Uncle Sam is playing sugar daddy for thousands of "farmers" who never plow a furrow, but cultivate Agriculture Department programs for the sole purpose of harvesting subsidies.
One of these bureaucratically blessed cash crops is the "deficiency payment program," designed to keep prices that farmers get for their produce at a reasonable level. It's based on the idea that farmers may need federal subsidies to keep body and soul together, and the payments are calculated by the price of the crop and the volume produced.
To keep agribusiness corporations and big farmers from cashing in, the government set a maximum amount that any farmer could collect in a year: $50,000, regardless of the size of the farm or the crop harvested.
Various unforeseen factors -- increased per-acre yields, higher grain prices and cheaper loan rates -- combined to increase the number of farmers who qualify for the $50,000 maximum, or close to it. Slightly more than 4,000 farmers received $40,000 or more in deficiency payments in 1983; almost 38,000 did in 1986. And the government's total expenditure under the program ballooned from just over $200 million in 1983 to $1.4 billion in 1985.
Unfortunately, widespread chiseling has played an important part in this dramatic increase in the deficiency program's cost.
A recent report by the Agriculture Department's inspector general concluded that more than one in every five farmers who received deficiency payments weren't entitled to them.
"In all," the internal report states, "the questioned payments amounted to about $15.7 million to 225 persons of 1,059 tested -- or a 21 percent error rate."
The General Accounting Office reckons that if the trend continues, the cumulative program cost for 1984-89 would be about $2.3 billion -- with some $900 million of that added in 1989 alone.
As for the cheaters, another GAO study had this to say: "We saw instances where farm owners broke up their operations by renting their land to investors who leased equipment, hired labor and used surrogate managers to operate the farm."
Consider this scheme used in California: A subsidiary leased some 6,660 acres from its parent company and hired a management firm to run the farm. It was entitled to a $50,000 maximum deficiency payment.
Instead, the subsidiary leased the land to the management company, which subdivided it into 238-acre parcels, the minimum acreage that qualifies for the maximum $50,000 deficiency payment for irrigated cotton land. The minimum parcels were then leased to 28 investors -- who each qualified for $50,000 deficiency payments.
The total federal payment thus grew from the original $50,000 to $1.4 million.
Sen. Tom Harkin (D-Iowa) is understandably upset that there has been not a single successful prosecution of these schemes, despite the fact that the Agriculture Department inspector general has completed more than 20 investigations. Harkin's subcommittee on nutrition and investigations will begin hearings on the problem this week.