WASHINGTON — Direct farm subsidy payments have provided billions of dollars to producers in Nebraska and Iowa over the years, but the program is on the chopping block in the farm bill before the Senate this week.
Iowa farm operations received $407 million in direct payments in 2010, more than in any other state, according to Department of Agriculture data compiled by the Environmental Working Group, an organization that has been critical of the farm subsidy system.
Nebraska's $239 million in direct payments in 2010 ranked seventh in the country.
Lawmakers from both states support ending the program, which has been pilloried by critics as representative of everything that is wrong with the country's agricultural policies.
Direct payments were originally conceived as a temporary approach that would help farmers transition off government support, but Congress kept renewing the payments.
Direct payments have been particularly easy to attack, because they are handed out to producers based on historical production, and are not triggered by actual losses or a drop in prices.
In an era of federal budget constraints and booming agricultural revenues, even farm state lawmakers have dubbed the program indefensible, including Sen. Mike Johanns, R-Neb., a former U.S. secretary of agriculture.
“In the era of farmers going broke because prices were so low, you could make the case for direct payments,” Johanns said. “You can't now.”
Sen. Tom Harkin, D-Iowa, former Senate Agriculture Committee chairman, agreed. Direct payments “cannot be justified on any grounds whatsoever” at this point, he said.
“Even though Iowa got the most money, I said it was wrong from the beginning,” Harkin said. “I've never been a fan of it.”
Harkin said he believes that federal funding should be directed to such areas as ag research and conservation programs.
Harkin supports the legislation's approach of using the money saved from direct payments to bolster crop insurance protection, in part by creating new “shallow loss” programs that essentially would cover more of a farmer's deductible in the case of a loss.
Those shallow loss provisions could make up much, if not all, of the money that Nebraskans and Iowans would lose on direct payments, although that is difficult to predict.
Sen. Ben Nelson, D-Neb., said the point is to craft a better program and save money. The Senate farm bill does include about $23 billion of deficit reduction.
“Even if there is a differential (for Nebraska), the fact that we have a better program in place now for the future is important,” Nelson said.
Although Nebraska and Iowa receive large amounts of direct payments overall, per-acre payments are actually higher for farmers growing Southern crops such as cotton and peanuts.
Most farm bill disagreements break along regional, not partisan, lines, and this year is no different. Southern lawmakers are expected to try to make the bill more friendly to their part of the country during this week's floor debate.
Sen. Chuck Grassley, R-Iowa, said the Senate may be able to resist the Southerners' demands, but the House is another matter.
“Iowa's being hurt more than any other state,” Grassley said, referring to the probable loss of direct payments, “but we're also benefiting from the higher prices of our grain as well.”
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