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Big Ag Faces Fight on Farm Subsidies From Bush, Reformers

Big Agriculture, recipient of $15 billion a year in government subsidies, faces a two-way challenge in Congress this year — from the Bush administration and from one of the broadest strange-bedfellows collection of reformers ever assembled. [IMGCAP(1)]

At the moment, I’d bet on Big Ag to keep intact the structure of the 2002 farm bill widely derided as “porkapalooza” and as a give-away to rich corporate farmers. The bill is up for reauthorization this year.

The reformers make a very compelling case against the current system — that it bestows two-thirds of its subsidies on just 5 percent of America’s farmers, favors rich farmers over poor and encourages overproduction, driving down world prices and impoverishing Third World farmers.

The reformers — conservative deficit hawks and pro-trade groups, liberal anti-hunger and environmental activists and the food processing industry — are loosely collected in a group called the Alliance for Sensible Agriculture Policies.

The group includes, on the right, the Club for Growth, Cato Institute, National Taxpayers Union and Citizens Against Government Waste; on the left, Environmental Defense, Oxfam, Bread for the World and the Center on Budget and Policy Priorities, plus various church groups, foundations and the food processor lobby headed by former Rep. Cal Dooley (D-Calif.).

The alliance and the administration both want to cut farm subsidies that now go to producers of just a handful of crops — corn, wheat, rice, cotton and soybeans — and use the savings to expand land conservation, energy, rural development and nutrition programs, and provide assistance to fruit and vegetable growers and meat producers who currently are outside the commodity program.

The administration calls for reducing subsidies by $4.5 billion over five years, principally by capping eligibility for payments at $200,000 of adjusted gross income.

The alliance favors even bigger cuts, using some of the money to reduce the budget deficit and replacing the commodity subsidy system with tax-favored and government-seeded IRA-like Farmer Savings Accounts that could serve as a reserve in lean times.

Dooley told me that he gives Agriculture Secretary Michael Johanns credit for “moving in the right direction, though it was more baby steps than giant strides. But in relative terms, it’s more than any administration has done in the last few decades” to reform agriculture.

Both the alliance and the administration argue that subsidies have caused the U.S. to face repeated sanctions from the World Trade Organization and are a bar to concluding the Doha Round of world trade talks, whose success could lower barriers for U.S. exports throughout the economy.

Strong as the reform case may be, it’s being strongly resisted by the powerful American Farm Bureau Federation and Rep. Collin Peterson (D-Minn.), chairman of the House Agriculture Committee. Even administration officials are skeptical that reform will prevail — and they warn President Bush might veto a farm bill if Congress increases spending significantly.

In a hearing in late March, Peterson said that “the 2002 farm bill has cost less than was projected and that is because it is working well — making payments only when commodities prices are low and saving taxpayers billions of dollars.”

He served notice that “the commodity title will not be decreased because prices are high. It will not be raided to pay for other programs, nor will it be dismantled to meet trade obligations that do not yet exist.”

Senate Agriculture, Nutrition and Forestry Chairman Tom Harkin (D-Iowa) has not said what he wants to do about commodities, although he favors income caps and significantly higher spending for conservation, nutrition, rural development and bio-energy projects.

Administration officials fear that money for such expansions will come from “reserve funds” of $15 billion and $20 billion provided in the Senate and House budget resolutions, subject to being paid for with revenue increases or spending cuts.

One administration official told me that he feared the “pay-for” requirements would be waived — which takes 60 votes in the Senate and a simple majority in the House — and cited “emergency” farm money inserted in the Iraq War supplemental bill as evidence that Congress would not abide by its own “pay-for” rules.

“My view is that when it comes to providing immediate benefit to farmers versus standing up for what is good in the budget, I think goodies for farmers will win out,” he said.

On subsidies, he said, “History shows that commodities are where the votes are. The cotton guys and the corn guys are usually where the Congress is going to go.”

This official acknowledged that Bush signed the 2002 bill partly to secure support in farm states in the 2004 elections and pointed out that “this year he is not going to be encumbered about his re-election.”

Meaning he might veto? “We don’t talk about that publicly, but it is a real option,” this official said.

In the meantime, reformers have yet to produce their own legislation to serve as a rallying point, but it’s said to be coming, sponsored in the House by Reps. Jeff Flake (R-Ariz.) and Jim McGovern (D-Mass.) and in the Senate by Sen. Dick Lugar (R-Ind.).

After that, it will require a major, high-visibility push to make farm policy a national concern. Otherwise, Big Ag will win again.

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