A gaping loophole in a government farm-subsidy program is costing taxpayers millions thanks to exploitation of it by a few farmers and a lot of businessmen who've never farmed so much as a penthouse vegetable garden. Yet Congress hasn't produced any corrective legislation to stop it.
The loophole is in the Agriculture Department's ''deficiency payment program,'' which was intended to maintain farm prices at a reasonable level. To prevent profiteering, Congress set a limit of $50,000 that could be paid to any one person each year, regardless of the size of the farm or the crop.
But some farm owners got around this by breaking up their operations and leasing the minimum number of acres to several absentee investors, who then collect the maximum $50,000 apiece on each parcel.
One problem is the definition of ''persons'' entitled to receive the $50,000 deficiency payments. They can be individuals, of course, but also corporations, trusts, institutions and even governmental entities. The Agriculture Department has stretched the identity of a ''farmer'' to bizarre limits.
In addition, state-owned farming operations are exempt from the $50,000 limitation. Thus, among the largest potential payments on a department list we've seen were to Montana's Department of State Lands, $912,000; Washington state's Department of Natural Resources, $966,000; the University of Arizona, $373,000; Reclamation District No. 108 of Grimes, Calif., $336,000; and the Texas Department of Corrections, $312,000.
Other ''farmers'' listed on the USDA printout included a large bank in Springfield, Ill., and a credit association in Inglewood, Calif. In another department document, a single rice farm qualified for more than $2 million in payments. How come? The rice farm listed 69 producers who were entitled to a deficiency benefit.
The General Accounting Office has urged Congress to remedy the situation by prohibiting such farm split-ups when their only purpose is to get around the $50,000 maximum. Here are a few other examples that should spur congressional action:
In 1986 a Nebraska corn farm qualified for more than $1.1 million in deficiency payments, but because of the limitation, it got only $50,000. This year, the corporate farm has leased its 17,000-plus acres to 40 separate ''persons,'' who are eligible for an estimated $1.5 million in payments.
In 1984 an Arizona wheat and cotton farm earned $140,000 in deficiency payments, but as one ''person,'' it got only $50,000. The next year, the limited partnership was reorganized into a general partnership. No new land was acquired, but the harvest was good, and the four partners collected the farm's full deficiency payment of $190,000.
In 1985 two brothers running a Lousiana cotton farm qualified for $72,504 each in deficiency payments, but got only $50,000 each because of the per-person limitation. In 1986 they reorganized their operation to include their elderly mother, creating five corporations. Each brother owned one entire corporation; each owned half a corporation with his mother, and the fifth corporation was owned 50/50 by the brothers. The family enterprise also increased its acreage by about 58 percent. Result: Each of the five corporations was paid about $47,000, for a total of $235,000 in deficiency payments.
You might expect farmers to be rushing to cash in on the deficiency-payment loophole. But a recent University of Iowa survey of farmers in the state showed that 84 percent thought the federal government should stop the abuse of the $50,000 cap by making sure no farm receives more than Congress intended originally.
The bureaucrats rarely listen to farmers when they design farm programs, of course, so the Iowa poll won't carry much weight at the Agriculture Department. But maybe Congress will listen to the voices of these farmers/voters and finally take action on the abuse of the deficiency payment program.