FARMERS NOW get two layers of support from the government. First is a loan: a farmer can turn his crop over to the government if the market price is below the so-called loan rate. Second is an outright income supplement or deficiency payment, making up the difference between the market price or loan rate -- whatever the farmer gets for his crop -- and a target price or income goal.
The House, as it was leaving town two weeks ago, sent to the Senate with little debate a bill making an important change in this second kind of subsidy. Currently a farmer must plant to earn it: the system encourages production when overproduction is the problem. Under the bill, by contrast, wheat and corn farmers, the two largest subsidized classes, could earn most of their traditional deficiency payments if they promised not to plant.
The legislation offered by Rep. Dan Glickman, chairman of the House grain subcommittee, is a fairly simple and straightforward effort to nudge down production and costs and thereby help in a modest and traditional way with both crop surpluses and the budget deficit. But it also exists in a broader context.
The present two-tier system of supports was developed in the 1960s and 1970s. It was an attempt to separate income support from price support, so that in theory farm income could be kept comfortably high and farm prices competitively low at the same time. Now the thinking is that income support should be divorced from production decisions as well, so that the support system does not perpetuate the problem it is meant to solve.
The administration has been pushing this "decoupling" idea as a way to reduce support levels and costs. Right now the bigger a farmer is, the more income support he gets; the program is upside down. The administration suggests, for free-market and fiscal as well as fairness reasons, basing income supports instead on some standard of need. Those who want to preserve the existing support levels aren't much enamored of this idea; among many other things, they object that some of the money farmers get is welfare.
There is a middle school of thought that favors 1) divorcing income support from production levels, then 2) phasing down the support levels. The purpose would be not just to stop subsidizing surpluses but to give farmers time to adjust by either leaving the land or turning to other crops.
It's a long way from Mr. Glickman's constructive bill, which is only voluntary, to such a transformation of the support programs, and he didn't offer it with that as a goal. But it does take Congress into the territory. The farm programs need some work, and this is an interesting pat