Subsidies offer relief, support to Crossroads agriculturists (database)
Dec. 27, 2011 at 6:27 a.m.
Updated Dec. 28, 2011 at 6:28 a.m.
Recent rains might offer brief relief to those in agriculture, but the longtime drought wreaked havoc on crops, lowering yields, cutting back income and the like.
But farmers don't rely on Mother Nature alone. Some take advantage of subsidy payments to keep them chugging along.
Bill Kubecka is part of M&W Kubecka Farms, a partnership that farms about 5,000 acres in Matagorda, Jackson and Refugio counties. While he said his company fared pretty well throughout the dry conditions, subsidies do their part to help, too.
A farm subsidy database on the Environmental Working Group website shows the company received $4.20 million in subsidies in 2011.
While Kubecka said that money helps, he said it doesn't simply go into producers' pockets. Instead, it is capitalized into farm input.
"The producer or landowner, yes, they're the ones that the money is paid to, but it's not necessarily who gets to keep it," said Kubecka, whose farm produces rice, sorghum, cotton and corn. "It doesn't stay with us long."
Subsidy programs offer a way to stabilize production and prices and help producers compete on the world market, said Rupert Butler, county executive director for the U.S. Department of Agriculture Farm Service Agency.
Two different programs join the mix.
The Direct and Counter-Cyclical Program - the one most Crossroads producers opt for - offers subsidy payments in installments.
Through that program, producers receive one direct payment at a fixed rate, based on past production of small grain commodities. That includes anything storable, such as corn, oats and wheat.
Producers must prove they planted the acreage, which establishes a base, he said. A formula then determines what that producer receives.
The program's counter-cyclical element is based on the world price of the commodity, Butler said.
"If prices fall worldwide, that would trigger a payment," he said. "If someone was to flood the market and drive prices down, that triggers the rate."
The other program is the Average Crop Revenue Election program, based on future production and current prices.
Although producers can choose which program to join, Butler said the Direct and Counter-Cyclical Program makes the most sense for the area.
He stressed that subsidies aren't simply money for doing nothing.
Producers must prove to be good stewards of the land, he said. That includes not drying up wetlands, keeping a watch on wind and water issues and so on.
As for Kubecka, he said the money is an integral part of his company's budgeting process but, at 5 to 6 percent of the total income, it doesn't go as far as it once did.
A majority goes toward rental payments for the land his company leases, he said, explaining rent has doubled through the past decade. It also goes toward seed, fertilizer, equipment and more.
Rising costs also eat into that subsidy income, Kubecka said.
Companies in seed, fertilizer and other industries that support farm input know about such funding and often adjust prices in accordance.
"If something comes to the county that's a windfall for county taxes, everybody wants part of it," he said. "That's just human nature."
All in all, Kubecka said that even though dry conditions meant difficulties for Crossroads agriculture, he's grateful for another industry - Eagle Ford Shale play - doing its part to pump money into the region.
"Even though farming has not been that profitable, we have other things that take up the slack," he said.