Getting Farmers off the Dole

By DAN GOODGAME WASHINGTON

Mention farm aid, and most Americans think of the benefit concerts Willie Nelson throws for debt-plagued family farmers. In reality, the average full- time farmer boasts a net worth of $1,016,000 and annual income of $168,000 -- thanks in large part to federal handouts.

These averages are somewhat distorted by the high incomes and wealth of a few thousand huge growers. But farm-subsidy payments, which totaled about $20 billion last year, are equally skewed. Most small farmers receive few if any federal payments, 40% of which flow to the wealthiest 60,000 at a cost to the average family of about $500 a year in higher taxes and federally boosted food prices.

Few domestic programs have attracted more criticism -- or a more ferocious defense -- as White House and congressional negotiators try to assemble a $50 billion package of new taxes and spending cuts to reduce the federal deficit. A growing though still small alliance of free-market, suburban Republicans and big-city Democrats is pushing unprecedented changes in the 1990 farm bill that comes to the House floor later this month. The reformers, led by Congressman Dick Armey, a Texas Republican, and Representative Charles Schumer, a New York Democrat, would end federal payments to farmers with adjusted gross incomes of , $100,000 or more a year and otherwise restructure farm programs to save more than $1 billion annually.

When U.S. farm programs were devised during the agricultural collapse of the Great Depresssion in the 1930s, they were described as "temporary emergency measures." More than a half-century later, their central goals -- stabilizing farm production and prices and raising farm income -- remain little changed, despite a huge surge in farm incomes during the late 1980s. The programs' invulnerability stems in part from millions of dollars in campaign contributions from wealthy farmers and the elaborate rationales high-priced farm lobbyists have concocted for keeping them in place. Among these is the notion that farm subsidies provide a "safety net" to preserve the wholesome life-style of the small family farmer, who needs protection from uncertain weather and rapid drops in commodity prices. Nonetheless, the number of farms decreased from 2.4 million to 2.2 million between 1980 and 1988.

Agriculture Secretary Clayton Yeutter argues that in the heavily subsidized competition for world food sales, the U.S. must not "disarm unilaterally" by abruptly abandoning Government farm supports. Yeutter and George Bush are relying instead on negotiated worldwide reductions in farm subsidies. The subject is expected to produce much talk -- and little progress -- at this week's Houston summit of the seven major industrialized democracies.

Critics reply that current farm policy hurts exports by artificially raising prices of American commodities above those of foreign competitors. In addition, farmers who get reliable subsidies for crops such as corn have no incentive to shift to unsubsidized crops such as soybeans, even though they are in heavy demand overseas.

Another strong argument for a freer market in agriculture is that current policy is based on a double standard: only a relative handful of crops (such as cotton, rice and certain feed grains) receive direct federal subsidies, while another handful (including sugar, peanuts, citrus) benefit from byzantine supply-control arrangements. The vast majority of the 400-plus crops grown in the U.S., from tomatoes to potatoes to peas, prosper -- or fail -- with little Government aid. For that reason, many farmers who grow those crops are staunch opponents of farm payoffs. Says Bill Johnston, whose family grows melons, peppers and potatoes in California's San Joaquin Valley: "Farm subsidies are like the welfare system -- they spoil people."

Both critics and supporters of current farm policy are skeptical about Armey's plan for cutting farm aid to the wealthiest farmers. House Agriculture Committee chairman Kika de la Garza, a Texas Democrat, points out correctly that kicking big, wealthy farmers off the dole would end federal "leverage" over their planting decisions and allow them to vastly expand their production. As a result, farm prices and income could be driven down, raising the cost of federal support for smaller farmers. Industry critic James Bovard, author of The Farm Fiasco, adds that current limits on farm subsidies (generally $50,000 a farm) are widely evaded by big operators, who divide their spreads into separate legal entities, each of which often qualifies for aid.

White House officials, while hungry for farm-spending cuts, insist that wealthy farmers can be weaned from welfare only by reforming the whole tangled farm-subsidy system. One promising idea is to convert the direct-payment programs to a self-financed insurance system in which profits in good years would be used to cushion losses in bad years, while keeping food prices relatively stable. Only through such imaginative steps can farm policy protect the interests of both producers and consumers at a price the nation can afford.

CHART: NOT AVAILABLE

CREDIT: TIME Chart

CAPTION: GROWING STRONG

Net Farm Income

With reporting by Dan Cray/Los Angeles and Hays Gorey/Washington