Copyright (c) 1990 The New York Times Company;

The New York Times

July 20, 1990, Friday, Late Edition - Final

SECTION: Section A; Page 27, Column 4; Editorial Desk

(c) 1990 The New York Times, July 20, 1990

LENGTH: 707 words

HEADLINE: Farm Subsidies: Milking Us Dry

BYLINE: By James Bovard; James Bovard is author of ''The Farm Fiasco.''


BODY: If the farm bill is passed by Congress in its present form, it will richly deserve the veto that the Agriculture Secretary, Clayton Yeutter, has recommended. Farm subsidies over the next five years would cost Americans hundreds of thousands of dollars for each full-time farmer in the nation.

Rep. Kika de la Garza, Democrat of Texas, chairman of the House Agriculture Committee, declared last month, ''This year, less than one penny out of every Federal budget dollar - only 0.63 percent of the Federal budget - will go to protecting our nation's farmers.'' But, in reality, farm programs will cost Americans at least three times as much as farm-state members of Congress are telling the public.

When farm-state politicians talk about the cost of farm programs, they usually refer only to the cost of direct Federal outlays for a few of our many subsidy programs. But this is like talking about the military budget and excluding the cost of the Navy, Air Force and Marines.

In 1990, the Agriculture Department expects to spend $8.174 billion on direct payments to farmers to compensate them for low prices. This excludes more than $6 billion in price support loans. In the past, a high percentage of these loans - up to 90 percent in some years - have defaulted. The Government has been forced to sell at a heavy loss the crops it collects as a result of the defaults. (The General Accounting Office reported in 1988 that, in the years 1972 to 1986, actual farm spending was 78 percent higher than the amount predicted.) The Agriculture Department will provide more than $5 billion in credit guarantees for crop exports. The General Accounting Office found that the agency has done a poor job of managing the credit risk on its foreign loans. As of September 30, 1988, according to the G.A.O., the credit guarantee program's total losses could have been as high as $3.5 billion on outstanding loans to foreign countries of $6 billion - more than half!

The Agriculture Department will spend $566 million in 1990 to export American crops at a loss, and $1.178 billion on the Food for Peace program, which has bankrupted many foreign farmers by dumping surplus American agricultural commodities into third world markets. The department will also spend $200 million for the Targeted Export Assistance program, which is underwriting foreign ads by American companies like Gallo and McDonald's.

And that's not all. The department will spend $3.3 billion to provide conservation assistance and payments to farmers for leaving their farmland idle. The Federal Crop Insurance Corporation will spend $1.2 billion to provide subsidized crop insurance. The department will also spend $369 million for the Agricultural Extension Services, and roughly $1 billion subsidizing agricultural research to help farmers enhance their yields.

(c) 1990 The New York Times, July 20, 1990

The Farmers Home Administration will make or guarantee upwards of $3 billion in agricultural loans in 1990. Farmers Home has seen extremely heavy losses in recent years. Congress made a special appropriation of $4.1 billion this year to cover previous losses, and the Congressional Budget Office expects that Farmers Home will be hit with almost $6 billion in losses from debt write-offs and interest-rate subsidies this year.

All told, farm aid will cost American taxpayers not $8 billion but more than $20 billion this year. On top of this, farm programs impose heavy costs on consumers. The Organization for Economic Cooperation and Development estimates that farm programs cost American consumers $24 billion a year. The Commerce Department concluded that sugar price supports alone cost consumers $3 billion a year.

Thus, at a minimum, farm programs are costing taxpayers and consumers at least $40 billion a year. With 320,000 full-time farmers (whose average net income in 1988 was $168,000) farm aid is costing us the equivalent of $100,000 for each full-time farmer - almost 200 times the average amount given to food stamp recipients.

Granted, some of these ''farmers'' are mammoth agribusiness companies, raking in millions in subsidies and profits. Nevertheless, considering that the typical farmer is still far wealthier than the average American family, the expenditures are hard to justify.