- The Washington Times - Friday, December 14, 2001

For years, farm subsidies have been a favorite whipping boy for the national media. And none has been whipped harder or longer than the peanut quota system.

But now, in what I think is one of the more important stories in the current debate over a new farm bill, these agricultural "experts" from New York and Washington have conveniently ignored a sincere effort to finally change this long-standing farm policy they have criticized so widely.

In a place like Washington, where talk of eliminating a program is as rare as spotting a whooping crane, we're now working on eliminating an entrenched, Depression-era program in our nation's $4 billion peanut industry. That should be huge news because it's what many critics of the program have advocated for years.

A little history may be enlightening. Remember FDR's famous line during the Great Depression.?"I see one-third of a nation ill-housed, ill-fed, ill-nourished," he said. He did not exaggerate. It was the South I was born into. And it was the South that gave birth to the peanut quota system for poor farmers in that area.

The quotas were first based on acreage, then poundage and were set annually based on the projected needs of domestic manufacturers. They guaranteed a minimum price for peanuts to the farmers fortunate enough to hold them. Eventually, landowners who held peanut quotas began to rent them out to farmers, and the peanut quota became a valuable commodity in our neck of the woods. It was passed down from generation to generation, bought and sold much like Coca-Cola stock. For some widows and retirees who rented out their quota, it became their family retirement plan, similar to their city cousins' 401K.

Under the program, peanut producers were guaranteed a minimum price, which was above the world market, so it was the manufacturer and, of course, ultimately the consumer, who paid the cost of this program. It is important to note the government's annual cost of running this program has been a pittance compared to other commodity programs.

For decades this system served the South well. It provided economic security to some of our country's poorest areas, while at the same time guaranteeing the domestic market a safe, high-quality source of peanuts.

But all that changed when NAFTA and GATT were passed. These agreements effectively ended the peanut program as we knew it. Trade protections for peanuts were ratcheted down, imports gradually increased, and farmers' quotas reduced. In one fell swoop, the South had over 300,000 tons of quota peanuts taken from them with a value of over $200 million annually. In the 1996 farm bill, Congress had decided to require farmers to cover peanut program losses, making it no-net-cost to the government. This sounded good politically, but it failed to make peanuts more competitive on the world market or quell imports. By maintaining the quota support price, we had more imported peanuts with fewer domestic purchases, and the quota holders were left holding the bag. It was a bill for millions of dollars in losses to the program losses they had to cover on their own.

In this new era of globalization, peanut producers have faced up to this competitive reality, and the vast majority are willing to finally give up a program that they had for 60 years.

They want to be competitive farmers in a world market and they want a program that benefits the farmer not the quota holder. They also want to entice our peanut shelling and manufacturing sectors to stay here in the United States by ensuring them access to lower-priced domestic peanuts. They recognize this can't happen under the current quota system.

The House has taken the first bold step toward eliminating the peanut quota system. Now, the Senate must follow suit. Yes, it will cost money to compensate quota holders for their losses. But before the howls of protest begin, consider the huge economic impact such a change will have on the South's rural areas traditionally the poorest areas of our country. The rents on these peanut quotas total over $250 million per year. It would be unthinkable for the government not to compensate farm families for their property. We need to have a bridge between the old system and the new.

And speaking of bridges, to those who criticize this plan and all farm aid, I ask you: Why is building a bridge in New York applauded as an "investment," while keeping a farm in business in Georgia is denounced as a "subsidy?"


Zell Miller is a Democratic senator from Georgia.

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