Interesting Article

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Bez?

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I especially liked Mr. Andersons typical bureaucratic answer on administrating the plan.

Bez?
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Farm Program Pays $1.3 Billion to People Who Don't Farm

By Dan Morgan, Gilbert M. Gaul and Sarah Cohen
Washington Post Staff Writers
Sunday, July 2, 2006; Page A01

EL CAMPO, Tex. -- Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.

Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.

These homes in El Campo, Tex., stand on land once used to grow rice. Because of that, their back yards qualify for direct payments under federal agricultural programs as long as the owner does not develop the acreage. (By James M. Thresher -- The Washington Post)

Changing Farm Program
Federal farm programs began during the Great Depression, when one-quarter of the U.S. population lived on farms. The programs guaranteed prices by effectively allowing farmers to sell some crops to the federal government when markets were poor. Farmers who participated in the programs were required to limit their production. Here is how the farm programs evolved:

Money for Nothing
In 2002, this land in El Campo, Tex., was a rice field. Today, owners of new homes on the land collect farm subsidies on their back yards. One real estate broker refers to the properties as "cowboy starter kits."


Interactive Map: Raising Cash
This map shows each county that received the payments in the past calendar year and the program's 10 largest recipients in each county, according to payment records obtained by The Washington Post from the U.S. Agriculture Department as of February 2005.

Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.

Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.

"I don't agree with the government's policy," said Matthews, who wanted to give the money back but was told it would just go to other landowners. "They give all of this money to landowners who don't even farm, while real farmers can't afford to get started. It's wrong."

The checks to Matthews and other landowners were intended 10 years ago as a first step toward eventually eliminating costly, decades-old farm subsidies. Instead, the payments have grown into an even larger subsidy that benefits millionaire landowners, foreign speculators and absentee landlords, as well as farmers.

Most of the money goes to real farmers who grow crops on their land, but they are under no obligation to grow the crop being subsidized. They can switch to a different crop or raise cattle or even grow a stand of timber -- and still get the government payments. The cash comes with so few restrictions that subdivision developers who buy farmland advertise that homeowners can collect farm subsidies on their new back yards.

The payments now account for nearly half of the nation's expanding agricultural subsidy system, a complex web that has little basis in fairness or efficiency. What began in the 1930s as a limited safety net for working farmers has swollen into a far-flung infrastructure of entitlements that has cost $172 billion over the past decade. In 2005 alone, when pretax farm profits were at a near-record $72 billion, the federal government handed out more than $25 billion in aid, almost 50 percent more than the amount it pays to families receiving welfare.

The Post's nine-month investigation found farm subsidy programs that have become so all-encompassing and generous that they have taken much of the risk out of farming for the increasingly wealthy individuals who dominate it.

The farm payments have also altered the landscape and culture of the Farm Belt, pushing up land prices and favoring large, wealthy operators.

The system pays farmers a subsidy to protect against low prices even when they sell their crops at higher prices. It makes "emergency disaster payments" for crops that fail even as it provides subsidized insurance to protect against those failures.

And it pays people such as Matthews for merely owning land that was once farmed


"We're simply administering it the way Congress established," said John A. Johnson, a top official at the U.S. Agriculture Department.

Today, even key farm-state figures believe the direct-payment program needs a major overhaul.

These homes in El Campo, Tex., stand on land once used to grow rice. Because of that, their back yards qualify for direct payments under federal agricultural programs as long as the owner does not develop the acreage. (By James M. Thresher -- The Washington Post)

An investigation by The Washington Post found that billions of dollars in crop payments were paid out over the past six years, with a good deal of the money going to people who don't farm.

Farm Subsidies Over Time

In recent years, farm subsidies have remained high even in years of near-record profits.

A Changing Farm Program

Federal farm programs began during the Great Depression, when one-quarter of the U.S. population lived on farms. The programs guaranteed prices by effectively allowing farmers to sell some crops to the federal government when markets were poor. Farmers who participated in the programs were required to limit their production. Here is how the farm programs evolved:

Money for Nothing
In 2002, this land in El Campo, Tex., was a rice field. Today, owners of new homes on the land collect farm subsidies on their back yards. One real estate broker refers to the properties as "cowboy starter kits."


"This was an unintended consequence of the farm bill," said former representative Charles W. Stenholm, the west Texas Democrat who was once the ranking member on the House Agriculture Committee. "Instead of maintaining a rice industry in Texas, we basically contributed to its demise."

Freedom to Farm

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The program that pays Matthews was the central feature of a landmark 1996 farm law that was meant to be a break with the farm handouts of the past. Subsidies began when the Roosevelt administration stepped forward to support millions of Depression-era farmers suffering from low prices. By the early 1990s, U.S. agriculture was a productive marvel, yet was still mired in government controls and awash in complex subsidies.

When the Republicans took control of Congress in 1995, they brought a new free-market philosophy toward farm policy. In a break with 60 years of farm protections, they promoted the idea that farmers should be allowed to grow crops without restrictions, standing or falling on their own. The result was the 1996 bill, which the Republicans called Freedom to Farm.

The idea was to finally remove government limits on planting and phase out subsidies. But GOP leaders had to make a trade-off to get the votes: They offered farmers annual fixed cash payments as a way of weaning them off subsidies.

