TIME: Almanac 1993/TIME Almanac 1993.iso/time/071690/0716105.000

Text File | 1992-08-28 | 5.4 KB | 116 lines

                ■v-#/#                                                        NATION, Page 26

Getting Farmers off the Dole


The budget squeeze forces a hard look at agriculture subsidies

By DAN GOODGAME/WASHINGTON -- With reporting by Dan Cray/Los
Angeles and Hays Gorey/Washington


    Mention farm aid, and most Americans think of the benefit
concerts Willie Nelson throws for debt-plagued family farmers.
In reality, the average full-time farmer boasts a net worth of
$1,016,000 and  annual income of $168,000 -- thanks in large
part to federal handouts.

    These averages are somewhat distorted by the high incomes
and wealth of a few thousand huge growers. But farm-subsidy
payments, which totaled about $20 billion last year, are
equally skewed. Most small farmers receive few if any federal
payments, 40% of which flow to the wealthiest 60,000 at a cost
to the average family of about $500 a year in higher taxes and
federally boosted food prices.

    Few domestic programs have attracted more criticism -- or
a more ferocious defense -- as White House and congressional
negotiators try to assemble a $50 billion package of new taxes
and spending cuts to reduce the federal deficit. A growing
though still small alliance of free-market, suburban
Republicans and big-city Democrats is pushing unprecedented
changes in the 1990 farm bill that comes to the House floor
later this month. The reformers, led by Congressman Dick Armey,
a Texas Republican, and Representative Charles Schumer, a New
York Democrat, would end federal payments to farmers with
adjusted gross incomes of $100,000 or more a year and otherwise
restructure farm programs to save more than $1 billion
annually.

    When U.S. farm programs were devised during the agricultural
collapse of the Great Depresssion in the 1930s, they were
described as "temporary emergency measures." More than a
half-century later, their central goals -- stabilizing farm
production and prices and raising farm income -- remain little
changed, despite a huge surge in farm incomes during the late
1980s. The programs' invulnerability stems in part from
millions of dollars in campaign contributions from wealthy
farmers and the elaborate rationales high-priced farm lobbyists
have concocted for keeping them in place. Among these is the
notion that farm subsidies provide a "safety net" to preserve
the wholesome life-style of the small family farmer, who needs
protection from uncertain weather and rapid drops in commodity
prices. Nonetheless, the number of farms decreased from 2.4
million to 2.2 million between 1980 and 1988.

    Agriculture Secretary Clayton Yeutter argues that in the
heavily subsidized competition for world food sales, the U.S.
must not "disarm unilaterally" by abruptly abandoning
Government farm supports. Yeutter and George Bush are relying
instead on negotiated worldwide reductions in farm subsidies.
The subject is expected to produce much talk -- and little
progress -- at this week's Houston summit of the seven major
industrialized democracies.

    Critics reply that current farm policy hurts exports by
artificially raising prices of American commodities above those
of foreign competitors. In addition, farmers who get reliable
subsidies for crops such as corn have no incentive to shift to
unsubsidized crops such as soybeans, even though they are in
heavy demand overseas.

    Another strong argument for a freer market in agriculture
is that current policy is based on a double standard: only a
relative handful of crops (such as cotton, rice and certain
feed grains) receive direct federal subsidies, while another
handful (including sugar, peanuts, citrus) benefit from
byzantine supply-control arrangements. The vast majority of the
400-plus crops grown in the U.S., from tomatoes to potatoes to
peas, prosper -- or fail -- with little Government aid. For
that reason, many farmers who grow those crops are staunch
opponents of farm payoffs. Says Bill Johnston, whose family
grows melons, peppers and potatoes in California's San Joaquin
Valley: "Farm subsidies are like the welfare system -- they
spoil people."

    Both critics and supporters of current farm policy are
skeptical about Armey's plan for cutting farm aid to the
wealthiest farmers. House Agriculture Committee chairman Kika
de la Garza, a Texas Democrat, points out correctly that
kicking big, wealthy farmers off the dole would end federal
"leverage" over their planting decisions and allow them to
vastly expand their production. As a result, farm prices and
income could be driven down, raising the cost of federal support
for smaller farmers. Industry critic James Bovard, author of
The Farm Fiasco, adds that current limits on farm subsidies
(generally  $50,000 a farm) are widely evaded by big operators,
who divide their spreads into separate legal entities, each of
which often qualifies for aid.

    White House officials, while hungry for farm-spending cuts,
insist that wealthy farmers can be weaned from welfare only by
reforming the whole tangled farm-subsidy system. One promising
idea is to convert the direct-payment programs to a
self-financed insurance system in which profits in good years
would be used to cushion losses in bad years, while keeping
food prices relatively stable. Only through such imaginative
steps can farm policy protect the interests of both producers
and consumers at a price the nation can afford.