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
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.