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Farm Revolution Stops at Subsidies

Efficiency Fails to Stem Flow of Federal Cash

By Dan Morgan
Washington Post Staff Writer
Sunday, October 3, 2004; Page A03


Grain farmer Allan Skogen is just the kind of efficient, market-savvy farmer Congress had in mind in 1996 when it sought to revolutionize U.S. agriculture by giving growers more freedom to decide what to plant while phasing out traditional subsidies.

To reduce risks and increase productivity on his 5.5 square miles of rolling North Dakota prairie, Skogen uses all the tools of technology and science -- from herbicide-resistant strains of bioengineered soybeans to a new device for his combine that calculates the number of bushels of corn and wheat he is getting every few hundred yards.

North Dakota grain farmer Allan Skogen relies on allowances from the government. Since 2000, he has received $158,000 from Washington. (Ann Arbor Miller for The Post)

But in one essential respect, Skogen is still deeply entrenched in the farm system of the last century. Despite bin-busting crops and strong prices over the last four years, he relies heavily on checks from the federal government. Since 2000, his farm has received about $158,000 from Washington under a program that gives grain, rice and cotton farmers an annual allowance in good times and bad.

Last year -- a banner year in agriculture -- the government paid farmers $6.7 billion in such "direct payments," and $5.4 billion in other types of subsidies, according to figures from the U.S. Department of Agriculture and the Washington-based Environmental Working Group. Over the past nine years, the government has paid out more than 10 times that amount in total subsidies -- a $130 billion government outlay.

Skogen's situation bears witness to a persistent dilemma: Even as American farms grow bigger and more efficient, they still demand and receive financial help from the government. Their productivity is itself part of the problem, experts say, because it perpetuates a cycle of bigger crops to meet growing world demand while prices per bushel or bale stay at about what they were three decades ago.

While the system benefits many huge, highly profitable farms as well as smaller producers, few in either political party favor ending the flow of federal dollars that last year went to 1.8 million farmers and generated business and income for banks, real estate brokers, businesses and local governments throughout the Farm Belt. Both political parties are mindful that wheat, corn and soybean farming are vital to such presidential battleground states as Minnesota, Missouri, Ohio and Wisconsin.

Such broad-based political support has made agriculture a laggard in the movement heralded after the GOP takeover of Congress a decade ago to reorient the economy toward unfettered markets and reduced government support. That philosophy was the bedrock of the Republicans' "Freedom to Farm" legislation passed in 1996.

But subsequent droughts, floods and market upheavals forced Congress to back down. With passage of 2002 legislation, Congress once again embraced more generous subsidies. Those subsidies have come under fire from fiscal conservatives, developing countries and other groups.

"Farm subsidies are America's largest corporate welfare program," said Brian Riedl, federal budget analyst for the conservative Heritage Foundation. "The majority of the payments go to large agribusinesses, which promotes the consolidation of farms. It's the plantation effect."

Developing nations, meanwhile, have refused to participate in a new round of multinational trade talks without a pledge from the United States, Europe and other wealthy countries to reduce their $300 billion in annual agricultural subsidies.

In a case that some farm groups say could bring down the whole subsidy system, a World Trade Organization panel recently ruled that an array of U.S. cotton subsidies -- though not the direct payments -- was illegal. An appeal is planned.

"Seventy percent of farmers aren't getting any subsidies," said Rep. Ron Kind (D-Wis.), who led a battle in 2002 to shift more money in that year's farm bill from subsidies to conservation. "I don't think that's the way to encourage diversity in our food production system."

Instead of paying farmers cash, he said, the government should help them with improved health care, more agricultural research and conservation programs.

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