[Homestead] Farm corporate welfare being cut--not enough but a start
tvoivozd at infionline.net
Sat Feb 5 16:00:50 EST 2005
The New York Times
February 6, 2005
Bush Is Said to Seek Deep Cuts in Farm and Commodity Programs
*By ROBERT PEAR *
WASHINGTON, Feb. 5 - President Bush will seek deep cuts in farm and
commodity programs in his new budget and in a major policy shift will
propose overall limits on subsidy payments to farmers, administration
officials said Saturday.
Such limits would help reduce the federal budget deficit and would
inject market forces into the farm economy, the officials said.
The proposal puts Mr. Bush at odds with some of his most ardent
supporters in the rural South, including cotton and rice growers in
Alabama, Arkansas, Georgia, Louisiana and Mississippi.
The new chairman of the Senate Appropriations Committee, Thad Cochran of
Mississippi, and more than 100 farm groups are gearing up to fight the
White House proposal. The administration's willingness to push the
proposal, despite such protests, suggests how tight the new budget will be.
Most of the subsidies are paid to large farm operators growing cotton
and rice and, to a lesser degree, corn, soybeans and wheat.
Mr. Bush would set a firm overall limit of $250,000 on subsidies that
can now exceed $1 million in some cases.
The proposal comes as the administration is seeking significant changes
in other programs long considered sacrosanct, with the proposed
revamping of Social Security to allow personal investment accounts and a
move to shake up the Civil Service system.
Mr. Bush's farm proposal found support from some people who frequently
criticize his policies.
For example, Kenneth Cook, president of the Environmental Working Group,
a research and advocacy group, said that it would reduce payments to
large agribusiness operations and that the savings would reduce pressure
on Congress to cut conservation programs.
"This proposal is a very big deal," Mr. Cook said. "I am stunned and
impressed. The Bush administration is opening the door to reform on the
most contested issue in agriculture policy today. Taxpayers will no
longer have to subsidize every bushel of grain or bale of cotton. They
will no longer have to subsidize the demise of the family farm."
In the past, when Congress considered limits on payments, Mr. Cook said,
the administration took no position. The Senate approved a $275,000
limit in 2002 but dropped it in negotiations with the House.
Agriculture Department officials said Mr. Bush's proposals would cut
federal payments to farmers by $587 million, or about 5 percent, next
year and would save $5.7 billion in the coming decade. The officials
spoke on condition of anonymity because they did not want to upstage
release of the president's budget, scheduled for Monday.
The budget includes other proposals intended to produce large savings in
farm programs, the officials said, but they refused to give details.
In theory, the maximum payment to a farmer, through multiple entities,
is now $360,000 a year. But Keith J. Collins, chief economist at the
Agriculture Department, said that growers had found many legal ways to
get around the limit and that some growers received several times that
amount. One type of aid, which involves marketing assistance loans, is
not subject to any limit, he said.
In setting a firm overall limit of $250,000, the president's plan would
tighten requirements for the recipients of such payments to be "actively
engaged" in agriculture, and it would generally prevent farmers from
claiming additional payments through multiple entities.
Farm subsidies have been a major issue in global trade talks, as poor
farmers in the developing world demand that the United States and other
wealthy countries cut back subsidies for their domestic producers.
Efforts to cap farm payments have produced odd alliances. Fiscal
conservatives like the Heritage Foundation have joined some
environmental groups and family farmers in the Midwest in supporting
stricter limits. Opponents include the American Farm Bureau Federation.
the nation's largest farm organization, as well as many commodity groups
and politicians of both parties from rice and cotton states.
Mr. Cochran, the former chairman of the Senate Agriculture Committee,
said he would "work as hard as I can to oppose any changes" in current
payments limits, set by Congress three years ago.
Speaking this week to the National Cotton Council, a trade group, Mr.
Cochran said he knew that some people wanted to reduce farm program
"We always know there is a threat to lower levels of payments to
producers from some in the Congress," he said. But, he added, the
payments are economically important to rural communities, and "the risk
caused by changing payment limits far outweighs the benefits."
In a letter to Mike Johanns, the new secretary of agriculture, a
coalition of more than 100 farm groups said they too would resist such
"With prices for many major commodities falling sharply from last year,
reductions to farm programs would come at precisely the time that these
supports are most needed in rural America," the coalition said.
The White House proposal is a vindication of sorts for Senator Charles
E. Grassley, Republican of Iowa, who has advocated "reasonable payment
limits" for three decades.
"When 10 percent of the nation's farmers receive 60 percent of the
payments, it erodes public confidence in federal farm programs," said
Mr. Grassley, who describes himself as the only family farmer in the
Senate. "Unlimited farm payments have placed upward pressure on land
prices and contributed to overproduction and lower commodity prices,
driving many family farmers off the farm."
Mr. Collins, the Agriculture Department economist, said, "When the
government subsidizes every bushel and every acre, it encourages large
farm operations to grow larger."
Subsidy payments take several forms and are computed according to
complex formulas that take account of "base acres," "target prices" and
other factors. In some cases, the government makes direct payments to
farmers. In others, it lends money to farmers and assures them, in
effect, that they can receive more than the market price for their
crops, if that price declines.
In a report last year, the Government Accountability Office, an
investigative arm of Congress, said farmers used many "schemes or
devices" to circumvent existing payment limits. Under federal law,
payments are supposed to go only to people who are "actively engaged in
farming," but, the report said, many people not involved in farm
operations have received large subsidies.
Moreover, it said, individuals who on their own could receive no more
than $180,000 for a farming operation sometimes set up a partnership
composed of three partners, each of whom receives $180,000 in subsidies,
thus tripling the total amount of payments to the farming operation. A
federal advisory commission, said many of the largest farms had changed
their business structure to "avoid payment limits."
An exhaustive study by the Agriculture Department found that "government
payments increase with farm size and sales," so "payments tend to be
concentrated among the larger farms." In 2001, it said, "59 percent of
government payments went to producers on farms with a net worth of
$600,000 or more." But, it added, about one-third of all farms receive
commodity subsidies, and the "government payments often make a
significant contribution to farm income, regardless of the farm's size."
Senator Blanche Lincoln, Democrat of Arkansas, said payment limits would
be particularly unfair to rice and cotton farmers because production
costs were higher for those crops than for others.
Mrs. Lincoln, the daughter of a rice farmer, said some farmers would
have difficulty surviving under stringent payment limits.
But Brian M. Riedl, an economist at the conservative Heritage
Foundation, said stricter payment limits were needed because farm
subsidies had become "America's largest corporate welfare program."
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