- The Washington Times - Monday, December 17, 2001

Every five years Congress takes on the role of Santa Claus for America's agribusinesses when it enacts a new farm bill. Thanks to years of congressional generosity, the U.S. farm sector is arguably today the most welfare-dependent industry in America.

Even though farmers have higher average incomes than do nonfarm taxpaying households, since 1980 American farmers have received more than $200 billion in direct taxpayer assistance. That's enough money to buy every acre of farmland in America west of the Mississippi River.

This week the U.S. Senate will vote on a farm bill that would make the honey pot a whole lot sweeter. It would return rural America back to the Soviet-model command-and-control agriculture policy of yesteryear by establishing a vast network of government established price supports for crops. Its $170 billion, 10-year price tag would make this far and away the most expensive farm bill ever. The subsidies average out to roughly $200,000 of welfare payments for every recipient. And this doesn't even include the billions of dollars in emergency taxpayer aid farmers receive nearly every late summer and fall to compensate them for every natural and manmade disaster one can conceive of: floods, droughts, tornadoes, hail, the Asian market meltdown, the strong dollar, European trade restrictions, and so on.

This year the farm lobby is even wrapping its funding request around the flag by suggesting that more generous price supports will help in the war against terrorism.

The 2001 farm bill would re-install the entire infrastructure of a failed price support system that dates back to Franklin D. Roosevelt and the New Deal era.

Sen. Richard Lugar, Indiana Republican, one of the few outspoken critics of the bill, correctly notes that the bill "ignores decades of experience that grain price supports only encourage the overproduction of crops and guarantees soaring taxpayer bail-outs."

It was just five years ago that Republicans in Congress enacted the historic 1996 Freedom to Farm Act, which was intended to phase out crop and dairy subsidies over five to seven years. By now farmers were expected to be weaned off agriculture subsidies altogether and the U.S. Agriculture Department was supposed to be boarding up suddenly obsolete offices.

Things haven't turned out quite as hoped. Federal farm payments haven't fallen every year as scheduled. Instead, they've increased from a low $7.3 billion in 1996 to $22.9 billion last year.

The paradox of modern agriculture is that the more productive U.S. farmers become and they are by far the most efficient in the world the more attached they become to the federal umbilical cord.

In the early 1990s, only about 18 cents of every dollar farmers earned came from government payments.

Over the past three years, 1998-2000, agriculture price supports accounted for 35 cents of every dollar of farm income. Freedom to Farm has become freedom to farm taxpayers.

Farm state legislators on Capitol Hill recite the myth that without federal assistance, tens of thousands of sturdy and reliable family farms would forever disappear from the rural landscape. In fact, the return to a price-control framework where farmers are guaranteed a minimum price for their crops would disproportionately benefit the largest and most profitable farms. This only accelerates farm consolidation and hastens the demise and sell-off of small and medium-sized family farmers.

According to Agriculture Department data, about 80 percent of farm payments went to farmers with gross sales of $250,000 or more. Meanwhile, genuinely struggling marginal farms with incomes of less than $10,000 receive about 1 percent of the federal payments.

The myth that American farmers can't survive under a free market system is contradicted by the fact that of the 300 or so food commodities grown in the U.S. most do not receive subsidies. Almost all the federal payments go the producers of just a handful of staple crops: corn, wheat, soybeans, rice, and cotton. Dairy, peanut, and sugar producers are also well-endowed with federal dollars.

This bill would alas, cast the "farm safety net" even wider than ever: to include Florida citrus and lime growers, Vermont sheep herders, Connecticut oystermen, Midwestern popcorn producers, Idaho potato farmers, California asparagus, avocado, onion, cranberry and wine producers. This year there's even talk of including emergency aid to Virginia horse breeders.

All that is standing in the way of this return to farm bill socialism is Mr. Lugar. His more market-based alternative would eliminate price supports, acreage set-asides and the dairy, peanut and sugar subsidies. Instead, Mr. Lugar would create a system of federal matching funds to farmers with the money going into IRA-type accounts.

The money in these accounts could be used to purchase crop insurance and could be drawn down during bad crop years. This system would protect farmers from wild gyrations in their sales, by guaranteeing them 80 percent of their average income in any year. The Lugar approach would tug the farm system back in the direction of the free market system and would do so at a 10-year cost of $25 billion less than the House bill. No individual farmer would be eligible for more than $30,000 in aid in any given year.

The downside of the bill is that it would make almost all farmers eligible for federal help, and that could create brand new constituencies for these programs.

The optimal farm policy now for American farmers would be for the U.S. to terminate its production subsidies and call for Europe and Asia to do the same. In this time of global economic crisis, the U.S. should pitch a global free trade policy in agriculture as the most humanitarian way to provide cheap and abundant food to every corner of the globe. But we can't in good conscience call for a global system of free market agriculture if we don't practice what we preach here at home.

The best way to help farmers, taxpayers and consumers is to kill the House bill and start over.

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