Grassley: Farm Losses Likely to Trigger Subsidies, Hit Renters Hardest

Oct 6, 2015

Many farmers are going to lose money on this year's huge harvest because prices are lower than they have been.

Farm bill subsidy programs, which kick in when the average national price of a commodity drops below a certain price, will almost certainly be triggered this year for corn and soybeans. But it is not yet clear the extent to which those programs will help.

"It's going to help, but it's still not going to get the help above the cost of production," says Iowa Republican Senator Chuck Grassley. 

That means farmers will lose less than they would without the support, but many likely will not turn a profit this season. Exact payment amounts won't be known for some months.

But Grassley says while the farm economy may suffer some, the situation is far from the devastating conditions during the 1980s. Today, the majority of farmland is owned outright, in stark contrast to the 1980s, when heavy debt loads made farmers much more vulnerable to losing their land.

Grassley says today's low commodity prices will hit hardest the farmers who rent land, even though the cash rent rate is dropping.

"It's gone down a little bit last year to this year," Grassley says, "and it'll probably go down more next year. But will it go down enough? The market's going to determine that. And each individual farmer is going to determine whether or not he can afford cash rent."

Some farmers are already be re-thinking their renting plans for next year.