"Freedom to farm" goes on

Apparently, Congress is going to come up with a new Farm Bill sometime this month. Below, we've included notes from a long perspective piece done by Dan Morgan and two other reporters on the Washington Post staff last July, which provides a little idea of what we're getting into with the 2007 (now 2008) Farm Bill again, in a presidential election year.

Badlands Journal editorial board
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4-1-08
Merced Sun-Star
Farm bill barrels toward deadline...MICHAEL DOYLE
http://www.mercedsunstar.com/167/story/219835.html
WASHINGTON -- House and Senate negotiators on Thursday staged their first face-to-face bargaining session over a long-delayed farm bill, whose details are still being crafted in private. Eight months after the House passed its farm bill version, and four months after the Senate acted, negotiators convened for 45 minutes to start the final, crucial phase of their work.
"I know many of you had doubts we would ever make it to this point," said Rep. Collin Peterson, the Minnesota Democrat who chairs the House Agriculture Committee.
With lawmakers now facing an April 18 deadline, the outlines of a final package are already apparent. The bill will devote a record amount to fruits and vegetables, though less than specialty crop producers originally sought. Commodities like cotton, rice and wheat will largely retain their current subsidies. Some payment limits will be tightened, though not nearly as much as reformers hoped.
"I think we are probably 80 percent of the way through the technical issues," said Rep. Dennis Cardoza, D-Merced.
The remaining 20 percent, though, encompasses the toughest questions, including how to pay for new spending and how to craft a new permanent disaster program favored by Midwestern lawmakers. Negotiators expect to meet again by next Tuesday to assess progress...All told, the farm bill has a five-year price tag of $280 billion. More than half of this will pay for food stamps and other nutrition programs.
The package outline includes $1.35 billion designated for fruit and vegetable programs, which include block grants to states and specialty crop research. Several hundred million dollars in additional funding would pay for expanding an existing fruits-and-vegetables snack program to all 50 states. Currently, the healthy snack program is limited to 14 states, including North Carolina, Washington, Pennsylvania and Texas.
House members, in hopes of avoiding politically unpalatable tax hikes, now propose to offset some $5.5 billion of the farm bill's costs through improved tax compliance on business revenue from credit card sales.
7-2-06
Washington Post
Farm Program Pays $1.3 Billion to People Who Don't Farm...Dan Morgan, Gilbert M. Gaul and Sarah Cohen
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/01/AR200607...
EL CAMPO, Tex. -- Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.
Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.
Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.
"I don't agree with the government's policy," said Matthews, who wanted to give the money back but was told it would just go to other landowners. "They give all of this money to landowners who don't even farm, while real farmers can't afford to get started. It's wrong."
The checks to Matthews and other landowners were intended 10 years ago as a first step toward eventually eliminating costly, decades-old farm subsidies. Instead, the payments have grown into an even larger subsidy that benefits millionaire landowners, foreign speculators and absentee landlords, as well as farmers.
Most of the money goes to real farmers who grow crops on their land, but they are under no obligation to grow the crop being subsidized. They can switch to a different crop or raise cattle or even grow a stand of timber -- and still get the government payments. The cash comes with so few restrictions that subdivision developers who buy farmland advertise that homeowners can collect farm subsidies on their new back yards.
The payments now account for nearly half of the nation's expanding agricultural subsidy system, a complex web that has little basis in fairness or efficiency. What began in the 1930s as a limited safety net for working farmers has swollen into a far-flung infrastructure of entitlements that has cost $172 billion over the past decade. In 2005 alone, when pretax farm profits were at a near-record $72 billion, the federal government handed out more than $25 billion in aid, almost 50 percent more than the amount it pays to families receiving welfare.
The Post's nine-month investigation found farm subsidy programs that have become so all-encompassing and generous that they have taken much of the risk out of farming for the increasingly wealthy individuals who dominate it.
The farm payments have also altered the landscape and culture of the Farm Belt, pushing up land prices and favoring large, wealthy operators.
The system pays farmers a subsidy to protect against low prices even when they sell their crops at higher prices. It makes "emergency disaster payments" for crops that fail even as it provides subsidized insurance to protect against those failures...
"This was an unintended consequence of the farm bill," said former representative Charles W. Stenholm, the west Texas Democrat who was once the ranking member on the House Agriculture Committee. "Instead of maintaining a rice industry in Texas, we basically contributed to its demise."

