FARM BILL PROJECT, Day 1, main bar: Farm bill renewal calls for compromise
President Bush and U.S. Sen. Dick Durbin rarely agree on anything.
The Heritage Foundation, a conservative think tank, is often at odds with Oxfam America, a Quaker-founded group dedicated to ending social injustice.
But farm-bill politics make strange bedfellows. Each one of these groups and politicians favors overhauling a subsidy program that has given farmers nearly $165 billion between 1995 and 2005, including $12.4 billion in Illinois, which ranked third among states in subsidy dollars received.
"I think what's fascinating is that virtually every organization that doesn't have a personal financial interest in farm subsidies seems to oppose them," said Brian Riedl, a budget analyst with the Heritage Foundation.
"Farm subsidies seem to harm everyone except the large agribusinesses that get the checks. It's amazing that farm subsidies are so difficult to reform.
"We can't win."
Critics of the current system had cause for hope as the House neared a July vote on renewing the farm bill, which is set to expire on Sept. 30 and is likely to be extended until the House and Senate reach a compromise. Calls for change were coming from a broader range of interest groups than ever before, critics boasted.
Free trade advocates say subsidies have depressed the price of crops worldwide, making it tough for Third World farmers to survive.
Closer to home, physician groups blame the government for an epidemic of obesity fueled by corn syrup and starchy food that's cheaper than it should be thanks to subsidies that encourage overproduction.
Environmentalists say subsidies have created a dog-eat-dog world of agriculture reliant on pesticides and herbicides that can cause environmental damage. Fiscal conservatives say subsidies amount to welfare for the rich, an argument supported by the fact that the average farm household income is well above the national average and has risen steadily over the past five years. This year, the average U.S. farm household income is nearly $87,000, according to the United States Department of Agriculture.
Even farmers complain about subsidies, pointing out that the bulk of money goes to a relatively small number of large farms that operate on narrow profit margins, making it tough for small and mid-sized operations to compete.
The House disappointed critics, refusing to enact limits on payments to farmers while extending existing subsidy programs and, in some cases, raising the amount farmers can collect. The bill that passed the House in July would cost $4 billion more than the existing program, and the added money would come from a tax increase on subsidies of foreign companies doing business in the United States.
Farmers are divided.
The American Farm Bureau Federation, which boasts that it wrote the first farm bill nearly 75 years ago, issued a statement praising the House bill, calling it "skillfully crafted" and "a new benchmark for reform."
Such praise leaves folks like Riedl scratching their heads.
"Why small farmers continue to defend these programs is a mystery to me," Riedl said. "Lawmakers perpetuate this myth that they're helping small, struggling family farmers who are one storm away from bankruptcy. That is an absolute, outdated myth."
The Center For Rural Affairs, a Nebraska-based think tank that also provides advice and loans to rural business owners, blasts the House bill, saying it will help large corporate farms at the expense of smaller competitors.
Strict payment limits are the most critically needed reform, said Chuck Hassebrook, executive director of the Center For Rural Affairs. But the House bill not only doesn't set limits, it increases the amount farmers can collect.
For example, farmers today are allowed to collect up to $40,000 in direct payments that the government distributes based on how many acres of farmland recipients own. The House bill increases that limit to $60,000 and allows spouses to collect an additional $60,000. A $75,000 limit on how much farmers can collect in loan deficiency payments (which are based on crop prices) was eliminated entirely, but that change isn't as significant as it might sound because there are already loopholes that allow farmers to bypass those limits.
"I expected payment limitations would have to come from the Senate side, but I never thought the House would have the audacity to raise the payment limitations for mega-farms, which is what it has done," Hassebrook said.
The practical effect of the existing subsidy program and the House bill is ever-increasing concentration of farmland into the hands of a few wealthy farmers, according to critics who point out that there's a built-in incentive to amass land because a potential subsidy is attached to every acre. That prompts land prices to rise, forcing small farmers out of the market.
"In our view, we have a farm policy today that is basically financing the destruction of family farming," Hassebrook said. "We think a farm program that does that isn't worth having.
"There's a legitimate role for government to play in protecting family-sized farms from falling commodity prices. There's a lot of research that says rural communities are stronger when you maintain a base of owner-operated farms. It does not serve any public purpose for the federal government to say one guy can farm the entire country."
The National Corn Growers Association hasn't condemned the House plan, but it has endorsed a proposal by Sen. Dick Durbin, D-Ill., to replace price supports with a program based on yields.
Under a revenue-based plan, farmers could get paid even if prices are high. It would work something like this: Prior to planting, farmers would predict how much money to expect at harvest based on how much corn or other crop their land has historically produced and how much crops are fetching on the futures market. Based on projections, they would decide what crops to plant.
If they made at least 90 percent of revenue projections, they would get nothing from the government. If they earned less, the government would make up the difference so that they ended up with 90 percent of projections. So, if prices were low in the fall but the harvest was exceptionally bountiful, they could end up with no government money. Conversely, if prices were high but the harvest meager, the government could pay out. Backers of a revenue-based approach say it would provide a more secure safety net that wouldn't cost taxpayers any more than they're paying now.
Durbin also has said he supports a ban on subsidies to anyone making more than $250,000 a year. The House bill sets the threshold at $1 million. The Bush administration, which has threatened a veto if the House bill survives the Senate, is calling for a $200,000 limit.
Hassebrook said a means test might be workable if done properly, but strict payment limits on existing programs are preferable. Wealthy owners of farmland could bypass a means test by cash-renting their land and factoring expected subsidies into what they charge tenants, he said.
Despite the House bill, Hassebrook and other reformers haven't given up hope.
"It's not a lost cause at all," Hassebrook said. "I think there are very good prospects that the Senate will produce a meaningful bill."
Bruce Rushton can be reached at 217-788-1542 or email@example.com.