Because of depressed markets and a bumper fall harvest, about one-fourth of U.S. farmers' net cash income this year could come from government subsidy payments, according to new Agriculture Department statistics.
For many farmers, in fact, income from federal crop supports this year could exceed amounts they made when market prices were higher and supplies tighter.
Robert L. Thompson, assistant agriculture secretary for economics, said federal direct-subsidy payments are expected to account for about $8 billion of the $38.6 billion that the department is calculating as farmers' net cash income.
But these "deficiency" and land-diversion payments to producers of major crops could be only a fraction of overall federal farm-program expenses, which Thompson said could surpass the 1983 record of $18.9 billion. Large-scale forfeitures of crop loans would send federal costs soaring again.
The imponderable in the budget equation is how much grain and cotton put under loan to the government will be forfeited. Massive forfeitures, a distinct possibility while market prices are lower than loan rates for many commodities, could leave Uncle Sam with huge amounts of hard-to-market commodities given up by farmers who choose to keep the loan money.
This year's anticipated record corn crop and a whopper wheat crop raise the possibility of as much as 3 billion bushels of corn and 800 million bushels of wheat being forfeited to the government. Wheat, soybeans, barley, sorghum and rice will have the largest surpluses in history, according to calculations by Doane's Agricultural Report, a trade newsletter.
Exceptionally high yields of corn and soybeans in the Midwest this year also heighten the potential for many farmers to make more money from federal programs than they would make in periods of higher market prices. High participation in the corn program, spurred by the Agriculture Department, virtually assures heavy loan activity and subsidy payments.
Darrel Good, an agricultural economist at the University of Illinois, said in an interview that farmers who enrolled in acreage set-aside programs and qualified for crop loans and target-price deficiency payments, and who also had significantly higher yields this year, could fare quite well.
He envisioned a farmer with a corn yield of 180 bushels per acre, 30 more than usual. The loan program guarantees him $2.55 per bushel, instead of the $2.25 or so that he might obtain on today's market. His per-bushel deficiency payment, a direct subsidy intended as an income support, would be 48 cents.
The gross from one acre of corn, all from the U.S. Treasury, would be $526. In "better" years, he might sell his corn on the market for $3.10, receive no federal help and gross only $465.
"For a lot of people in the Midwest, this will be true," Good said.
Statistics such as these have drawn new attention to efforts by some members of Congress to target limited amounts of federal assistance to farmers who need help most because of high debt, eroding assets and depressed prices.
Attempts to amend the recently passed House farm bill with targeting provisions and lower limits on federal payments were defeated. A counterpart bill before the Senate has a modified targeting approach, but the administration intends to try stimulating new interest in the subject during floor debate.
Senate Agriculture Committee Chairman Jesse Helms (R-N.C.) plans to revive on the floor an effort he lost in committee to cap farm payments and direct federal aid to those in the most economic trouble.
"Less than 20 percent of the $54 billion in benefits and subsidies provided in this farm bill are directed to farmers who are experiencing financial distress," Helms said in dissenting views on the bill he voted against in committee.
"Yet, it is the relatively high degree of financial distress that is the only justification offered by the proponents of these tremendous outlays for farm subsidies. With all due respect, such 'justification' falls into the category of false pretense," he said.
Helms and his allies say they plan to offer floor amendments that would limit the amount of crop loan a farmer is allowed to forfeit to the government, reduce deficiency-payment levels, limit the amount of commodity on which the deficiency payments are made, and close loopholes that allow families and business partners to evade the current $50,000 limit on these payments.
"We're putting out record amounts of money, and we're getting very little for it," Thompson said.
"The bulk of the money goes to the big guys -- not the low-income or the financially stressed farmers who need assistance. But there is a great resistance to targeting. The commodity groups are dominated by the large producers, and they are content with the present system," he added.