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Reaping a Cash Crop

Dan Morgan, Gilbert Gaul and Sarah Cohen
Washington Post Staff Writers
Tuesday, July 18, 2006; 11:00 AM

Reporters Dan Morgan , Sarah Cohen , and Gilbert Gaul were online Tuesday, July 18 at 11 a.m. ET to discuss the Post's series examining federal agriculture subsidies that grew to more than $25 billion last year, despite near-record farm revenue.

Read the series here: Harvesting Cash

The transcript follows:

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Anonymous: Why does agriculture, alone among industries, claim a "right" to subsidies because "we couldn't make a living/profit without them?" In any other line of work, if consumers don't want to buy what you produce/provide at a price that gives you a reasonable profit, you go out of business! Why should farmers not be subject to this same basic economic principle?

Sarah Cohen: Welcome everyone -- we're all here and glad to be chatting. Today's story is just one part of a year-long examination of farm programs.

And this is a question that's front and center in a lot of negotiations in congress and in international trade. The subsidies started decades ago and were aimed at helping Depression-era dust bowl farmers. They've evolved from there.

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Washington, D.C.: As someone who has worked with and for farmers for many years, we appreciate you exposing how politically driven the disaster process is - both in the enactment of programs and their implementation. But we would urge you to look at the bigger tragedy - those farmers who have been eligible but never received disaster funds or those farmers who right now are suffering from major devastation from droughts, floods, and searing heat. We urge you to look at who has not gotten assistance - family farmers, minority farmers, and those who were never informed by local FSA/USDA offices about available programs or funding. Thanks.

Sarah Cohen: Thanks for the comment.

One of the criticisms of the current farm programs is that most of the benefits go to a few, and not always those who need it most or are most hard-hit.

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Placitas, N.M.: Hello- Thanks for shedding light on this important subject. I've lived in rural Maryland, Montana, and now New Mexico. In all three places there have been strong anti-federal, don't-tax-me sentiments. Yet, as your articles clearly describe, obviously the survival of these communities depend on tax dollars directed to them from D.C. In doing your research, were you able to gain an insight as to why rural folks with small government attitudes are able to justify receiving these ag entitlements?

Gilbert Gaul: One of the things we found in our reporting was that many farmers and ranchers in rural areas were embarrassed taking the government checks -- for exactly the reasons you point out. Nonetheless, they usually took the checks saying they would be fools not to. If that sounds odd, think of the tax breaks you take each year even though you may not think you are entitled.

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Daughter of a Fifth Generation Farmer: Having grown up on a small farm in Southwest Virginia and having watched my mom (my mom has been a full-time farmer for over 20 years) suffer to break even most years with her beef/dairy operation, I'm incredibly offended by your recent coverage concerning farm subsidies. I won't deny that the government runs a highly inefficient and sometimes borderline ridiculous subsidy system; however, I would argue that the real story concerns the thousands of small farmers that desperately need aid but receive little to nothing. It's amazing to me that you choose to cover the abuses of the system and yet make no mention of the types of farmers who could make good use of government aid. I think it's important to point out how the government is wasting money that could and should be directed to farmers that could use those funds, but your stories only cover the first half of that theory, lacking the balance and full perspective that I would expect from the Washington Post. My mother is a fifth generation farmer, and she loves the land and works hard to maintain our family farming legacy. Yet, as I mentioned above, she is barely able to make a profit most years. And she's not pulling down thousands of dollars in government subsidies. Indeed, she signed up for her first government program a few years ago, and she received a check for $15. She works from 5:00 a.m. to 10 p.m. most days, and there are no holidays. Certainly, I'm a biased party in this discussion, but until you walk a mile in a farmer's shoes, I do not believe that you can truly understand the magnitude of their workload and responsibility. Thanks for letting me vent my frustration, and I sincerely hope to see an article that talks about the life of the majority of farmers, the ones who are not rolling in $75,000 subsidy checks.

Sarah Cohen: We're a little surprised by your question -- the series of stories we're doing is highlighting exactly the issue you raise. We are seeing many federal dollars going to the largest, wealthiest and sometimes even non-farmers while the smaller operations get relatively little. We're focusing on some of the apparent inequities or unintended beneficiaries of the system.

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College Park, Md.: Is there some way I can find out which members of Congress voted for the Livestock Compensation Program? I want to make sure I don't vote for any of these guys in the fall elections.

Sarah Cohen: The program was part of a massive appropriations bill that funded most of the government that year, so it would be hard to identify who voted "yes" because of it.

