Veach: Direct Payment Loss Could Zap $244 Million From Arkansas Economy

In Washington, D.C., regulators, lawmakers and vested stakeholders are hoping to craft a new federal farm bill, but Randy Veach, president of the Arkansas Farm Bureau — the state’s largest agricultural advocate — says he has concerns that major changes could negatively impact Arkansas farmers.

“Not only are we looking at some carryover from this last year, but we’re also looking at a new farm bill and it could take away the safety net we’re used to,” Veach said in a Talk Business interview last week.

His comments refer to last year’s devastating floods and droughts — the worst in years — that destroyed critical farmland and left many of the state’s farmers reeling. More than a billion dollars worth of damage were inflicted by heavy rains last spring, while a summer heat wave pounded farmers with another extreme.

While insurance and federal disaster relief helped to a degree, many Arkansas farmers have not been made whole and many went out of business. Now, farmers may face new challenges as Congress considers a new farm bill.

Discussions are underway right now, and Veach is worried that a sacred cow of the agriculture industry — direct payments, especially for row crop farmers which are prevalent in Arkansas — may be on the chopping block.

“Everybody seems to think that the direct payments are gone,” Veach said. He says that for row crop farmers, direct payments help supplement insurance and provide protection from natural disasters and unforseen outcomes. He also says the economic impact of losing direct payments will have consequences to Arkansas’ workforce and GDP, especially due to Arkansas’ productivity as a national leader in cotton, soybean and rice crops.

“If you take the direct payments away completely, that’s $244 million that goes out of the state of Arkansas’ economy. It goes out of agriculture and it goes out of the economy of the state, which is 1,952 jobs,” he said.

Veach says he hopes new policy safeguards might be able to offset some of the projected economic losses. He’s part of a group working with the U.S. Department of Agriculture and Congress to improve risk management/insurance tools for farmers, marketing loan rates, and higher target prices on crops. Veach contends that this combination of changes could help.

“They could compute out into some price protection. That would come back and give some of that protection we’d lose by losing direct payments,” Veach said.

The subject is likely to get a very public hearing in northeast Arkansas later this month. Rep. Frank Lucas of Oklahoma, chairman of the House Agriculture Committee, will be holding an in-field hearing on the federal Farm Bill in Jonesboro on Friday, March 30th at Arkansas State University.