$1.3 billion crop subsidies shelled out to nonfarmers
$1.3 billion crop subsidies shelled out to nonfarmers
Dan Morgan, Gilbert M. Gaul, Sarah Cohen, Washington Post
Sunday, July 2, 2006
(07-02) 04:00 PDT El Campo, Texas -- Even though Donald Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.
Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.
Matthews is not alone. Nationwide, the government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by the Washington Post.
Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.
"I don't agree with the government's policy," said Matthews, who wanted to give the money back but was told it would just go to other landowners. "They give all of this money to landowners who don't even farm while real farmers can't afford to get started. It's wrong."
The checks to Matthews and other landowners were intended 10 years ago as a first step toward eventually eliminating costly, decades-old farm subsidies. Instead, the payments have grown into an even larger subsidy that benefits millionaire landowners, foreign speculators and absentee landlords, as well as farmers.
Most of the money goes to real farmers who grow crops on their land, but they are under no obligation to grow the crop being subsidized. They can switch to a different crop or raise cattle or even grow a stand of timber -- and still get the government payments. The cash comes with so few restrictions that subdivision developers who buy farmland advertise that homeowners can collect farm subsidies on their new backyards.
The payments now account for nearly half of the nation's expanding agricultural subsidy system, a complex web that has little basis in fairness or efficiency. What began in the 1930s as a limited safety net for working farmers has swollen into a far-flung infrastructure of entitlements that has cost $172 billion over the past decade. In 2005, when pretax farm profits were at a near-record $72 billion, the federal government handed out more than $25 billion in aid, almost 50 percent more than the amount it pays to families receiving welfare.
The system pays farmers a subsidy to protect against low prices even when they sell their crops at higher prices. It makes "emergency disaster payments" for crops that fail even as it provides subsidized insurance to protect against those failures.
And it pays people such as Matthews for merely owning land that was once farmed.
"We're simply administering it the way Congress established," said John Johnson, a top official at the Agriculture Department.
The program that pays Matthews was the central feature of a landmark 1996 farm law that was meant to be a break with the farm handouts of the past. When the Republicans took control of Congress in 1995, they brought a new free-market philosophy toward farm policy. In a break with 60 years of farm protections, they promoted the idea that farmers should be allowed to grow crops without restrictions, standing or falling on their own. The result was the 1996 bill, which the Republicans called Freedom to Farm.
The idea was to finally remove government limits on planting and phase out subsidies. But GOP leaders had to make a trade-off to get the votes: They offered farmers annual fixed cash payments as a way of weaning them off subsidies.
That sweetener was needed to win over wheat-state Democrats -- led by then-Senate Minority Leader Tom Daschle, D-S.D. -- and GOP House members from rice and cotton districts.
The new payments were calculated on a farm's "base acres," or production dating back to 1981. For example, if a farmer had planted 400 acres of rice, he was entitled to a check for about $100 an acre, or $40,000, every year. The amount per acre varied depending on past production.
The payments were unrestricted -- farmers got them whether or not they grew any crops, or whether prices were high or low.
Supporters said these annual payments gave farmers the flexibility to switch from one crop to another as market conditions changed, or even to sit it out in a year of low prices. In addition, the payments fit with international trade rules that frown on traditional price supports.
The annual payments were dubbed "transitional" and were supposed to decline over seven years. Many lawmakers assumed they would eventually end. But instead of cutting, Congress ended up expanding the program, now known as direct and countercyclical payments.
Efforts to overhaul the farm subsidy network have been repeatedly thwarted by powerful farm-state lawmakers in Congress allied with agricultural interests.
"The strength of the farm lobby in this town is really unbelievable," said former House Majority Leader Richard Armey, R-Texas, who led an unsuccessful fight in the 1990s to trim the subsidies. "I don't think there's a smaller group of constituents that has a bigger influence."
Page A - 3
©2006 San Francisco Chronicle
Dan Morgan, Gilbert M. Gaul, Sarah Cohen, Washington Post
Sunday, July 2, 2006
(07-02) 04:00 PDT El Campo, Texas -- Even though Donald Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.
Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.
Matthews is not alone. Nationwide, the government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by the Washington Post.
Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.
"I don't agree with the government's policy," said Matthews, who wanted to give the money back but was told it would just go to other landowners. "They give all of this money to landowners who don't even farm while real farmers can't afford to get started. It's wrong."
The checks to Matthews and other landowners were intended 10 years ago as a first step toward eventually eliminating costly, decades-old farm subsidies. Instead, the payments have grown into an even larger subsidy that benefits millionaire landowners, foreign speculators and absentee landlords, as well as farmers.
Most of the money goes to real farmers who grow crops on their land, but they are under no obligation to grow the crop being subsidized. They can switch to a different crop or raise cattle or even grow a stand of timber -- and still get the government payments. The cash comes with so few restrictions that subdivision developers who buy farmland advertise that homeowners can collect farm subsidies on their new backyards.
The payments now account for nearly half of the nation's expanding agricultural subsidy system, a complex web that has little basis in fairness or efficiency. What began in the 1930s as a limited safety net for working farmers has swollen into a far-flung infrastructure of entitlements that has cost $172 billion over the past decade. In 2005, when pretax farm profits were at a near-record $72 billion, the federal government handed out more than $25 billion in aid, almost 50 percent more than the amount it pays to families receiving welfare.
The system pays farmers a subsidy to protect against low prices even when they sell their crops at higher prices. It makes "emergency disaster payments" for crops that fail even as it provides subsidized insurance to protect against those failures.
And it pays people such as Matthews for merely owning land that was once farmed.
"We're simply administering it the way Congress established," said John Johnson, a top official at the Agriculture Department.
The program that pays Matthews was the central feature of a landmark 1996 farm law that was meant to be a break with the farm handouts of the past. When the Republicans took control of Congress in 1995, they brought a new free-market philosophy toward farm policy. In a break with 60 years of farm protections, they promoted the idea that farmers should be allowed to grow crops without restrictions, standing or falling on their own. The result was the 1996 bill, which the Republicans called Freedom to Farm.
The idea was to finally remove government limits on planting and phase out subsidies. But GOP leaders had to make a trade-off to get the votes: They offered farmers annual fixed cash payments as a way of weaning them off subsidies.
That sweetener was needed to win over wheat-state Democrats -- led by then-Senate Minority Leader Tom Daschle, D-S.D. -- and GOP House members from rice and cotton districts.
The new payments were calculated on a farm's "base acres," or production dating back to 1981. For example, if a farmer had planted 400 acres of rice, he was entitled to a check for about $100 an acre, or $40,000, every year. The amount per acre varied depending on past production.
The payments were unrestricted -- farmers got them whether or not they grew any crops, or whether prices were high or low.
Supporters said these annual payments gave farmers the flexibility to switch from one crop to another as market conditions changed, or even to sit it out in a year of low prices. In addition, the payments fit with international trade rules that frown on traditional price supports.
The annual payments were dubbed "transitional" and were supposed to decline over seven years. Many lawmakers assumed they would eventually end. But instead of cutting, Congress ended up expanding the program, now known as direct and countercyclical payments.
Efforts to overhaul the farm subsidy network have been repeatedly thwarted by powerful farm-state lawmakers in Congress allied with agricultural interests.
"The strength of the farm lobby in this town is really unbelievable," said former House Majority Leader Richard Armey, R-Texas, who led an unsuccessful fight in the 1990s to trim the subsidies. "I don't think there's a smaller group of constituents that has a bigger influence."
Page A - 3
©2006 San Francisco Chronicle
posted by Walking Contradiction at 7/06/2006 09:40:00 AM
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