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Farm Program Pays $1.3 Billion to People Who Don't Farm

"We're simply administering it the way Congress established," said John A. Johnson, a top official at the U.S. Agriculture Department.

Today, even key farm-state figures believe the direct-payment program needs a major overhaul.

"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.

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.

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