DES MOINES, Iowa (AP) — Iowa farmers enjoyed one of their best years in 2008, thanks to soaring corn and soybean prices.
Now, many growers are getting a second shot of cash for that year's crops in the form of federal disaster payments — even if they had minimal revenue losses.
Some farmers are getting as much as $100,000 each. The total statewide, $163 million, is more than twice that of any other state so far. Federal officials say the state's total could top $300 million, which would be twice as much farm disaster aid as Iowa has received in the past 15 years combined.
All of the farmers getting money must have had at least one crop affected by the weather heavy rains in spring 2008 delayed planting and washed out some crops. But experts say that because of quirks in how the payments are calculated, some of the income losses that the disaster aid is supposed to cover existed largely on paper.
The money comes from a program created by the 2008 farm bill and then sweetened by the economic stimulus bill that President Barack Obama pushed through Congress last year.
"You would have to work hard to find a clearer example of the absurd results from our maze of farm subsidy programs than a permanent disaster program that sends out payments during a banner year for farm income like 2008," said Craig Cox, Midwest vice president of the Environmental Working Group, a research and advocacy group.
Julius Schaaf, who farms near Randolph, said flooding hurt his crops. The disaster program "turned out to be a pretty good safety net," he said.
He declined to say how much his yields were hurt or how much in disaster aid he received. But he said he plans to use the cash to upgrade a combine. The money "is going to show up in the economy," he said.
Mark Heckman, who farms near West Liberty in eastern Iowa, was among the disaster-aid recipients, although he wouldn't say how much was paid. He had a 50 percent yield loss on parts of his farm, he said, and plans to use his payment to improve his planter.
Reaction among other farmers is mixed, he said.
Some are glad to see stimulus money going to rural areas, Heckman said. Others say "we weren't expecting this but we'll take it."
Net farm income in 2008 in Iowa, despite the spring flooding, topped $7 billion, a 60 percent increase from 2007. The price of corn peaked at nearly $8 a bushel that July, more than double what it is today. Meanwhile, despite wet weather, the statewide average corn yield was the same in 2008 as it was in 2007.
Depending on when crops were sold, farmers could have received some of the highest prices they had ever seen. Many farmers sell their crops in advance to gain high prices.
Still, farmers can claim the disaster payments so long as the yield on at least one of their crops was down by at least 10 percent in 2008 and they live in one of the 90 Iowa eligible counties. Those counties were either declared a disaster area because of weather damage or they were adjacent to one that was.
The other nine counties are in west and northwest Iowa, and farmers in those counties must have sustained a 50 percent crop loss to qualify.
What doesn't matter is what price farmers may have received on their individual crops, said Chad Hart, an economist at Iowa State University.
Instead, the payments are pegged to what happened to commodity prices nationwide in the course of the year. As it turned out, those prices took a steep dive, causing potential disaster payments to balloon.
The drop in those prices is factored in with the farm's crop yields and insurance coverage to come up with the amount of the disaster payment.
The payments were made even larger by temporary changes Congress made to the program in the 2009 stimulus bill.
About 30 percent of the money Iowa farmers have received so far has been a result of the stimulus bill, according to the Agriculture Department, which informs farmers of how much of their checks is due to the stimulus package. The stimulus bill was funded by increasing the federal deficit.
"There are producers who really took it in the chin for '08," Hart said. "There are others who managed '08 just fine and they're going to receive payments, too."
The Agriculture Department has not released payment amounts for individual farms or counties.
But a map of payments posted on the department website indicates that some of the heaviest payments nationwide are flowing to counties in eastern and northern Iowa and along the Missouri border. A sample farm with 800 acres of corn and 300 acres of soybeans could qualify for a payment of more than $80,000, according to the department.
Kevin McClure, a program specialist in the Agriculture Department's Iowa office, said payments at the $100,000 maximum are not unusual, and the state's total could exceed $300 million once all applications are processed.
The department started taking applications early in the year and has not set a deadline for farmers to make a claim.
Grant Gustafson, a spokesman for Sen. Tom Harkin, D-Ia., who led the Senate Agriculture Committee in 2008 when the program was created, said the payments "have turned out to be larger than we would have predicted."
The program was pushed not only by Harkin but also by two senators from states that have traditionally been more dependent on disaster aid, Kent Conrad, D-N.D., and Max Baucus, D-Mont.
Gustafson said Harkin "recognized that the program had some potential benefits for Iowa farmers, but he did not contrive the program to benefit Iowa farmers more than others."
Sen. Chuck Grassley, R-Ia., said the payments were justified.
"A great deal of Iowa farmland was underwater during prime growing season," he said. "I don't think anyone would argue that the 2008 floods weren't a real disaster for our state."
Some bankers were reluctant to talk about the program, citing its political sensitivity. But Owen Bolte, president of United Bank of Iowa of Ida Grove, which has branches around west- central Iowa, said he liked the program because the linkage to crop insurance encourages farmers to buy the subsidized policies.
"It does provide a needed safety net," he said.
