A recent projection by the U.S. Department of Agriculture indicates that American farmers are on track to reap record profits this year in the midst of the worst drought in recent history. This prediction is raising questions about the necessity of government aid and the efficacy of federal farm spending.

For the past several months, farmers across the country have been in the grip of one of the worst droughts in nearly fifty years. Farmers from California to Ohio have seen record high temperatures and record low precipitation. The extreme drought conditions (which have struck more than one-third of the country) have withered crops and crippled production.

However, recent USDA predictions show an aggregate farm profit of $122 billion, up 3.7 percent from last year. The increased profits are largely driven by higher prices (due to plummeting supply) and support from federal crop insurance programs that are helping to absorb the worst of the drought related losses.

Some environmental watchdog groups argue that these profits are evidence of the need for major subsidy reform. According to the head of the Environmental Working Group, “It’s compelling evidence that what started out as a basic safety net has become a program that is essentially guaranteeing business income.”

Many farmers, however, are quick to point out that these aggregate numbers do not show the entire story. Livestock farmers, for example, who are not covered by crop insurance programs, are looking at months, if not years, of hardship because of the ongoing drought. Others have also pointed out that corn profits (largely driven by continued demand for ethanol production) are driving up aggregates and painting a rosier picture than the reality on the ground.

To learn more about agricultural financing opportunities contact a Farm Plus Financial representative by calling 866-929-5585 or by visiting www.farmloans.com.

Follow us on: Twitter

Written by: Justin Ellison / Farm Plus Staff Writer