Disaster Dollars Frustrate other Farm Interests

By Beacon Staff

WASHINGTON (AP) – There’s not much extra money for the farm bill this year, but some senators have found a way to include $5 billion to reimburse farmers for weather-related crop losses.

It’s a politically popular proposition in parts of the Midwest and West, but it’s causing heartburn for some environmental and farm groups who would like to see the money distributed elsewhere.

“The real issue here is what is the government’s responsibility?” said Ken Cook, head of the Environmental Working Group, an advocacy organization that has opposed the aid. “You are squeezing out the opportunity to invest in other things.”

Cook argues the money will go to drought-prone states, such as the Dakotas and Montana, that already get millions in farm subsidies. Senate Finance Committee Chairman Max Baucus of Montana authored the disaster legislation, approved by his panel Oct. 4 to be part of the farm bill.

Cook’s group recently released a study that reports the government spent $26 billion in emergency agricultural disaster aid between 1985 and 2005. According to the study, 66 percent of “chronic recipients” — or farmers who have received disaster aid for 11 years or more — come from five states. Texas tops that list, followed by South Dakota, North Dakota, Oklahoma and Georgia.

North Dakota Sen. Kent Conrad, a Democrat, likens the study to “criticizing Katrina aid because it would go to a place that floods.”

Conrad has spent much of his Senate career arguing for disaster aid as the Dakotas have suffered an intense drought. He says the nations’ farmers need protection because their business is harsh and unpredictable.

“If you don’t find ways to even out the swings then you’d have mass bankruptcy,” Conrad said. “This is critically important because agriculture is right at the center of American economic strength.”

Baucus’s bill would require farmers and ranchers to purchase crop insurance in order to be eligible for disaster assistance, which supporters say ultimately would help taxpayers by potentially decreasing the amount of government aid they will need.

The legislation “protects taxpayers by encouraging farmers to take care of themselves,” Baucus says.

Critics disagree. Sen. Pat Roberts, R-Kansas, has said he is concerned the program could be used as a “slush fund” for non-agriculture programs.

“We should consider disaster on a merit and need basis,” he said.

In a statement, Chuck Conner, acting head of the U.S. Department of Agriculture, says the administration would prefer to protect farmers in ways that include basing farm payments on when revenues are low, and increasing direct payments to farmers.

Sara Hopper, a farm policy expert for Environmental Defense, says the money should be going instead to conservation programs that protect environmentally sensitive farmland.

“The permanent disaster program will add $5.1 billion to our farm subsidy system at a time of record-high net farm income, and at a time when we’re struggling to find resources for conservation, renewable energy, and nutrition programs,” she said.

The money could prove to be a problem down the road.

Senate Agriculture Chairman Tom Harkin, D-Iowa, has never really liked the idea of a permanent disaster fund, and has said he would prefer to use extra money for other priorities. But he has conceded in recent weeks that the disaster program probably would be part of the bill.

Also controversial is the way Baucus is paying for the agricultural aid. The bill would raise money by cracking down on companies under the “economic substance” doctrine, which holds that for a company to claim a tax deduction for a specific transaction, that transaction must yield a profit or have some other clear economic benefit separate from the tax effect.

Though that idea has the support of Iowa Sen. Charles Grassley, the top Republican on the finance panel, most of the committee’s other Republicans voted against it.

The disaster money is only one sticking point in the farm bill as senators continue to haggle over how much to cut farm subsidies, and the amount of money that will be distributed for conservation programs. The Senate Agriculture Committee is expected to consider the bill this month, if negotiations go well.

If the disaster money survives the Senate, it could face obstacles in negotiations with the House. House Agriculture Chairman Collin Peterson, D-Minn., decided not to include the money in his version of the bill. Although Peterson supports disaster aid, he decided there wasn’t enough money for it.

The House passed its version of the farm bill in July.