Iowa Public Television


Bulk of Payments Go To Few

posted on August 3, 2001

Hello, I'm Sid Sprecher. Mark Pearson is off this week.

Heading into the dog days of summer, the nation's economy appears to be tiring. The unemployment rate is holding steady. Lay-offs in the manufacturing sector have been partially offset by new jobs in the less lucrative service sector. Thus far, lower interest rates have not sparked industrial investment, much less economic expansion.

In Rural America, investment in its major economic sector is nearly as constant as the volatility of the value of this year's crop. The market fluctuations underscore the importance of government subsidies to the financial stability of American agriculture. But that source of income is proving to be just as uncertain as the marketplace.


Bulk of Payments Go To Few

It was business as usual in Washington this week, where Democrats and Republicans appear to be as divided as ever on America's Agricultural Policy. The most pressing legislation centers on a package of emergency relief for the nation's farmers.

A Republican-backed bill providing up to 5.5 billion dollars in emergency assistance was passed by the House in June. But Senate Democrats, led by Agriculture Committee Chairman, Tom Harkin of Iowa, wanted a measure calling for a total of 7.5 billion dollars.

As debate began on the Senate floor, the White House released a statement, citing improving prices in agricultural markets. President Bush, claiming 5.5 billion dollars to be more than adequate, threatened to veto the larger, democratic version and on Friday the Senate abruptly passed the House Legislation.

(slug: field work)

While relief is a key piece to the farm policy puzzle, a larger battle is looming over the philosophy and distribution of future subsidies.

According to the General Accounting Office, or GAO, federal farm programs doled out a record 20-billion dollars last year. Nearly half of the nation's farms now receive federal payments and the money accounts for about half of net farm income.

But critics claim current policy favors large-scale farms, producing vast quantities of raw commodities, over smaller operations.

For example, in 1999, corn growers received more than 40-percent of the payments and Iowa garnered nearly 10% of the subsidies, making it the largest state recipient.

Together, corn and wheat accounted for 64-percent of commodity payments, with 70-percent of the money going to just 12 states... In other words, 38 states received an average of just three-fourths of one-percent of the money.

Senate leadership hasn't given up on securing the extra two billion dollars worth of farm relief. Majority Leader Tom Daschle says the democrats might try to win passage of the additional two billion in the next fiscal year, beginning October first.

In the meantime, lobbying is intensifying to include provisions and money in a farm bill rewrite that addresses non-farm economic development.

Proponents of such development, like the Nebraska-based Center for Rural Affairs, contend that if the tide of exodus from Rural America is to be stemmed, at least some of USDA's money must be diverted to Main Street. The Center is calling for an overhaul of USDA lending programs, suggesting 50 percent of the money be directed to small businesses, and 50 percent to farmer/rancher-owned value-added ventures.

Tags: agriculture bailouts farm subsidies government news