That sweetener was needed to win over wheat-state Democrats -- led by Senate Minority Leader Tom Daschle (S.D.) -- and GOP House members from rice and cotton districts. Wheat growers alone stood to receive $1.4 billion in the first year. The payments for rice growers were increased by $52 million at the last minute in an effort to win support from Sen. David Pryor (D-Ark.).

The new payments were calculated on a farm's "base acres," or production dating to 1981. For example, if a farmer had planted 400 acres of rice, he was entitled to a check of about $100 an acre, or $40,000, every year. The amount per acre varied depending on past production.

The payments were unrestricted -- farmers got them whether or not they grew any crops, or whether prices were high or low.

Owners could do almost anything they wanted with their land, as long as they did not develop it. They could leave it fallow or rent it for pasture. They could set up a hunting retreat. Or, as happened in some Louisiana parishes, landowners could collect payments while planting stands of commercial timber.

Supporters said these annual payments gave farmers the flexibility to switch from one crop to another as market conditions changed, or even to sit it out in a year of low prices. In addition, the payments fit with international trade rules that frown on traditional price supports.

The annual payments were dubbed "transitional" and were supposed to decline over seven years. Many lawmakers assumed they would eventually end. But two years later, farm prices fell sharply, and the Republican-led Congress gave in to the farm lobby.

Sen. Thad Cochran (R-Miss.) used his power as chairman of the Appropriations subcommittee on agriculture to push through $3 billion in "emergency" assistance to grain, cotton and dairy farmers. That was only the beginning of a retreat by Republicans fearing retribution at the polls in key "red" states with broad farm constituencies.

"The original intent was to make a step in the direction of eliminating farm programs," said then-House Majority Leader Richard K. Armey (R-Tex.), who led an unsuccessful fight in the 1990s to trim the subsidies. "By 1998, there was no zeal left."

Instead of cutting, Congress ended up expanding the program, now known as direct and countercyclical payments. A program intended to cost $36 billion over seven years instead topped $54 billion.

"The farm policy we're pursuing now has no rhyme or reason, and we're just sending big checks to big farmers," said Gary Mitchell, now a family farmer in Kansas who was once a top aide to then-Rep. Pat Roberts (R-Kan.), the 1996 bill's House sponsor. "They're living off their welfare checks."

Efforts to overhaul the farm subsidy network have been repeatedly thwarted by powerful farm-state lawmakers in Congress allied with agricultural interests.

"The strength of the farm lobby in this town is really unbelievable," Armey said. "I don't think there's a smaller group of constituents that has a bigger influence."

'Cowboy Starter Kits'
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Farmers and landowners benefited from the 1996 law whether their land once grew wheat, corn, cotton or any of the other subsidized crops. But nowhere is the impact more evident than in the sunbaked Texas rice country that spreads southwest from Houston to the Colorado River and east to the Gulf of Mexico.

In 1981, the Texas rice belt extended over about 600,000 acres. By last year, USDA records show, the amount of planted rice had shrunk to 202,000 acres, partly because landowners were able to get farm payments even if no rice was grown on their land.

In fact, so many landowners and farmers are collecting money on their former ricelands -- $37 million last year alone -- that the acres no longer used for rice outnumber the planted ones.

"So many wealthy people are getting so much money off this, it's going to be hard to cut," said Michael Wollam, a rice farmer from Brazoria County.

At a housing development rising from old rice fields on the outskirts of El Campo, 70 miles southwest of Houston, local real estate broker John K. Petty purchased a 75-acre tract from investors in July 2002. He held on to it for a few months, then carved it up and resold it for housing.

"At one time, the area was all farmed in rice," Petty said. Now, the dusty tract is perfect for what he calls "cowboy starter kits," residential tracts owned by nonfarmers but still large enough to keep a horse in the back yard.

Petty informed potential buyers that because their land had once been an active rice field, they could collect an annual payment from the USDA on the portion that was not developed. They did not have to grow rice or anything else.

"If you have 10 acres and build a house on one, you can continue to get farm payments on those other nine acres without farming," the USDA's Johnson said.

Petty used it as a selling point.

"Does it increase the marketability?" Petty asked. "Sure it does."

Duane Korenek bought 17 acres at the site and is building a house. Korenek said it was "common knowledge around here" that the new owners could collect farm payments. He has received about $2,550, USDA records show.

A few hundred yards up a gravel and dirt road, oilman Rene Hamman purchased 20 acres in May 2003. His two-story house and garage sit on part of the land and are appraised at $338,140, records show. His payments have been about $4,500, according to USDA records. "The money is free," Hamman, 48, said, adding that he thought the money should go to real farmers. "You don't have to do anything but keep the ground."

When Donald Matthews bought his 18-acre tract from Petty in 2002, he never expected to receive farm subsidies on his property, appraised at $381,000.

"I was informed by Mr. Petty that there was a 'rice base' and I was entitled. I said, 'What do you mean I'm entitled? I'm not going to farm rice.' "

But nine of Matthews's acres are classified as agricultural land, for which he has received more than $5,000, records show.

Matthews said he originally was not going to take the money. But he said Petty told him that it would just go to other landowners. "I thought, heck, why should I do that? I wasn't going to give it to somebody else to put in their pocket." Instead, he uses the money to fund scholarships at the county fair and two local high schools, he said.

"Still, I get money I don't think I'm entitled to," he said.

In some Texas counties, the federal payments open the door to another benefit: property tax reductions.
 

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