Billions in Wrong Troughs

The farm lobby would have us believe that most farmers are on the edge of poverty and that the only solution is to keep giving them more money. Taxpayers will spend $26 billon this year on federal farm aid; President Reagan last month pledged $200 million more to bail out the farmers. In fact, most farmers are doing fine, and federal aid is not reaching the ones in trouble. It is instead lining the pockets of a rich minority who are making it harder for the others to make it. Before voting to dump more cash into America’s farmland, Congress should take a fresh look at the programs that it has in place.

American farmers are said to be the most productive in the world, victims of their own efficiency. Some are; some aren’t. Of America’s 2.4 million farms, 337,000 yield three-quarters of the U.S. agricultural output. These farms are in no financial trouble at all. That leaves about 2 million farms producing less than a third of U.S. agricultural output, and their financial situation is less clear. Of these, about 1.7 million have at least one family member earning full-time income off the farm. Some of these farms are part-time ventures, some are tax shelters. In all, about two-thirds of American farmers are under no greater financial stress than the rest of us. The small, full-time family farms, of which there are about a half-million, are the ones in real trouble, and they are receiving too little help from Washington.

The central flaw of the agricultural price-support system is that it distributes money according to output. That encourages overproduction, depresses market prices and makes it harder for all farmers--particularly the small ones--to earn a living.

About one-third of last year’s federal aid went to farmers with annual incomes of more than $250,000 and net worths exceeding $900,000. The Department of Agriculture estimates that about 25% of the aid went to farmers who were on the edge of bankruptcy. Fully two-thirds of deficiency payments, meant to prop up farm income, went to farmers who were wealthier than the average U.S. taxpayer.

What’s more, program loopholes allow the big farms to reap millions of federal dollars. The government’s limit of $50,000 of aid per farmer is easily evaded. Many of the largest producers divide up their farms and receive $50,000 for each parcel. Last year more than three times as many cotton and rice farms received government subsidies as were actually counted in the census. Many such farms, including some in California, will receive more than $1 million in federal subsidies. Indeed, nearly half of all deficiency payments this year will be received by farmers who have gone over the $50,000 limit.

The federal government obviously is shoveling billions of dollars into the wrong troughs--a case of waste and abuse that is right up President Reagan’s alley.

To his credit, he has tried to get changes. Perhaps when the elections are over he can start another campaign to persuade Congress to rewrite farm laws so that if it cannot bring itself to stop giving money away it will at least give it to people who need it.