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Subsidizing Hunger On Borrowed Cash

Lagan Sebert - 12/21/2007

A window of opportunity for farm-subsidy reform is closing after the Senate approved a new $286 billion farm bill passed on Friday. The bill’s innocuous name belies a wide-reaching American policy. The farm bill continues to be touted as a safety net for American farmers, but the word farm isn’t even in the bill's official title this year-- The Food and Energy Security Act of 2007. An odd coalition of critics ranging from President Bush to environmental groups have charged that the Senate failed to significantly reform a subsidy system, which continues to subsidize large-scale farmers already making record profits and wealthy city-slickers cashing in on vast land ownership.

Bush has threatened to veto the bill as well as the House’s similar version calling them too expensive. Environmental, health, human rights, and sustainable farming groups condemn the bill for perpetuating a farm-subsidy system that favors large-scale producers of a few crops.

The new bill expands spending on biofuels, food stamps, conservation efforts, and grain subsidies. But Charlie Moore from international poverty organization Oxfam said there is “zero” significant reform in the bill. He said the new farm bill continues to benefit corporate farms at the expense of U.S. taxpayers and small farmers in the United States and around the globe. Agricultural Secretary Chuck Conner called the bill “disappointing”� in a news conference and suggested money promised for nutrition programs under the Senate’s bill comes from “budget gimmicks” that could leave the programs under-funded over time.

“It is important for farmers out there to know that unless there is a substantial change made to this bill, we are indeed no closer to a good farm bill than we were before this Senate passed this bill,” said Conner.

Former Texas congressman and current agricultural policy annalist Charles W. Stenholm was among many who had pushed for a signed bill before 2008, saying farmers needed time to make planting decisions and work out financing with their bankers before Spring. He said he was elated at the outcome of the Senate’s bill, and despite a veto threat, is confident the president will sign a final version before spring.

“There was not a lot of change, but there was the beginning of an evolution. There were those who wanted revolution. Those that wanted revolution lost the battle, but not necessarily the war,”� said Stenholm.

In an attempt to pass a bill before the end of session, Senate leadership required a 60-vote margin for passage of key reform amendments, leading to the defeat of two majority-supported amendments to significantly limit federal farm-subsidy payments. The amendments would have closed loopholes that allow some individuals to receive more than a million dollars a year through agribusiness ownership and partnerships, and redefined eligible farmers to exclude the likes of David Letterman, Scottie Pippen, and David Rockefeller Sr., all of whom received thousands of taxpayer dollars from farm-subsidy payments as recent as 2006. Senator Chuck Grassley, R-Iowa, who authored one of the failed subsidy amendments, said in a statement, while the bill does put some limits on subsidy payments to the richest of the rich it left loopholes “that anybody could drive a tractor through.”

Congress will now have to address the president’s veto threat in committee negotiations. Prices for many subsidized crops, such as corn, wheat, and rice are at all-time highs. A recent report by The Economist predicts these rises in price are an outcome of a permanent increase in food demand around the world created by population growth, development of Asian economies, and the growing biofuels industry.

Despite a booming market, U.S. commodity-crop growers received $21 billion in subsidy payments in 2006 according to USDA data, but the massive spending goes to less than one-third of U.S. farmers. Over the last 11 years the top ten percent of subsidy recipients collected over $120 billion, about three fourths of all subsidy payments. Some individuals received over $1 million of government subsidies in a single year on top of record crops. Many of the largest recipients of farm subsidies live in metropolitan centers nowhere near the land they receive benefits from. Probably not the disadvantaged working-class population Franklin D. Roosevelt had in mind when he initiated the depression-era program as part of his New Deal reforms.

One of the most controversial elements of the Senate’s farm bill is the continuation of annual direct-payment checks given to growers of booming commodity crops regardless of need. About $26 billion has been paid out to farmers since the last farm bill in 2002, and this level of payment stands to remain about the same under the Senate’s bill.

Stenholm said direct payments are a way to protect farmers without affecting the marketplace. Between 2003 and 2005 Stenholm himself received $168,627 in agricultural subsidies and direct payments for farmland he owns in Texas according to the Environmental Working Group.

“They (direct payments) are hard to justify with the current prices, however people assume that prices will stay this high when they could drop easily,” said Stenholm.

USDA estimates 2007 U.S. farm revenue will increase by almost $30 billion from last year, but a majority of the profits are going to large-scale subsidized commodity growers who benefit from a weakening dollar by exporting commodities overseas.

Sen. Richard Lugar, R-Ind., also a farmer, said the current U.S. subsidy policy violates World Trade Organization agreements.

“Failure to move toward compliance will undoubtedly invite retaliatory tariffs that legally can be directed at any U.S. industry,” Lugar wrote in a letter to Senate colleagues. Already Russia and Venezuela have started to impose price controls on U.S. commodities to keep food prices down and protect local growers.

