Senate's Farm Bill Includes $10 Billion in New Aid
Dan Morgan
Special to The Washington Post, Nov. 13, 2007

Thanks to the application of a little last-minute budgetary magic, the farm bill before the Senate this week authorizes about $10 billion in new subsidies, price guarantees and disaster aid in the next decade, even as farmers report near-record profits.

There is a new $5.1 billion "disaster trust fund," as well as a revenue insurance program that would increase taxpayer costs by $4.7 billion over 10 years, according to the Congressional Budget Office. Spread through the huge bill are gains for producers of wheat, milk, sugar, peanuts, barley, oats and honey, and a new $1 million-a-year subsidy earmarked for camelina, a seed used to make biofuels. "Pretty much everywhere you look, farm subsidies are being increased," said Daniel A. Sumner, an agricultural economist and adjunct scholar at the American Enterprise Institute, a conservative think tank.

Few predicted that outcome a few months ago.

Fiscal conservatives and a broad coalition of farm program critics were primed to pare back the subsidies. President Bush, stung by a barrage of criticism after he signed a 2002 farm bill laden with billions of dollars in new subsidies, was on the side of the reformers....But in a surprising turnabout engineered by key farm-state lawmakers, the bill on the Senate floor builds strongly on the price guarantees and supports included in the controversial 2002 legislation, which authorized $73 billion more in subsidies, food stamps and other agriculture-related spending. The Senate bill is more generous than a House version that passed in July....

One innovation would pay farmers $15 a year for each eligible acre -- whether they plant anything or not -- while guaranteeing them an additional payment if crop revenues in their state fall short of the norm....The plan is backed by the National Corn Growers Association and is sponsored by Sens. Richard J. Durbin (D-Ill.), Sherrod Brown (D-Ohio) and Harkin.

In a Nov. 1 estimate, the Congressional Budget Office (CBO) determined that the program would reduce government costs by $2.4 billion between 2008 and Sept. 30, 2017 -- the official window for judging whether a program conforms to the pay-as-you-go budget rules....But the CBO said that about $11 billion in revenue-guarantee payments would be made after the 2017 cutoff date. So instead of reducing expenditures, the new program would actually cost $4.7 billion, after some delayed savings are factored in....

Harkin himself has criticized another major new program included in the Senate version of the bill, a $5.1 billion, five-year trust fund to cover weather losses of farmers and ranchers....

The disaster fund has been a priority for Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Kent Conrad (D-N.D.), whose dry Western states are plagued by droughts and other natural disasters. But acting Agriculture Secretary Charles F. Conner last week blasted the Senate for "asking other sectors to bear the costs" of the farm bill.

Meanwhile, a wide range of commodity interests also stands to benefit from the Senate bill. Sugar beet and sugar cane growers would get a new program aimed at protecting their share of the U.S. market in the face of an expected surge in Mexican imports. The 10-year cost: about $1.3 billion. Tucked into the measure is good news for the companies that store and handle the South's peanut crop. The bill partially reinstitutes a program that was discontinued in 2006, allowing the companies to bill the government for some costs they incur under the federal price-support program. The CBO has set a $175 million, 10-year price tag on that.

According to records provided to The Washington Post by the Department of Agriculture, peanut warehousing is dominated by two large corporations that in the past received about half the federal storage payments. They are Virginia-based Birdsong and a joint venture between agribusiness giant Archer Daniels Midland and a Swiss partner. The Senate version of the bill also continues a special break for peanut growers that was included in the 2002 legislation. Diversified farmers can keep collecting federal peanut subsidies even after they have reached the subsidy limit on their other farming operations.

Morgan is a contract writer of The Washington Post and a fellow with the German Marshall Fund, a nonpartisan public policy institution.