Pending Farm Bill Rekindles Regional Divisions

It seems like it's North versus South all over again.

But this time the issue is how much money farmers should get from the federal government for production. Lawmakers in some Midwestern and Southern states are worried that an amendment to the 2002 farm bill now wending its way through the U.S. Congress will cripple farmers in their states dependent on federal crop subsidies for survival.

In some Southern states many more acres are in production per farmer than in other states. Opponents of subsidy cuts say this is because per acre yield is much lower and cost of production is much higher on their less fertile farms.

But smaller farm states, which tend to be in the North and Northeast, say this farm bill is more equitable, and helps ensure the survival of small, family-owned farms.

The farm bill passed the U.S. Senate at the end of February complete with an amendment that would cap payments at $275,000 per year. The current legislation technically limits the payments to $460,000, but opponents of the subsidy system claim numerous loopholes make it almost limitless.

The House's version of the farm bill would raise the limit to $550,000 per year and retains many of the loopholes of existing laws.

Small-farm states and environmental groups have supported subsidy-cutting measures, saying that they will save the taxpayers money and bring small farmers into fair competition with large agribusiness.

"It [the subsidy limits] will end up saving more than a billion dollars," said Sarah Feinberg, a spokeswoman for the Environmental Working Group.

But some agricultural economists say that this is not enough.

Bruce Gardner, an agricultural economist at the University of Maryland, said policy crafters have to look harder at the signals they are sending to producers with the subsidy programs.

"What you would really want to do is spread this money across commodities," Gardner said. Too much money is going into the pockets of farmers of traditional commodities such as wheat, he said.

Subsidy payments need to be distributed differently to discourage overproduction, and ranchers and vegetable growers who don't qualify for price supports should see some changes also, he said.

Gardner said farm policy needs to take a "broader risk management approach that gives farmers the options to use federal funds to engage in a variety of approaches" to protect their livelihoods that aren't limited to price supports.

These would include increased conservation and environmental protection payments. Gardner said conservation programs have to be expanded to include problems faced by small farm states such as water quality, and not just the soil erosion problem of the Great Plains states.

The House passed its version of the farm bill last fall, without an amendment that failed by a narrow margin, to shift some subsidy funds to increase conservation and reserve payments.

Lawmakers from states such as Maryland, New York and even agriculture-intensive California say subsidies encourage overproduction and drive down prices for small farmers who don't grow enough to qualify for hefty payments.

Even they caution however that some farmers in their states do receive subsidy payments. Don Vandrey, spokesman for the Maryland Department of Agriculture, said 75 percent of the grain farmland in Maryland is under the subsidy umbrella. But at the same time, these states recognize the need for more money to devote to conservation and to limiting overproduction.

"The limits do have an impact, but the conservation titles [provisions of the bill] are critical to our state's long term goals," Vandrey said.

The White House has also voiced support for subsidy cutting. In his farm policy directive released last fall, President Bush said more money needs to be devoted to conservation funding and nutritional programs instead of subsidies.

But lawmakers from large-farm states -- Republican and Democrat alike -- have blasted this amendment, stopping just short of calling it a death blow to farmers.

But those opposed to subsidy payments say it's only logical that bigger farms get more subsidy money, and this is why farmers in agriculture-intense states such as those in the Midwest and South are often the recipients of much higher payments.

The American Farm Bureau Federation, a national group that is a coalition of state and local farm bureaus, opposes any cap on subsidy payments.

The group says too many external factors affect American farmers for them to be restricted by subsidy caps.

"That's what we're dealing with here, a lot of unknowns," said Tim Cansler, director of congressional relations for the Bureau.

Cansler said variations in production costs per acre, the success of a crop and international agriculture all affect farmers in different ways each year.

"If you look at this issue on its face and on its face only, it may be a logical turn," he said. But "if things like this occur ... through no fault of the farmer, and he's not receiving a fair price, what's a farmer going to do?"

Factors affecting farmers like gaps in the cost of production are a cause of differentiation in subsidy payments, Cansler said.

"You have all types of variations across this country where costs of production vary greatly," he said.

Rep. David Swinford, Republican chairman of the Texas Agriculture Committee, said these differences are why large-farm states such as Texas are worried about subsidy limits.

In Texas and other southern states, land isn't as fertile and rainfall isn't as plentiful as in other states, so per acre yield is far below that of more fertile states with smaller farms.

Subsidy limits "would just absolutely destroy agriculture in Texas," he said. "That issue is a killer for Texas and a lot of the South."

There is no guarantee that the subsidy cap will end up in the completed version of the farm bill that goes to the president. The subsidy provision first has to survive a conference committee with the House to reconcile the different bills.

The bill reported out of committee then must pass both the House and the Senate before it goes to Bush's desk. It is unclear whether or not he will sign it.