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washingtonpost.com: Washingtonpost.com has a database of every vote in the U.S. Congress since 1991: http://projects.washingtonpost.com/congress/

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Kenosha, Wis.: How much did the 'little farmers' like Cargill and Archer Daniels Midland get from this welfare program?

Sarah Cohen: In this program, the money went to dairy farmers and ranchers themselves, not to agribusinesses.

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Kenosha, Wis.: Thanks for your article, I called my Senators (Feingold and Kohl) and complained about the practice of compensating our farmers without any requirement of them showing damage. One thing that I didn't hear is whether the GAO investigated for any fraud. Would it have been possible for someone to just walk in, fill out a form claiming X number of cattle and then receive a check?

Gilbert Gaul: Under the LCP program you weren't required to prove a loss. So, yes, you could simply walk into your county USDA office, fill out a short form certifying the number of head of cattle or dairy cows you had, and a short while later get a government check -- again, with no losses. Other than some spot checking, there was little oversight of the program. No one in Congress has asked for a GAO investigation. There was a Sept. 2005 audit of drought relief programs by the USDA Office of Inspector General that looked at the LCP, but it was an audit, and didn't name names or provide detailed examples. Also, you may want to follow our story in the Post tomorrow, which details abuses in another drought relief program.

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Austin, Tex.: Although you do an excellent job of documenting a program to distribute federal funds to an interest group (in this instance, livestock producers, but it could as well have been defense contractors or evangelical non-profits), your article only briefly touched on the motive behind it: Garnering good will for the Republican administration and influence the mid-term elections favorably for Republican candidates.

Many people will read your article as an indictment of agricultural subsidies. For better or for worse, agricultural subsidies are the very small price we pay in order to have abundant and cheap food. Unfortunately, particularly under Republican administrations, agricultural subsidies are too often disconnected from the goal of providing the American people with food, and even from providing struggling agricultural producers with a reasonable standard of living, and misused for partisan political ends.

Thanks for the fact finding, but to complete the article you need to more thoroughly analyze the political motives and impacts.

Sarah Cohen: From what we've seen, both parties in Congress have been involved in offering subsidies during election years. Democrats are no less generous.

Our stories started when we wondered where the money was actually going, not where politicians said it was going -- it took us to some surprising places.

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Washington, D.C.: What do you think the effect would be of eliminating the subsidies in toto? Wouldn't the prices of these crops go up were they not subsidized? I have a feeling that the prices would go up, resulting in the costs being passed onto consumers, which would then lead to more imported goods from countries that can produce these goods cheaper.

Sarah Cohen: That's a really good question. There's a lot of disagreement among economists about what would happen to prices without generous subsidies.

It's worth remembering that most agriculture isn't subsidized much. For example, there's no farm program for fruits, vegetables, and usually livestock (even though our story today focused on one "emergency" program). So the prices for those products are generally unaffected.

Corn, wheat and other staples are the big recipients.

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Kansas City, Mo.: I'm appalled. I just hope that the next time the administration or other politician talks about cutting spending or wasteful someone asks them if they support this program. I think we should support small farmers but not BMW farmers.

Sarah Cohen: We're hearing this a lot -- including from many ranchers and farmers

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Washington, D.C.: Your series was critical of farm program payments going to some individuals who are not actively engaged in farming. Do you believe then that only farmers who are producing a crop should receive farm program payments?

Sarah Cohen: It's not for us to say who should be getting the payments -- that's up to Congress. But many farmers do express discomfort the current system.

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Henly, Tex.: "Anonymous: Why does agriculture, alone among industries, claim a "right" to subsidies." Perhaps Anonymous is unfamiliar with the subsidy history of industries such as oil, autos, airlines, railroads, defense, alternative energy, and about a hundred other industries which have and in many cases continue to receive federal subsidies. Unlike agricultural subsidies, however, most of these industry subsidies have ultimately benefited ultra-wealthy individuals and typically failed to result in lower costs to American consumers.

Sarah Cohen: Good point, Henly. Of course, most industries get some kind of federal help, either in the form of tax breaks, tariffs, or direct subsidies. Agriculture is far from alone.

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Washington, D.C.: Aren't subsidies actually prohibited by the WTO?

Sarah Cohen: Certain kinds or farm subsidies have been found by the WTO to violate trade agreements -- as have subsidies of some other countries. The recent collapse of world trade talks over just this issue shows how important they are internationally. Right now, key members of Congress are putting pressure on the Bush administration to make sure that any concessions the US makes are matched by other concessions by our trading partners.

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Falls Church, Va.: To what extent do you think the convoluted farm subsidy program of the U.S. is a result of a belief that farmers represent the "soul" of America? How has agribusiness exploited this belief to the detriment of "real" family farms?

