barry) Going back to what we talked
about earlier, I’m very pleased that we kept foods and nutrition programs in there. (Jim) Right. (Barry) Secondly, we’ve continued conservation reserve program. We put in permanent disaster relief for the livestock industry and they’ve just been through several years of drought and we made that retroactive to 2011. We have in there a revenue safety net, it’s called ARC. We also have in there a price loss program and farmer’s have to choose between the two. From certainly a theoretical standpoint it makes more sense to cover revenue than it does just price. (Jim) OK. I heard you say that in the speech a while ago, give me a reason for that? I didn’t take very many economics classes, so give me a little history there. Sorry to interrupt you. (Barry) That’s fine. We’ve had for years, what’s called a target price point. (Jim) Right. (Barry) Every time we pass a new Farm Bill they rename this stuff. So, now it’s called PLC, Price Loss Coverage. But if we have for example, a wide spread drought across the country, farmer’s are in trouble. (Jim) Big hurt. (Barry) And you know, it’s very simple to understand that if you don’t have anything to sell, price is irrelevant. (Jim) Exactly. (Barry) So what happens when you put up a price safety net you have wide spread drought, farmers are in trouble but price will go up. (Jim) So those people on the fringe that didn’t have… that had something to sell, they’re gonna make out like bandits. (Barry) Yea, but the people that suffered the drought, don’t have anything to sell and won’t get a payment because price jumped above the target. (Jim) Right. (Barry) Now you go to the other side, we have record crop across the country, farmer’s have something to sell, they’ll make some money, price will go down because of the record crop, then they’ll get a payment because it’s below target. It’s backwards. (Jim) Right, right. OK. (Barry) So if you do revenue you have price times quantity sold. (Jim) OK. (Barry) That’s much more realistic. (Jim) OK, I buy that. (Barry) It’s pretty simple. (Jim) Oh yea, it is. As an agronomist here I almost understand it. So, sorry I interrupted you, continue on your thoughts on positive things. (Barry) Well, the overall approach is moving us towards, or let me restate that, away from the traditional commodity programs. And more toward risk management programs like crop insurance. (Jim) OK. (Barry) And that’s a step in the right direction. This bill clearly preserves an enhanced crop insurance. And regardless of the situation that a farmer’s in if he knows he has some insurance that even if we have a wide spread drought he’s not gonna go broke, he’s not gonna have a very good year, even with crop insurance, but he will survive that shallow loss that he had. So, I think that would probably be number one on top of all of it is that we’ve started the process of moving away from the government support programs to risk management programs. (Jim) OK. Stay with us. We have to take a break here. Folks stay with us at home. We’ll be right back after these words from our sponsors.

(Jim) Welcome back to That’s My Farm. I’m Jim Shroyer. Barry Flinchbaugh is with us and we’re gonna continue the conversation on the Farm Bill. So, just recently we heard that the President’s administration wants to cut subsidies for crop insurance. How does that play into the Farm Bill and other things that I’m not aware of? (Barry) Well, this is the annual appropriation, the budgetary process. They call it budgetary reconciliation. And the President presents a budget. (Jim) Right. (Barry) It’s dead on arrival on Capitol Hill. And it’s the Congress’ responsibility to come up with a budget. The budget doesn’t require presidential signature; it’s a working document. (Jim) Right. (Barry) Now to appropriate money within that budget that requires the President’s signature. So, there’s a huge difference there. Well, in the President’s budget he not only cut crop insurance from the standpoint of covering administrative costs with the crop insurance companies. That’s usually… if you want to do some cutting on crop insurance they always pay the companies less to operate the program. (Jim) Right. (Barry) But this time he’s cutting the premiums. So a farmer would have to pay a higher percentage of the premium and the government would pay less. And all this is, I would argue, is trading stock, because we’re gonna do a battle over food and nutrition programs again. The new chairman of the House Ag Committee, Conway from Texas is talking about reopening this Farm Bill and taking Food and Nutrition Programs out of the bill. Well, or at least cutting them. So, the administration is gonna say, “Alright you cut food stamps, we’re gonna cut…” (Jim) Subsidies. (Barry) “…subsidies to crop insurance.” And this is gonna be a contest. And we can’t afford that contest. (Jim) Or is it just bargaining chips? (Barry) Traditionally it would be bargaining chips, but we’ve had the Congress and the President for the last six years. It’s been so dysfunctional, they… just neither one will compromise. It’s my way or the highway. The President lays down how he wants it and if he doesn’t get it, he just ignores it basically. And the Congress is always trying to… if Obama says yes, they say no. And the time has arrived now to do some compromise and to work together and kind of lay off at least, don’t try to really deeply cut food stamp programs and nutrition programs. And then the Administration needs to back off on cutting crop insurance programs. (Jim) So, do you think the urban districts are going to allow that to happen? (Barry) Well, no the won’t allow it to happen. They won’t vote for the budget if it cuts food stamps too much. There will be no Democrat votes. (Jim) Right. (Barry) And they’re gonna lose some Republican votes. This is too much of a witch hunt. It’s based on ideology not on a functioning government. If you want to be an ideolog, that’s easy cause you don’t have to think. It’s all there in the document as I said earlier today. (Jim) Uh huh. (Barry) I’ve got a few eyebrows raised when I said that, so facts are facts. (Jim) Barry hang on here, we gotta take a break and folks stay with us, we’ll be
right back after these words.

