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In North Dakota, Farmers Wary of Cuts to Subsidies

Many Brace for Trims by Bush, Congress

By Peter Slevin
Washington Post Staff Writer
Monday, April 4, 2005; Page A03

MEDINA, N.D. -- It's tough to make a living as a farmer in North Dakota these days, Owen Olson says. If it's not the diesel costs going up, it's the rain coming down -- or not coming down. Commodity prices rise and fall in rapid, repeated and unpredictable succession.

Olson, who farms 1,400 acres near here, is among the men and women who sow the seeds, harvest the crops and oppose this year's attempt by President Bush and Congress to cut federal farm assistance. They speak of hardship and fairness while questioning the votes cast for a president who scored big in the Midwest, in part by promising to do well by farmers.


North Dakota leads the nation in production of spring wheat. President Bush has proposed cuts of $5.7 billion from agricultural programs over 10 years. (Ann Haethorne -- Black Star Via Newscom)


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"If it wasn't for the federal government here," said Olson, 39, "nobody would be farming."

No one is talking about eliminating federal subsidies, just reducing them. But in North Dakota, where more than three in four farmers receive payments -- the highest percentage of any state -- the proposals working their way through the hearing rooms on Capitol Hill are big news.

Bush proposed cuts of $5.7 billion from agricultural programs over the next 10 years as part of a deficit reduction package. The House Budget Committee set the figure at $5.3 billion, while its Senate counterpart said $2.8 billion should be trimmed.

Exactly how much will be cut and from which programs remain to be determined this summer. Congressional leaders must settle on a target, which can be met in many ways, including by cutting food stamps.

"The fight's still ahead. I would guess in the end, everybody will take some pain," said Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation. "It's just easier not to have World War III by picking winners and losers."

The president called for a reduction of 5 percent across the board, as well as a $250,000 cap on payments to large producers. Farm income has been up the past two years, yet Congress has channeled more than $130 billion in subsidies to farmers in less than a decade. Seventy percent of the cash goes to 10 percent of the producers, particularly cotton and rice farmers in the South.

Victory is in the beholder's eye, and as far as most North Dakota farmers are concerned, any cut would be a bad cut.

"They've either had droughts or floods so many years in a row now, they've got a double-whammy," said Ferd Hoefner, policy director of the Sustainable Agriculture Coalition. "The further west you go, the more marginal the land is, so the 5 percent cut is going straight at your midsize family farm that's relying on commodities."

Parts of North Dakota had an early frost last year that stunted the soybeans. Another chunk had too much moisture, and there simply were not as many days of hot summer sun as some crops demand.

"Just a real struggle to get the heat," said Jeffrey Missling, executive vice president of the North Dakota Farm Bureau. He says of agriculture's contribution to federal deficit reduction, "We have to do our share, but it does get us concerned."

Sparsely populated North Dakota leads the nation in production of durum and spring wheat, barley, lentils, pinto beans, sunflower oil and honey. It produces 95 percent of the country's flaxseed and 90 percent of its canola. The state received $5.7 billion in federal agricultural subsidies between 1995 and 2003, according to the Environmental Working Group.

Ellen Linderman, who has been growing wheat, sunflowers, soybeans, corn and sometimes barley on 1,500 acres since 1976, said the past year was lousy because of the unpredictable weather. She said it rained during spring planting but was too dry at the end. Frost battered the soybeans and killed her corn.

Active on a commission that studied payment reform, Linderman favors a limit on who can receive money and how much. Like many of her fellow Dakotans, she says the help should tilt toward "real farmers, not those sitting in corporate offices or playing professional basketball."

"Across-the-board cuts always hurt the person at the bottom more than anybody else," said Linderman, who expects the cuts to come. "I think it's going to happen. This president has put us so deeply in debt. We're not his powerful friends, out here in the countryside."

The battle over funding is waged with arguments honed during countless budget battles. Randy Richards, who farms in the small town of Hope, about 70 miles northwest of Fargo, said the true beneficiaries of U.S. agricultural subsidies are shoppers, even if the payments do come from tax dollars.

"It's not a farm subsidy. It's a consumer subsidy, so the consumer can go to the supermarket and spend less than anybody else in the world," said Richards, who reports that more than 25 nearby farmers have surrendered in the past 15 years. "If we want cheap food, we have to support agriculture. We're struggling out here."

Critics of subsidies argue that federal payments interfere with markets and inspire farmers to produce too much of certain crops, driving down prices at home and abroad. Payments that go mostly to large agricultural businesses draw charges of "corporate welfare," while a steady process of consolidation makes it ever harder for medium-size farms to compete.

Sitting around a table on a late winter afternoon, a half-dozen residents of central North Dakota said federal payments often make the difference between solvency and large debt. The president's proposed 5 percent cut would eat into thin profits, they said, and could set an unwanted precedent for future reductions.

"It's not like we're making a killing on government payments," Olson said. "It's just year to year."

Added Karl Limvere, a local minister who spent 27 years with the North Dakota Farmers Union, "When you have a federal budget cut of 5 percent, you're talking about a 5 percent net cut in pay for farmers."

It's not that a typical farm has paltry revenue. Darald Olson said he grossed about $400,000 from his 2,000-acre farm last year, but his gross adjusted income was about $40,000. His son's was $27,000 after the receipts from his 1,400-acre farm were tallied.

A new combine can cost more than $200,000. Fuel costs increased several thousand dollars last year alone. Seed and fertilizer prices are rising.

"We really gross a lot of money," Darald Olson said, "but there's not a lot left."

The Olsons do favor the limit on crop payments, particularly if money is saved and distributed to farmers who need it more. They argue that the system favors agribusiness at a time when the economics are pressing producers to enlarge their land to achieve economies of scale.

Opponents who have spent years lobbying for limits, including rules to confine federal checks to people closely involved in a farm, feel cheered by Bush's support of limits. A 2002 amendment sponsored by Sen. Byron L. Dorgan (D-N.D.) and Sen. Charles E. Grassley (R-Iowa) would have limited the payments to $275,000 annually. It passed the Senate and the House, but later died in the Senate-House conference committee.

"We're overjoyed there's finally a presidential endorsement, the first one since the Carter administration," said Hoefner of the Sustainable Agriculture Coalition. "I spent several days slapping myself, saying, 'Is this really happening?' "


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