Gilbert Gaul: Thanks for your interesting question. Frequently, when AG programs are adopted -- be it disaster relief or direct payments -- members of Congress justify their actions with repeated references to struggling, small family farmers. Yet the reality is that much of the subsidies go to increasingly large, sophisticated farming operations that rely on computers, forward contracting and other complicated financial instruments. Many small family farmers simply can't compete in this marketplace, and many of the farmers have taken jobs off of the farm, or reduced their operations, in some cases becoming boutique or highly specialized farms.

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Washington, D.C.: Are you planning to write about our insane sugar policy? It seems that virtually everyone - environmentalists, the food industry, other producers, and international development experts - agrees that the price supports and import restrictions are economically and environmentally disastrous.

Sarah Cohen: We're continuing on agriculture programs for the rest of the year, we hope, and are eager to hear ideas.

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Ogallala, Neb.: Reading the Post Articles over the last couple weeks, I was very upset. You clearly do not have an understanding of what agriculture does for this country, as a whole. American agriculture contributes heavily to the GDP of this country and millions of jobs. When you talk about the inequities of the federal spending in agriculture, you fail to note that farm programs spends less than ¿ of 1 percent of the federal budget and provide a safe and abundant food supply for this country. There seems to be a constant buzz in the media about the problems with imported oil and the fact that the Middle East has us over a barrel (no pun intended). If we aren't careful, we will soon be relying on foreign food in this country the same as we rely on foreign oil.

Sarah Cohen: Much of our food already is imported. It's hard to imagine that we would be relying on foreign food anytime soon when we already export so much of our own.

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Columbus, Ohio: Your series on agricultural subsidies has clearly demonstrated the inefficiency, waste, and abuse in the current system of government farm programs. Are there alternative farm programs that might be a more efficient and effective method for supporting farmers? For example, most would agree that farm programs should provide public goods such as environmental benefits, a healthy and safe food supply, and support for farmers who truly are facing financial difficulties due to natural disasters or low prices? In short, is there a possibility for new responsible farm programs or should the government remove itself from it's involvement in the agricultural industry?

Sarah Cohen: It's an interesting question.

There are many proposals out there in connection with a new farm bill that's required next year. They include more reliance on crop insurance and new kinds of tax-free savings account for producers. It would be hard for the government to totally remove itself quickly without a big shock to Rural America.

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Grand Forks, N.D.: What impact will your series have on the possible passage of agriculture disaster relief this year? and the '07 farm bill?

Sarah Cohen: We can't predict that.

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Winthrop, Mass.: Has anyone ever seriously proposed that only small Family Farms get any aid in an effort to preserve examples of traditional ways of American life, and that Large Corporate Farms be cut off the gravy train. This solves the emotional issues, and would save the lion share of the federal outlay.

Sarah Cohen: The concern for small family farms runs through the comments we're getting here and in emails. In fact, small farms do get some aid. But there are few left that actually make a full-time living off of their crops or livestock. Many rely more on other jobs.

Big farmers make the argument that they produce the most, are most efficient, and should therefore receive the most.

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Florence, Mont.: While you keep referring to these large corporate farms as a bad thing, do you realize that most family farms are actually corporate farms who have incorporated because of the tax and other benefits provided by the government for doing so? Furthermore, no matter what size a farm might be, and regardless of whether they have computers or not, the margins on the farm are very small, and even farmers who may have what you consider a high amount of gross sales, are still only netting a very small amount of money after paying input costs. And since prices are set based on world market, farmers have no choice in the price they take for their crop. They take what they get, absorb all costs of productions and pay transportation costs too and from the farm. If Americans want to continue to have the safe and inexpensive food they have come to enjoy, they should stop being so critical of those who provide it.

Sarah Cohen: I don't think we've used "large corporate farms" -- we recognize most large operations are still family-owned.

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Washington, D.C.: One thing that jumps out to me about my understanding of US corn subsidies and sugar subsidies(hopefully captured in the future) is that money is going to both the corn farmers AND to ethanol production. While I personally support the subsidized development of ethanol to get it more economically competitive, perhaps the increased demand for the corn now would create a market price to offset the subsidized amounts? Also, during the previous subsidy programs, when the gov't took ownership/possession of the excess, wasn't it often sent as aid elsewhere in the world? If not, why not?

Sarah Cohen: Some economists think ethanol demand will reduce the need for some government subsidies for corn farmers.

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Sarah Cohen: This is really from all of us (as all of the answers have been): Thanks so much for joining us today. We're looking forward to covering the subject in the months ahead.

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