While tobacco farmers have received over $500 million dollars in subsidies over the last ten years, fruit and vegetable growers are again excluded from the subsidy programs, though the new bill does increase spending on research and marketing for “specialty crops�.” Marks, a fruit and vegetable farmer in Northern Indiana said not only does he not get subsidies; he can’t even get farm insurance or government disaster aid.

“For fresh-market farmers the yields are not usually high enough to be eligible for insurance. It’s not an easy living for small farmers. Depending on the weather you don’t know if you are going to be able to pay the bills,” said Marks.

Marks said he stays afloat by selling directly to the local Northern Indiana community he lives in, and stays competitive by offering higher quality produce. He said it’s rewarding but also risky. Marks said others who try to do what he does often fail because there is a sharp learning curve and no safety net.

Marks and others such as Jeff Schahczenski, president of Western Sustainable Agriculture Working Group, said the farm bill actually hurts small farmers. Marks said since big farmers benefit more than the small farmers from the subsidy system they end up buying out smaller farmers who can’t compete, especially when food-prices are driven down and land-prices are driven up.

“At least in Eastern Montana, the general outcome has been overproduction of these commodities, which drives out the family farm. It has been devastating. It destroys communities. There needs to be a new plan,”� said Schahczenski.

Public health expert James Tillotson said farm bill’s historical emphasis on crops such as corn, soybeans, and sugar beet helped make fatty processed foods the basis of the U.S. diet and contributed to the obesity epidemic in the United States. He said farmers must be protected but the agricultural system must take health issues into account and also “decrease water usage, environmental damage, and the drain on public coffers.”

Many environmental groups are especially fearful of the push for more corn acreage from the subsidization of corn ethanol. Gerald W. Winegrad, an environmental policy expert from University of Maryland said in 2007 over 180,000 acres of land were converted to corn fields for ethanol production in the Chesapeake Bay watershed. He said harmful nitrogen runoff into the bay from the increased corn acreage is canceling out water-restoration efforts and leading to a situation where the blue crab population is on the precipice of a biological collapse from all of the bay grasses disappearing. A similar phenomenon is occurring on a larger scale at the mouth of the Mississippi River.

Even Ron Lamberty, the Vice President for the American Coalition for Ethanol admits there is a limit to how much corn ethanol can be produced before it starts to impact other things in the economy.

“A certain amount of fertilizer gets into the water it decreases the amount of oxygen in the water, the fish and other animals that live under the water move out for a while when they don’t have any oxygen, and after the situation corrects itself they come back, and the concern has been that each year this occurrence seems to have been getting bigger. There are legitimate concerns and corn growers and livestock producers are working with those concerns,” said Lamberty.

Aimee Witteman from the Sustainable Agriculture Coalition said a more responsible farm bill would do more to reward farmers for sustainable and environmentally friendly practices rather than rewarding massive commodity production by industrial farms. Witteman said when you shorten the supply chain and, like Tom Marks, have personal relationships with the people you feed, everybody understands better what they are getting into.

Lugar cosponsored one of the failed amendments with Sen. Frank Lautenberg, D-N.J., which would have replaced crop subsidies with free insurance for all farmers regardless of what they grow or how big they are, and sharply boosted spending on environmental and nutrition programs. According to Lugar, his bill would have saved billions in farm payments, while broadening the agricultural safety net in a time when most farmers receiving benefits don’t need them.

But with less than a month left before the Iowa primary, political will to challenge the powerful farm lobby seemed scant. Neither party wants to risk being seen as the enemy of rural America, even if voting to end the current farm-subsidy system might be in the best interest of most farmers.

Instead, large agribusinesses producing low-priced commodities look poised to continue undercutting subsistence growers around the world and buying out American family farms at home, all with the help of taxpayer money

Ron Lamberty is Vice President / Market Development for the American Coalition for Ethanol -- (605) 334-3381

Gerald W. Winegrad- Adjunct Professor of Pubic Policy at Univeristy of Maryland and former Maryland State Senator from 1983 to 1995. -- 410-280-8956 --

gwwabc@comcast.net

Charles W. Stenholm- Senior Policy Advisor- Olsson, Frank, Weeda, Terman, Bode, Matz, PC

The nation’s premier FDA, USDA, and health care law firm, serving clients before federal agencies, courts, and Congress

phone -- (202) 518-6334

Jeff Schahczenski - 800-346-9140 - Executive Director of both the Big Hole River Foundation and Western Sustainable Agriculture Working Group (WSAWG)

Aimee Witteman- Sustainable Agricultural Coalition, Policy Analyst awitteman@sustainableagriculturecoalition.org

Tom Marks – Marks Farm - (219) 873-0624

Professor James Tillotson – Public Health - Tufts University - 781-383-6608

Charlie Moore- Oxfam- Legislative Director-- (202) 496-1177 cmoore@oxfamamerica.org.