BUSH AGRICULTURE PLAN DIVIDES FARM LOBBY

 

Congressional fight over subsidy cuts erupts along geographic rather than party lines

3/7/05

Washington By SARA SCHAEFER MuNoz

 

THE LOWER agricultural subsi­dies President Bush proposed in his budget ha,ve divided the farm lobby and ignited a fight in Congress that has split lawmakers along geographic, rather than party, lines.

The president's budget request, which calls for lower payments to farm­ers, would hit cotton and rice farms in the South and California harder than the Midwest's corn, wheat and soybean farms, which generally receive smaller subsidy checks. Many farmers oppose the cuts, but some small farmers ap­plaud them, saying subsidies drive up land prices.

Intent on paring the federal deficit, Mr. Bush last month sent Congress a budget plan that would cap subsidies to individual fanners at $250,000 a year, about 30% less than the current $360,000 limit. The blueprint includes a 5% across-the board cut for farmers, based on current formulas, said an Agriculture Department spokesman. If enacted, the plan would trim federal spending on agriculture by $587 million for the 2006 fiscal year and by $5.74 billion over the next decade.

A number of agricultural economists say this is the first time in nearly a decade that the White House has put some real muscle into restructuring the farm program. The 2002 Farm Bill spared America's growers hefty cuts in payment limits. "Effectively, the 2002 farm bill didn't have much of a White House stamp on it at all," said Allan W. Gray, an agricultural economist at Purdue University in West Lafayette, Ind. "This is a dramatic turnaround from where they were before."

With the White House behind them, Sens. Charles Grassley (R., Iowa) and Byron Dorgan (D., N.D.) have rolled out legislation setting a $250,000 cap. "The president's support gives a lot of impetus to this that we wouldn't have otherwise had," said Mr. Grassley, who sits on both the budget and agriculture committees.

But the bill is unlikely to go far if Senate Agriculture Chainman Saxby Cham­bliss has a say about it. The Republican from Georgia-home to a $600 million cotton industry-recently said on the nation. ally syndicated radio program "AgriTalk" that he opposed cutting payments. "[Critics] keep talking about the fact the largest payments go to the largest farmers," Sen. Chambliss said. "They don't ever talk about the fact that the larger farmers also take the largest losses."

 

 

Sen. Chambliss has bipartisan support in the South. Sen. Blanche Lincoln, an Arkansas Democrat and the daughter of an Arkansas lice farmer, says she will fight these cuts all the way." A 2003 Agriculture Department study found that the largest 6% of growers received 30% of federal pay­ments in 2001. Growers of cotton and rice are more likely to hit cur­rent payment lim­its because costly equipment and complex cultivation make those crops more expensive to produce. The Environmental Working Group, a Washington nonprofit that has been critical of farm subsidies, calculated that of the $16.4 billion in subsidies paid in 2003, cotton operations received$2.7 billion and rice operations received. $1.5 billion.

Some small farmers say lowering the payments would bring indirect benefits, such as protection against being gobbled up by large farms. Ferd Hoefner, who represents the Sustainable Agriculture Coalition, a group of organi­zations that includes small and midsize farms and conservation groups that work with them, said farm subsidies have spurred a rise in land prices, making it harder for small and midsize pro­ducers to expand. According to data from the Agriculture Department, subsidies can increase farm land values by15% to 25%, depending on the region, Mr. Hoefner said. Iowa cattle farmer Mark Leonard recently spent several days on Capitol Hill urging lawmakers to vote for the presi­dent's lower cap on subsidies. Mr. Le­onard, who grows corn and soybeans for his cattle on 1,100 acres east of Sioux City, says leasing additional land would cost him $30 to $40 an acre more than the land he uses now. At that price, he says, expansion isn't worth it.

Many supporters of sustainable agriculture back lower subsidy caps. American Farmland Trust, a Washington orga­nization that represents farmers and ranchers interested in environmentally sound farming practices, says limiting money flowing to big farms may be a step toward a subsidy system that re­wards land-conservation efforts by farmers-regardless of size, location or crops.

By proposing lower payment limits, the administration "took on a tough issue and opened the door to reassessing how we spend our dollars," says Jimmy Daukas, the organization's director of communications.

But the National Farmers Union,. a Denver group that represents 250,000 farmers and ranchers, opposes Mr. Bush's plan. It is an about-face from the 2002 Farm-Bill debate, in which the group pushed for subsidy caps as a way to free up funds for other farm spending. This time, however, the National Farmers Union doesn't feel that significant amounts of farm aid should be diverted to help balance the federal budget.

Lower subsidy caps came before Con­gress during debate on the $118 billion Farm Bill, when a measure that would have set the limit at $275,000 passed the Senate but was rejected in the House.

Opposition to lower subsidies is again mounting in the House. In a show of bipar­tisan cooperation, House Agriculture Com­mittee Chairman Bob Goodlatte (R., Va.) and the panel's ranking Democrat, Collin Peterson of Minnesota, recently wrote House Budget Committee Chairman Jim Nussle (R., Iowa), urging him to leave programs in the 2002 Farm Bill alone.

Even constituents of Sens. Grassley and Dorgan reject the limits. The National Corn Growers Association said that reducing payment limits now would disrupt financial arrangements-such as land-leasing pacts-that were predicated on the five-year Farm Bill.

But the subsidy system also is facing international pressure. The World Trade Organization ruled Thursday that U.S. cotton subsidies violate trade rules. Lawmakers said they would review the ruling, but not immediately implement changes.