Growing Concerns on Farm Cuts

President Bush’s proposal to trim federal farm subsidy payments is planting fears among some of the state’s cotton and rice growers.

“This could be crippling for many California farmers,” said Mark Watte, whose family tends 2,000 acres of cotton west of this San Joaquin Valley town.

Cotton and rice operations collected the bulk of the $672 million in federal subsidies paid out in California in 2003, the latest year statistics are available, according to the Environmental Working Group, a Washington-based nonprofit agency.

Nationwide, farmers were paid $16.4 billion in 2003, the group said.

Advocates see the payments as a cushion for a key industry against bad times. Opponents see them as corporate welfare.

For growers like Watte, who owns one of the largest cotton farming operations in Tulare County, the payments are especially important in years like this. A worldwide cotton glut has dropped prices to about 43 cents a pound from about 74 cents a pound a year ago.

Under the Bush proposal, farmers would see their maximum annual payment slashed to $250,000 from $360,000, said Keith Collins, chief economist at the U.S. Department of Agriculture. And the rules for how the money is collected would be tightened.

Current regulations allow growers to collect indirect payments from multiple farming concerns in which they have ownership interests. The Bush administration wants to limit the subsidies to individuals, possibly through the use of Social Security numbers, Collins said.

All told, the fiscal 2006 budget would cut farm subsidy spending by $587 million, or 5%, and would reduce farm aid by $5.7 billion over 10 years.

“Farmers are going to understand that our country cannot run a deficit at this level and expect anything good to come out of that over the long term,” Agriculture Secretary Mike Johanns said Monday at a news conference in Washington.

“We have to deal with the deficit if they are going to have a long-term future in agriculture.”

Bush’s plan probably will set off a bitter battle on Capitol Hill, where lawmakers will weigh efforts to slash the nation’s budget deficit while facing political pressure from farm lobbies in the nation’s agricultural states.

“At this point, it is just a proposal,” said Mark Bagby, spokesman for Bakersfield-based Calcot, the largest cotton growing cooperative in the Western United States. “Through the years, a lot of things have been proposed.”

Rice farmers also are bracing for a struggle over subsidies.

Charley Mathews, who farms about 1,000 acres of rice in Marysville, Calif., said the proposed cuts probably marked the beginning of negotiations.

“I think in this case because of the looming budget deficit,” he said, “there’s going to be some cuts to the farm program payments.”

Tim Johnson, chief executive of the California Rice Commission, said other industries would be affected if crop payments were reduced.

“There are truckers who haul the crop, shippers who send it out for export, the rail carriers,” he said.

“It’s not just the farmers who are involved.”

If enacted, Bush’s plan could represent a major reform of the agricultural subsidy system in the United States, said Ken Cook, president of the Environmental Working Group.

The group, which publishes an annual database of federal farm subsidies, says the system isn’t equitable and tends to favor large agricultural businesses while doing little to support the small farms the program was designed to protect.

“It is good to limit payments to the big producers,” Cook said.

Although important to some farmers, the fight over subsidies won’t be much of an issue for most of California’s $30-billion agriculture economy, which relies on unsubsidized products such as wine, nursery plants, fruits, vegetables and beef. In 2003, California produced $761 million of cotton, making it the state’s 11th-largest farm commodity. Rice was No. 16, with $373 million in sales.

But as cotton farmer Watte walked between the exhibits of giant cotton harvesters and tractors at the World Ag Expo, the world’s largest farm equipment show, which opens in Tulare today, he said, “The writing is on the wall.”

Political pressure in Washington and from international concerns such as the World Trade Organization points to at least a gradual decrease in federal subsidy payments, he said.

“I have no complaint with the idea that we all need to start getting less,” Watte said.

“But I hope they don’t single out large farms because they are larger.”

A cut in payments could put some farmers out of business or send them to other crops, Watte said. The farmer figures that he could adapt by switching some of his acreage over to pistachios and row crops such as green beans and black-eyed peas.

“Some of us are prepared to make changes,” Watte said, “but we need time to do it.”

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Times staff writers Julie Tamaki and David Colker contributed to this report.

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Farm subsidies

The top 10 recipients of USDA farm subsidies in California:

Total USDA subsidies Corporate Main crops 1995-2003 Recipient headquarters subsidized (millions)

Farmers Rice Coop* Sacramento Rice $134.3 J.G. Boswell Corcoran Cotton 17.3 Dublin Farms Corcoran Cotton, wheat 11.8 Wolfsen Land & Cattle Los Banos Cotton 11.1 R. Gorrill Ranch Enterprises Durham Rice 9.1 Hansen Ranches Corcoran Cotton 8.6 C.J. Ritchie Farms Visalia Cotton 8.2 Buttonwillow Land & Cattle Buttonwillow Cotton, wheat 8.1 Starrh & Starrh Cotton Shafter Cotton 8.0 Westfarmers Visalia Cotton 6.7

*A cooperative that distributes payouts to multiple farms.

Source: Environmental Working GroupÕs Farm Subsidy Database