(Jim) Welcome back to That’s My Farm and we have Barry Flinchbaugh still with us. And Barry, we talked about the positives of the Farm Bill, let’s talk a little bit about the negatives. Some of what people are kind of pulling a hair out and arguing about. (Barry) Well, the big negatives is
that we lost the once popularly known as the direct payment. It’s a… was put in in the ’96 Farm Bill. It’s a direct, decoupled, fixed payment. Farmers can rely on it. They get it regardless of what happens to revenue or price, etc. (Jim) But that goes into what you were talking about a second ago about revenues versus target prices, right? (Barry) Yes, this solves that problem cause the payments fixed and farmers got fixed payments from ’96 until 2013. This Farm Bill ends them. And the reason was it was hard to fight. Because we started debating this Farm Bill three years ago and we had record net farm income at the time. And we had record federal budget deficits. And so the… (Jim) Perfect storm so to speak. (Barry) Perfect storm. Government’s out of money. Or at least they… (Jim) And farmers are doing pretty good for a change. (Barry) Right, so why should we pay ’em? And that battle, we just lost it, which, long run that’s gonna come back to bite us. But it’s gone now. Whether it ever comes back I don’t know. When we knew we were going to lose that, that’s when we kinda put our eggs in the crop insurance basket. So, alright we’ll do it without the direct payment, but we’ve gotta have some insurance. And so, yea we lost the battle, but we did get the replacement is workable. So, there’s not a lot of negative. I would much prefer to just do the revenue program and not do the price program, it makes more sense. And then they sweetened the pot on the price program to get farmer’s to take it because we get in this battle between North and South. (Jim) Right. (Barry) Cotton and peanuts and rice, versus wheat, feed grain, and oil seeds. And if you go South, they always talk about price, they’re so concerned about price. Prices are high. Farmers are losing their butt cause they don’t have anything to sell. They’re still happy. (Jim) Right. (Barry) Prices are low, they’ve got a bumper crop, they’re gonna make some money. They’re still mad. And you gotta put the two together. And what happened with this Farm Bill is that we couldn’t get enough votes to put the two together and so we put it into revenue programs to please the Midwest in the wheat, feed grains and oil seeds people. We put in a price program to please the South- cotton, rice and peanuts and now we’re saying farmers have to make a choice. And that’s been really tough to do. (Jim) And just today I’e heard numerous farmers say, you know, that’s an issue they haven’t signed up and they don’t know which way to go. (Barry) Yea. (Jim) Hang on. We’ll be right back here. Folks we’ll be right back after these words from our sponsor.

(Jim) Welcome back to That’s My Farm. I’m Jim Shroyer your host. And Barry Flinchbaugh has been here the whole time and gives us his ideas on the Farm Bill and so what have we learned from this Farm Bill? (Barry) Well, the first thing we learned is not to shut the government down. (Jim) OK. That’s one. (Barry) I don’t think that’s gonna happen. Secondly we learned that at least some of us have, that food programs and farm programs go together. I think we’ve clearly learned that. Whether it stays is a matter of some politics. We learned that this division between North and South, between the various commodities is very difficult to solve and so we threw our hand up and said, “Here, take your choice.” We learned that’s it’s very difficult to put a farm program through that urban Congress, when farmers are making money and the government is running a huge deficit. So, that’s taught us that even though we’re dealing with farm policy and farm bills, we should be paying attention to macro economic policy. (Jim) Right, right. (Barry) What the federal reserve system does in terms of interest rates and so forth is very crucial to agriculture. And I think we clearly learned that lesson through this debate. (Jim) Well Barry, I really appreciate you taking time to sit down with us and talking to this agronomist anyway. (Barry) Well get an old wheat farmer and an old policy man together- we’ll solve the problems. (Jim) Thanks again. (Barry) You bet. (Jim) Folks, thanks for being with us. Next Friday, same time, same place. Another issue of That’s My Farm.

Closed Captioning Brought to you by the Kansas Soybean Commission. The Soybean Checkoff, Progress Powered by Kansas Farmers.

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