Iowa Public Television

 

"New" farm program reminiscent of PIK

posted on February 18, 2000


DESPITE RAISING INTEREST RATES FOUR TIMES SINCE LAST SUMMER, IT APPEARS THE FED WILL HIKE RATES AGAIN NEXT MONTH. THAT WOULD BE A BLOW TO THE RURAL ECONOMY, ALREADY SMARTING FROM SLUMPING COMMODITY PRICES AND DECLINING GOVERNMENT SUBSIDIES.

WHILE CURRENT FARM LAW CALLS FOR FARM SUBSIDIES TO BE PHASED OUT, A NEW AND CONTROVERSIAL PROGRAM GIVES THE AGRICULTURE DEPARTMENT AUTHORITY TO INCREASE THEIR LIMITS.

THIS WEEK, SECRETARY OF AGRICULTURE DAN GLICKMAN ANNOUNCED, UNDER PRESSURE FROM A BIPARTISAN GROUP OF LAWMAKERS, HE'LL IMPLEMENT THE NEW PROGRAM... GREATLY EXPANDING CROP SUBSIDIES.

CURRENTLY, FARMERS ARE LIMITED TO 150,000-DOLLARS IN GOVERNMENT SUBSIDIES ANNUALLY. THE NEW PROGRAM ALLOWS PRODUCERS WHO HAVE REACHED THE 150,000-DOLLAR PLATEAU TO RECEIVE THEIR STIPEND IN CERTIFICATES RATHER THAN CASH. THE CERTIFICATES CAN THEN BE REDEEMED FOR GOVERNMENT-HELD COMMODITIES.

THE NEW PLAN IS REMINISCENT OF GOVERNMENT AG POLICY IN THE 1980'S, WHEN THE PIK PROGRAM PAID FARMERS NOT TO PRODUCE A CROP.

CURRENT U-S-D-A GUIDELINES ALLOW PRODUCERS TO PUT CROPS UNDER SHORT-TERM GOVERNMENT LOANS AND THEN GIVE THE CROP TO UNCLE SAM INSTEAD OF REPAYING THE MONEY. FARMERS MAKE A PROFIT OFF THE FORFEITURE BECAUSE THE MARKET VALUE OF THE CROP IS LESS THAN THE VALUE OF THE LOAN.

WHILE PRODUCERS OF ALL MAJOR COMMODITIES WOULD BE ELIGIBLE FOR THE EXPANDED SUBSIDIES, THE NATIONAL COTTON COUNCIL LED THE LOBBYING FOR THE NEW RULES.

CRITICS BLASTED THE NEW PLAN CLAIMING IT WOULD BENEFIT THE LARGEST PRODUCERS IN THE NATION AT THE EXPENSE OF FARMERS WITH SMALLER OPERATIONS.


Tags: agriculture Dan Glickman government news U.S. Secretary of Agriculture