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

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"Farmers need a safety net for economics beyond their control," says Tom Buis, president of the National Farmers Union, the country's second-largest farmer organization. "They don't need a safety net in years with high prices."

For the most part, Mr. Gerlt agrees. Between 1996 and 2005, his 1,000-acre operation received corn and soybean subsidies ranging from $16,700 to $87,600 a year. Some of the money came in the form of direct payments that the government paid in years when high prices meant he hardly needed them.

Last year, he also began earning a modest conservation payment – about $20,000 – under a new federal program that rewards farmers and ranchers for using methods that protect the water and soil and encourage wildlife. Gerlt also took advantage of financial incentives to make additional improvements this season, such as planting strips of native grass to attract upland game birds and switching to a less virulent weed killer.

While Gerlt acknowledges that crop subsidies in good years are "hard to understand," he can't imagine giving them up altogether. In years when crop prices fall below what it costs to grow the crop, the math doesn't work out without government help, he says. "I don't know how we can survive without it."

There's no dearth of proposals in Washington. The House Agriculture Committee has assembled a bill that would slightly increase conservation spending but leaves crop subsidies intact. Rep. Ron Kind (D) of Wisconsin champions an alternative that would gradually replace crop subsidies with "risk management accounts" – funds held in a tax-exempt account like an IRA that farmers could draw on during bad years. Other groups favor more modest changes, such as stricter limits on subsidies.

At the moment, the moderate approach seems to be gaining momentum. Farm policy is notoriously difficult to change, in part because of resistance from powerful farm and commodity interests. Democrats, who cling to a narrow majority, will tread carefully for fear of losing seats in farming areas. But reformers say a broader coalition of interests is on their side this year.

"Market conditions are ripe for reform," Mr. Kind says.

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