Corporate Farms Hog Federal Tax
Subsidies

September 9, 2001
New York Times

As House Prepares Farm Bill, Questions of Who Needs Help, and How Much

By ELIZABETH BECKER

WASHINGTON, Sept. 8 < When the House takes up a $171 billion farm bill next
week, lawmakers will be debating two main questions: whether the program is
affordable and whom its subsidies will mainly help.

The bill's sponsors call it essential and urgently needed, especially by
family farmers in distress.

"There are countless numbers of farmers who say this is the only way they
can survive," said Representative Larry Combest, the Texas Republican who
chairs the Agriculture Committee and sponsors the bill.

But others say that a 10-year program of farm aid will only drain the
evaporating budget surplus and that the payments are not helping the
neediest farmers. Instead, they say, the farm subsidy program rewards large
farmers and corporations, who receive most of the money.

Of this country's two million farmers, fewer than one-fourth, or 482,206,
received 84 percent of federal subsidy payments. That is $60.2 billion out
of the total of $71.5 billion from 1996 through 2000, according to data
compiled by the Environmental Working Group, a nonprofit organization
supporting agricultural conservation. The group's analysis is based on
Agriculture Department records.

Because the subsidies are based on how much land farmers own or on the size
of the harvest, the payments inevitably favor the biggest farms. The average
payment for the top 1 percent of recipients was $558,698 over five years;
the average for the bottom 80 percent receiving subsidies was $5,830,
according to the environmental group's analysis.

The new House farm bill not only continues these payments but adds new ones,
such as a $3.5 billion peanut subsidy, reversing the Republican position
during the last debate over farm policy in 1996.

Back then, Speaker Newt Gingrich vowed to return market forces to
agriculture and to wean the industry from what he called "East German
socialist" farm programs.

That effort failed as grain prices dropped in the expanding global
marketplace and producers persuaded Congress to provide "emergency"
payments. The payments quadrupled, to $32.2 billion last year from $7.3
billion in 1995.

Now, in an effort to redirect some of that money to smaller farmers, a group
of House Democrats and moderate Republicans is offering an alternate
ammendment to shift $20 billion of subsidy payments to conservation
programs. That would spread a total of $55 billion for environment and
conservation programs to more farmers in more states.

"So much resources go to so few producers in so few states that there are
family farmers and entire regions that are shut out right now," said
Representative Ron Kind, the Wisconsin Democrat who is sponsoring the
amendment with two Republicans, Representatives Sherwood Boehlert of New
York and Wayne T. Gilchrest of Maryland.

Susan Frazier, who raises soybeans and corn on her farm in Fairmont, Neb.,
said she would welcome a new system. "The last bill allowed the bigger
farmers to capture more of the federal assistance and gave them the economic
power to grow," she said. "They have the money to outbid us all, buying up
land when it's available and renting land at rates we can't afford."

As in most big farm states, Nebraska's largest growers < the top 20 percent
< received nearly 75 percent of the subsidies over the five years ending in
2000. The top 1 percent of the recipients received an average payment of
$486,115 while the bottom 80 percent received $14,515 on average, the
environmental group's data showed.

In a poll this year, the University of Nebraska found widespread discontent
about the disparity in subsidies. The majority of rural Nebraskans surveyed,
those who work on and off farms, favored keeping farm payments but limiting
them to prevent larger farmers from pushing out the smaller family farmers.

"The biggest surprise was that 73 percent of rural Nebraskans, including
farmers, believed there should be real limits put on those subsidies," said
John C. Allen, a sociology professor who conducted the survey this year for
the university's institute of agriculture and natural resources.

Nebraska is not alone. Over the summer several local newspapers printed the
names of the biggest subsidy recipients in their states and lawmakers heard
loud complaints about the size of the subsidies received by the biggest
farmers.

Created more than 70 years ago to keep farmers afloat during the Dust Bowl
days, the subsidies are direct cash payments to farmers who grow a handful
of basic row crops such as wheat, rice, corn and cotton.

Because subsidies are not considered welfare, farmers never have to prove
they need the money.

With the dwindling budget surplus in doubt, Democrats in the Senate and the
House, and a few Republicans, are questioning whether there is enough money
to pay for any farm bill and say next week's debate is premature.

Representative Charles W. Stenholm of Texas, the ranking Democrat on the
Agriculture Commmittee, has declared the bill dead for lack of money though
he is a cosponsor. Senator Kent Conrad, the North Dakota Democrat who chairs
the Senate Budget Committee, worries that the House will try to "shoehorn"
the measure through before other big spending bills are passed.

"This a race to the money, to enact the farm legislation before other bills
have invaded the Medicare trust fund," Mr. Conrad said.

The House Republican leaders disagree. Representative Jim Nussle, the Iowa
Republican who chairs the Budget Committee, said there was more than enough
money to proceed with the legislation. And the Republican leadership has
scheduled the bill for debate next week.

But Senator Tom Harkin of Iowa and Senator Richard G. Lugar of Indiana, the
senior Democrat and Republican on the Agriculture Committee, respectively,
are drafting a farm policy intended to place greater emphasis on
conservation and be more generous to smaller farmers.

The administration has not taken a position in these debates.

Any effort to change farmers' subsidies will face opposition from most of
the farm lobby and agribusinesses. With subsidy payments at a record high,
nearly half of the net farm income in the United States comes from federal
subsidies, according to government figures.

The National Corn Growers Association has argued that payment limits on some
programs should be raised to $150,000 from $75,000 because corn prices are
so low.

Tom Buis, vice president of the National Farmers Union, which represents
smaller farmers, said grain prices were low because these large farmers were
overproducing at the taxpayer's expense.