Growers Reap Benefits Even in Good Years

The paradox of paying roughly equal subsidies regardless of local conditions was a deliberate policy devised by Congress. In 2002, it directed the USDA to "minimize" the difference in LDP subsidies across states and between counties -- and, in effect, across the country.

"We were trying to make certain that you wouldn't have a farmer receiving 5, 10, 15 cents less than another farmer across the river or the county line," said former representative Charles W. Stenholm (D-Tex.).

Lawmakers are frequently deluged by complaints from farm constituents who are outraged by a higher LDP across state or county borders. The lawmakers, in turn, lean on the USDA.

In June 2002, for example, South Dakota's senators demanded that an injustice be corrected: Corn farmers in Iowa were getting 9 cents a bushel while those just across the border in South Dakota were getting 7 cents.

"These inequities are more than just numbers because for farmers they could make the difference between profit and loss," wrote Sens. Tim Johnson (D) and Thomas A. Daschle (D) in a two-page, single-spaced letter to then-Agriculture Secretary Ann M. Veneman obtained under the Freedom of Information Act.

Efforts to equalize the subsidies fall to a staff of 10 officials housed in the USDA's Commodity Office in suburban Kansas City. Every workday, they check with online services, call grain elevators across the Midwest and poll 19 major grain markets, where large merchants and food processors go to buy.

Then, in a 4 p.m. ritual, the USDA officials gather around a conference table with an open phone line to headquarters in Washington. Poring over maps and prices, the group sets the next day's LDP for corn, wheat and 15 other commodities in more than 3,000 counties.

Officials add a few cents in one county and take away in another, when the research shows that subsidies in different areas would be too far apart.

"Congress gave us conflicting requirements," said Bert Farrish, director of the USDA's Commodity Office in Washington. "We have to minimize the difference in benefits across state and county lines, but administer it in a way that reflects local markets as closely as we can."

Stenholm acknowledges the problems but believes it all evens out.

"There's no way you're going to get a national program that works perfectly," he said. "Some get an advantage, some get a disadvantage. And you hope over 10 years it balances out."

Financial Hedging

Increasingly, farmers have learned to lock in their subsidies when prices are low and sell when prices are higher.