Freedom to Farm

The program that pays Matthews was the central feature of a landmark 1996 farm law that was meant to be a break with the farm handouts of the past. Subsidies began when the Roosevelt administration stepped forward to support millions of Depression-era farmers suffering from low prices. By the early 1990s, U.S. agriculture was a productive marvel, yet was still mired in government controls and awash in complex subsidies.
When the Republicans took control of Congress in 1995, they brought a new free-market philosophy toward farm policy. In a break with 60 years of farm protections, they promoted the idea that farmers should be allowed to grow crops without restrictions, standing or falling on their own. The result was the 1996 bill, which the Republicans called Freedom to Farm.
The idea was to finally remove government limits on planting and phase out subsidies. But GOP leaders had to make a trade-off to get the votes: They offered farmers annual fixed cash payments as a way of weaning them off subsidies.
That sweetener was needed to win over wheat-state Democrats -- led by Senate Minority Leader Tom Daschle (S.D.) -- and GOP House members from rice and cotton districts. Wheat growers alone stood to receive $1.4 billion in the first year. The payments for rice growers were increased by $52 million at the last minute in an effort to win support from Sen. David Pryor (D-Ark.).
The new payments were calculated on a farm's "base acres," or production dating to 1981. For example, if a farmer had planted 400 acres of rice, he was entitled to a check of about $100 an acre, or $40,000, every year. The amount per acre varied depending on past production.
Sen. Thad Cochran (R-Miss.) used his power as chairman of the Appropriations subcommittee on agriculture to push through $3 billion in "emergency" assistance to grain, cotton and dairy farmers. That was only the beginning of a retreat by Republicans fearing retribution at the polls in key "red" states with broad farm constituencies.
"The original intent was to make a step in the direction of eliminating farm programs," said then-House Majority Leader Richard K. Armey (R-Tex.), who led an unsuccessful fight in the 1990s to trim the subsidies. "By 1998, there was no zeal left."

Instead of cutting, Congress ended up expanding the program, now known as direct and countercyclical payments. A program intended to cost $36 billion over seven years instead topped $54 billion.
"The farm policy we're pursuing now has no rhyme or reason, and we're just sending big checks to big farmers," said Gary Mitchell, now a family farmer in Kansas who was once a top aide to then-Rep. Pat Roberts (R-Kan.), the 1996 bill's House sponsor. "They're living off their welfare checks."
Efforts to overhaul the farm subsidy network have been repeatedly thwarted by powerful farm-state lawmakers in Congress allied with agricultural interests.
"The strength of the farm lobby in this town is really unbelievable," Armey said. "I don't think there's a smaller group of constituents that has a bigger influence."

'Cowboy Starter Kits'

