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Sunday, July 02, 2006

The Freedom to Farm

The "Freedom to Farm" bill is pretty close to a free lunch for some people:

Farm Program Pays $1.3 Billion to People Who Don't Farm, by Dan Morgan, Gilbert M. Gaul and Sarah Cohen, Washington Post: Even though Donald R. 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 federal 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...

Some of them collect hundreds of thousands of dollars without planting a seed. ... 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 back yards.

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 alone, ... the federal government handed out more than $25 billion in aid, almost 50 percent more than the amount it pays to families receiving welfare. [F]arm subsidy programs that have become so all-encompassing and generous that they have taken much of the risk out of farming for the increasingly wealthy individuals who dominate it. ...

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...

"The farm policy we're pursuing now has no rhyme or reason, and we're just sending big checks to big farmers," said Gary Mitchell, now a family farmer in Kansas who was once a top aide to then-Rep. Pat Roberts (R-Kan.), the 1996 bill's House sponsor. "They're living off their welfare checks." ...

Among the most fervent critics of the annual payments are ... farmers who rent land... Under the rules, tenants receive the money if they operate the farms. But landlords can simply increase rents to capture those payments.

Other landlords have evicted the tenants from land they had farmed for years. Then the landowners can collect the checks themselves, even if they do not farm. ... Stephen J. Zapalac, a former Matagorda County rice farmer ... [said] "As soon as they figured they could take the payments, they said, 'I don't need you anymore,' " he said. "They were renting me land for $40 an acre, but they could get $125 an acre from the government." ...

I didn't realize that farm welfare is "50 percent more than the amount [paid] to families receiving welfare."

    Posted by on Sunday, July 2, 2006 at 04:11 AM in Economics, Market Failure, Policy, Politics | Permalink  TrackBack (1)  Comments (26)


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