Farm boom undercuts push for new subsidy package
A House panel cut subsidies for wealthy farmers Thursday. Will Congress slash even deeper?
from the July 24, 2007 edition
Page 2 of 3
US farm policy has already been tilting toward conservation for two decades. Earlier programs focused on removing marginal land from cultivation. But the last farm bill, passed in 2002, made an unprecedented commitment to farmers who use or wish to adopt environmentally friendly practices on their land.
Conservation programs are popular in farm country, where farmers are applying to carry out projects in far greater numbers than there's money to fund them. Proponents say the programs should be expanded to meet the demand. They also say that the expansion of corn acreage – up 19 percent to 95 million acres, the highest since 1944 – has made conservation more critical than ever. Corn requires massive quantities of fertilizer and other farm chemicals and is blamed for widespread soil degradation and water pollution.
Proponents also point out that "green payments," which are unrelated to production, are permissible under international trade rules. Current crop subsidies have been repeatedly challenged by the World Trade Organization.
In theory, few groups oppose spending more on conservation. But their support often hinges on where the funding will come from. One of the most obvious places is crop payments, which, after food stamps, consume the largest share of farm bill spending, and which many critics say is money wasted.
"A lot of people think that farm programs encourage production, lower food costs, and are saviors of agriculture," says Bruce Babcock, an economist and director of the Center for Agriculture and Rural Development at Iowa State University. "The facts are far different." Mr. Babcock says his research into corn, soybean, and wheat production from 2002 to 2005 suggests that crop payments have little effect on how much farmers grow. Only 43 percent of producers receive farm-program payments, the US Department of Agriculture (USDA) says, and most of them receive less than $10,000 a year.
Others argue that crop subsidies hurt rural communities by driving up land prices, discouraging new farmers, and promoting the consolidation of farms into ever larger operations.
But crop subsidies are popular in farm country, especially among farmers in the corn-producing states of the Midwest, who receive a greater share of farm payments than producers in any other region. In 2005 they received 42 percent of total crop payments and 31 percent of conservation payments, the USDA says. One type of subsidy – direct payments – puts money in farmers' pockets no matter how much they grow or what price their crop fetches. Others pay farmers when prices fall below a certain level. Farmers are loath to give these up, especially the subsidies that tide them over in bad years.
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