Farmers and landowners benefited from the 1996 law whether their land once grew wheat, corn, cotton or any of the other subsidized crops. But nowhere is the impact more evident than in the sunbaked Texas rice country that spreads southwest from Houston to the Colorado River and east to the Gulf of Mexico.
In 1981, the Texas rice belt extended over about 600,000 acres. By last year, USDA records show, the amount of planted rice had shrunk to 202,000 acres, partly because landowners were able to get farm payments even if no rice was grown on their land.
In fact, so many landowners and farmers are collecting money on their former ricelands -- $37 million last year alone -- that the acres no longer used for rice outnumber the planted ones.
"So many wealthy people are getting so much money off this, it's going to be hard to cut," said Michael Wollam, a rice farmer from Brazoria County.
At a housing development rising from old rice fields on the outskirts of El Campo, 70 miles southwest of Houston, local real estate broker John K. Petty purchased a 75-acre tract from investors in July 2002. He held on to it for a few months, then carved it up and resold it for housing.
"At one time, the area was all farmed in rice," Petty said. Now, the dusty tract is perfect for what he calls "cowboy starter kits," residential tracts owned by nonfarmers but still large enough to keep a horse in the back yard
The payments were unrestricted -- farmers got them whether or not they grew any crops, or whether prices were high or low.
Owners could do almost anything they wanted with their land, as long as they did not develop it. They could leave it fallow or rent it for pasture. They could set up a hunting retreat. Or, as happened in some Louisiana parishes, landowners could collect payments while planting stands of commercial timber.
Supporters said these annual payments gave farmers the flexibility to switch from one crop to another as market conditions changed, or even to sit it out in a year of low prices. In addition, the payments fit with international trade rules that frown on traditional price supports.
The annual payments were dubbed "transitional" and were supposed to decline over seven years. Many lawmakers assumed they would eventually end. But two years later, farm prices fell sharply, and the Republican-led Congress gave in to the farm lobby.
Petty informed potential buyers that because their land had once been an active rice field, they could collect an annual payment from the USDA on the portion that was not developed. They did not have to grow rice or anything else.
"If you have 10 acres and build a house on one, you can continue to get farm payments on those other nine acres without farming," the USDA's Johnson said. Petty used it as a selling point.
"Does it increase the marketability?" Petty asked. "Sure it does"...
In some Texas counties, the federal payments open the door to another benefit: property tax reductions.
"When a property owner receives a federal payment, the land is considered agricultural use and is assessed at that lower rate," explained Tylene Gamble, the chief appraiser for Wharton County, where El Campo is located. The discount can be dramatic. For example, she said, a parcel might be assessed at $55 an acre for agricultural use but $3,000 for regular use. "It's big," Gamble said.
Gamble is trying to enforce local rules that require landowners to actually farm to qualify for the lower tax rate. But she is hampered by the federal government's definition of farming, "which does not require you to actually farm. There is a conflict there between the federal definition and our definition," she said.
Gary Underwood, director of agricultural appraisals for sprawling Harris County, which includes Houston, said owners are building $500,000 houses on old rice fields and qualifying for tax breaks.
He singled out one tract where the owner built a 4,000-square-foot single-story house on five acres in Katy, a booming suburb. The house sits on one acre. The other four acres get a tax break and a farm payment. "I can't touch him," Underwood said.

The Big Landowners

The large landowners who control vast sections of the once-sprawling rice fields outside Houston have been some of the biggest beneficiaries of the 1996 law, USDA records show.
Diana Morton Hudson is a corporate securities lawyer whose 87-year-old mother, Mary Anna Hudson, owns an interest in two tracts of land in nearby Matagorda County. USDA records show that Mary Anna Hudson has received $191,000 since 1997 on land she doesn't farm. "We just pay someone to mow it, and it just sits there," Diana Hudson said.
Later, she added: "I'm a corporate securities lawyer. I couldn't even locate these two parcels in Matagorda."
Houston heart surgeon Jimmy Frank Howell has received $490,709 since 1996 in payments tied to old rice tracts on a vast ranch near Raywood in Liberty County where he now raises cattle, USDA records show. The last rice produced on the 10,000-acre property was "probably over 10 years ago," according to Susan Cotton, Howell's business manager. "We're not rice producers anymore"...
Among the most fervent critics of the annual payments are hundreds of Texas farmers who rent land on which they grow rice. Under the rules, tenants receive the money if they operate the farms. But landlords can simply increase rents to capture those payments.
Other landlords have evicted the tenants from land they had farmed for years. Then the landowners can collect the checks themselves, even if they do not farm.
Congress "made slaves out of every farmer who was a tenant," said Stephen J. Zapalac, a former Matagorda County rice farmer who now runs a farm credit office in Bay City.
In 1998, Zapalac was leasing 2,500 acres, most of it for rice farming. One landlord canceled a lease for 1,400 acres in 1998, he said, and a second cancellation followed for the rest in 2004.
"As soon as they figured they could take the payments, they said, 'I don't need you anymore,' " he said. "They were renting me land for $40 an acre, but they could get $125 an acre from the government."
Some of the rice land he lost has been turned into pasture for cattle, while the landlord continues to receive the rice money.
"You can sell the calves and still stick the rice payment in your pocket," Zapalac said. "It's a hell of a deal"...