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Study Calls Subsidy Distribution Into Question

posted on August 5, 2005

Hello, I'm Mark Pearson.

The government this week was busy pumping out economic reports, most of which were fairly positive.

*For starters, employers expanded their payrolls by 207,000 jobs in July, the best showing in five months. *New orders and increased productivity drove U.S. manufacturing activity higher last month. *And, consumers rediscovered their appetite for shopping in June, boosting spending and providing fresh momentum for economic growth into the third quarter.

In farm country, the government is involved with economic well-being in a more direct way, mostly through the distribution of subsidies. In Iowa, for instance, landowners received more than a billion dollars in subsidies last year.

But the issuance of those payments sometimes draws fire. Critics of subsidy programs say much of the money goes to absentee landowners and corporate farms. And now that Congress has been charged with trimming some $3 billion from the federal farm program budget, some of the most vocal critics again are pointing to examples they find unacceptable.


Study Calls Subsidy Distribution Into Question

According to a study released this week by the Environmental Working Group, or EWG, California's largest farms are abusing federal subsidies by "double dipping." "Double dipping" occurs when a farm uses government subsidized water to produce subsidized crops.

The EWG study found that 1,228 farms in the California Central Valley Project received water and crop subsidies in 2002. The "double dipping" totaled $244 million. In addition, the study revealed uneven subsidy distribution weighted towards larger farms. The top 5 percent received more than one-third of the overall crop subsidies.

EWG also found that some dairy farmers "triple dipped" by using subsidized water to grow subsidized corn to feed cows that produce subsidized milk.

But the environmental group's findings were disputed by state farming interests. A spokesman for the San Luis and Delta-Mendota Water Authority called the claims a "completely ridiculous analysis." Other organizations, such as the California Farm Water Coalition criticized how the EWG study was analyzed.


Tags: agriculture crops farms government news