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Cutting subsidies for farms feasible

Fight expected for long-term bill

- The Washington Times - Thursday, July 14, 2011

For budget hawks, federal farm-subsidy programs have long been a huge but elusive target, but critics say the time might finally be right to reap a harvest of savings by cutting payments to farmers as lawmakers gear up for a massive fight next year on a new long-term farm bill.

The federal deficit crisis, combined with a new class of House GOP lawmakers who have shown a willingness to attack sacred spending cows throughout the budget, has changed the equation on Capitol Hill.

"It has become impossible to justify these programs," said Rep. Ron Kind, Wisconsin Democrat, "especially right now, with record-high commodity prices."

A study by the antisubsidy Environmental Working Group puts the total payments to farmers from dozens of programs at $260 billion since 1995, and even senior House Republicans such as Majority Leader Eric Cantor of Virginia have cited farm program cuts as a potential area of agreement with the White House.

"This farm bill is going to be one where the budget will dictate policy," predicted National Cotton Council Vice President Gary Adams, according to a report in the Delta Farm Press.

It may sound like a familiar tune. Farm subsidies, many dating back to the Great Depression, have been criticized for years as programs that benefit relatively few farmers but cost taxpayers billions of dollars, paying out in both good and bad crop years. But politically, cutting farm payments has proven an uphill struggle.

The conservative American Enterprise Institute, in a study released Tuesday, says the government could save $100 billion over 10 years without affecting the nation's food supply or the viability of U.S. agriculture. The study also criticizes the direct-payments program, a per-acre payment given to farmers and landowners that costs taxpayers $5 billion a year.

"In the current fiscal environment, spending substantial federal funds on farm programs that have no real economic or equity justification is highly problematic," the AEI report says.

Barry Goodwin, one of the study's authors, attacked a number of arguments used to defend farm payments, contending that farms do well as businesses and the rate of farm failures is "very, very low."

"Farm households tend to be much wealthier than nonfarm households by a considerable amount. And this has been shown over and over again," Mr. Goodwin said.

The building debate of the next farm bill, which must be passed in 2012, is far from Congress' first attempt to strip subsidies. Republicans in the mid-1990s launched an ambitious drive to wean farmers from guaranteed crop subsidies and other federal programs, with very limited success.

"We tried to move away from farm programs in the mid-'90s, and people were willing to sign on to that since the commodity prices of farm products were pretty good," said Bruce Jones, an agricultural economist at the University of Wisconsin. "Reversal of market conditions led to the price of grains falling, and then farmers started hurting."

The new study calls for eliminating direct payments and subsidies for crop insurance and disaster aid, a slashing of programs that troubles powerful agricultural lobbies. Mary Kay Thatcher, a spokeswoman for the American Farm Bureau Federation, said lawmakers should not be misled by the current strength of the agricultural economy into thinking it's time for subsidy cuts.

"When prices go up, they always go back down," Ms. Thatcher said. "The reason we write a farm bill is for the bad years."

Ms. Thatcher added that although most farmers would not feel an immediate hit from losing subsidies, that would change as food prices and markets fluctuate.

Gary Sipiorski, an agricultural economist at Vita Plus, a Wisconsin-based firm that works with livestock and agricultural producers, said that although subsidies were only 1 percent to 5 percent of most farms' gross income per year, they can be significant during times of need.

But Mr. Kind said the push to reduce federal farm subsidies is "long overdue,"

"I couldn't think of a better time [to] focus on this for budget savings." he said. "So I hope we don't let this moment pass."

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