Another Sweet Farm Deal : Sugar Subsidy Sticks Out as Bad Example

Getting fat on the farm--with the government’s help--is something sugar farmers do well. Once again they’ve succeeded in fending off a reduction in a government subsidy program that costs taxpayers $3 billion a year. It’s a sweet deal and a telling example of what’s wrong with U.S. farm policy.

Congress needs to be practical and make some changes in the 1990 Farm Bill. Reforms are needed to cut, limit or freeze price and income supports on commodities that include cotton, rice, corn, wool and peanuts. The bill would replace the Food Security Act of 1985, which expires in September. The Senate wants to increase subsidies on many commodities. The House is proposing freezing price supports at the 1985 level, and in some cases, wants to cut them.

The Bush Administration is balking at both versions of the proposed $54-billion bill, saying the programs are too costly given current budgetary restraints. Agriculture Secretary Clayton Yeutter has said the President would veto the legislation unless $5 billion is lopped off the Senate version.

So far, however, legislators have resisted moves to wean farmers from government subsidies. On Tuesday, the House and Senate voted down separate amendments that would have reduced the sugar subsidy by 2 cents a pound. Last week, the Senate nixed an attempt to cut back assistance to rich farmers who have annual sales of $500,000.

The House is scheduled to vote today on a similar measure to prohibit income-support payments to farmers who have an annual adjusted gross income of $100,000 a year. The proposal could save as much as $800 million annually. The House also will vote on modifying some subsidies and closing loopholes to limit payments. The amendments face tough opposition.

Advocates of change won a minor victory Tuesday when the Senate agreed to phase out honey price supports over the next four years, but that’s not enough. The 1985 farm bill included major changes that helped restore U.S. farms to worldwide competitiveness. Price supports were cut about 10% on most commodity programs, except sugar.

Since then, U.S. agricultural exports have risen to more than $40 billion annually, up from about $30 billion four years ago. Farm income is at record levels. But critics maintain that, despite such progress, more farmers are dependent on government programs, and some--like sugar farmers--survive only with subsidies. In 1989, 82% of all growers of such major crops as wheat, corn and rice collected federal subsidies. Government payments as a percentage of their annual family budget rose to 31.7% in 1988 from 8.1% in 1980.

When the House and Senate meet in conference to come up with the final version of the 1990 Farm Bill, they need to help farmers become more competitive. The House version does that better.