Subsidies prop up area cotton farmers

Kenneth Keller is eagerly anticipating what 2010 may bring for his cotton crop.

The Dexter, Mo., farmer expects the cotton he'll plant this year will produce about 25 percent more than last year's 1,500 acres. And with a bigger yield, Keller believes he'll come away with a larger profit.

But without millions of dollars in federal farm subsidies, Keller said he and many other farmers in the region may not have the opportunity to produce a crop that is vital to the economy of the counties that make up the Bootheel.

"Cotton, more so than some of the other crops grown here, [is] so important to this region," said Keller, whose operation employs six people. "But with the cotton prices being so low in the past few years, it would be hard to turn a profit without some government program helping us out."

Keller's farm was paid $2,586,312 in cotton subsidies between 1995 and 2006, according to the Environmental Working Group, an environmental advocacy group that has long opposed subsidies. The most recent year for which individual payment records are available is 2006.

Farmers who produce cotton in Southeast Missouri received about $70 million in farm subsidies in 2008. Without that money, farmers and agricultural economists say, there wouldn't be much cotton grown -- and no one feeding cotton to gins or buying six-figure cotton pickers from farm equipment dealers.

According to the National Cotton Council of America, planting cotton in the Bootheel cost about $729.74 per acre in 2008, an increase from $640.05 the year before and $592.77 in 2006. Those costs include taxes, equipment, seed and labor. The council estimates the gross value per acre was about $769.21 in 2008, compared to $647.95 in 2007 and $540.79 the year before. Therefore, the profit per acre was about $40 in 2008 and $8 in 2007. Farmers lost about $52 per acre in 2006.

Michael Milam, an agronomy specialist with the Missouri Extension in Kennett, Mo., said that underscores the important role subsidies play in the survival of farmers.

"The subsidies have kept farmers in business," Milam said. "The help from the government allows the farmers to compete on a level playing field with the rest of the world's cotton producers. If the farmers that produced not only cotton but other crops dropped out because they didn't receive the subsidies, I believe you'd see a domino effect of higher prices passed onto the consumer."

The top 50 cotton-growing counties in the U.S., which are among the country's poorest, have endured economic stress that's essentially the same as the country as a whole. The Associated Press Economic Stress Index is a monthly analysis of the economic stress of those and more than 3,100 counties. The index calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. The higher the number, the greater the economic stress.

The national average county Stress Index score in November was 10.2, up from 5.2 in October 2007, when the Associated Press began tracking economic data for the index. In the top cotton-growing counties, the average stress score increased from 5.9 in October 2007 to 10 in November 2007.

The Bootheel includes four of the top 50 cotton-growing counties: Dunklin, New Madrid, Pemiscot and Stoddard. They all have a per-capita income that's at least 30 percent lower than the U.S. average, according to the U.S. Census Bureau, and are heavily dependent on agriculture.

But New Madrid County, for example, where the average worker makes just more than $14,000 a year, had a Stress Index of 9.9 in November, below the national average of 10.2. Stoddard County, where per-capita income is more than $19,000 a year, had a Stress Index score of 10.2 in November.

Neither came close to the Missouri counties hit hardest by the recession. Washington County had a score of 15.5, and Miller County had a score of 14.1.

While supporters believe the subsidies help keep cotton farmers in business, opponents claim the system gives taxpayer money to farmers, some of whom are considered wealthy.

Given the amount of money invested, there certainly should be some economic benefit for the broader economy, said Ken Cook, president of the Environmental Working Group. But Cook said the subsidies don't produce enough jobs or economic well-being outside of the farmers who receive the payments.

"It's not as if the case they're making [is], 'Give us this help now, and we'll take it from there,'" Cook said. "It's 'We permanently need a subsidy program.' You're still going to get some support, but we just can't be in there for every bushel and every bale."

Dr. Bruce Domazlicky, director of the Center for Economic and Business Research at Southeast Missouri State University, argues it would be more effective to give every Bootheel resident $660, the amount the federal government spends per capita on farm subsidies there each year.

"As an economist, I generally think subsidies are not a particularly good thing," Domazlicky said. "They do encourage farmers to plant more acreage, which of course can further depress market prices and lead to even higher subsidies since the subsidies are determined by the difference between the market price and the target price set by the USDA.

"But at the same time, for a poor region such as the Bootheel, it is hard to ignore the fact that any assistance can give the region a boost, even if it is rather narrowly targeted such as cotton subsidies."

The Associated Press contributed to this report.

bblackwell@semissourian.com

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