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As if the battle over the budget as well as the looming fight over the debt ceiling were not enough, there's a Farm Bill. Congress extended the Farm Bill after the fiscal cliff deal in January, but that extension expires at the end of the month. Congress is bitterly divided on food stamps and other issues. But both parties agree on something: The $5 billion-a-year farm subsidy called direct and countercyclical payments must go.
Frank Morris, of member station KCUR, reports the program shells out money to farmers and land owners regardless of need.
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FRANK MORRIS, BYLINE: David McKee raises corn, soybeans and cattle on the rolling land near Harrisonville, Missouri. Farm policy is not his thing, but he can see why people would be upset about direct payments.
DAVID MCKEY: The average working man who is struggling right now, paying his taxes, wonders why are we giving farmers payments for really nothing.
MORRIS: Many Midwestern farmers are wondering the same thing.
BILL WENDEL: Welfare for the farmers is what they call it.
MORRIS: A few miles away, Bill Wendel is cleaning tens of thousands of dollars' worth of corn out of a storage bin to make room for the new crop he's about to harvest. He says he doesn't need his direct and counter-cyclical payment, or DCP. His expenses are huge, but he says this farm is grossing about a million dollars a year.
Swings in the price of corn and soybeans can quickly cut or boost his income by hundreds of thousands of dollars.
WENDEL: So that little $10,000 DCP payment don't mean nothing.
RON HIGHLEY: Well, it's probably not as important now as it was.
MORRIS: At the Farm Service Agency in Harrisonville, Missouri, the guy in charge, Ron Highley, says a lot of good farms would have gone under in the late '90s if not for subsidies.
HIGHLEY: I mean that's how we made farm payments, that's how we paid for fertilizer. It was kind of the money the farmer's made.
MORRIS: And in 1996, a new idea called direct and counter-cyclical payments was the latest and greatest thing in farm policy.
KEITH COLLINS: At the time, in the mid-1990s, direct payments looked like the best of all possible worlds.
MORRIS: Keith Collins had a great vantage point on the birth of direct payments.
COLLINS: I did. I was chief economist at USDA.
MORRIS: Back then, Collins says, U.S. farm subsidies were breaking international trade rules by prompting farmers to plant so much of this or that. Direct payments came with almost no strings attached.
COLLINS: So they were independent of production. They were not trade distorting. They were consistent with our new WTO obligations and they could control the budget exposure because they were no longer a variable payment that got very large when prices declined.
MORRIS: On top of all of that, direct payments were supposed to phase out and stop more than a decade ago, heralding a new age free from federal farm subsidies. That didn't happen, partly because Southern farmers growing cotton, rice and peanuts came to rely more on direct payments. They haven't seen the big gains in crop prices that corn and soybean farmers have and don't glean as much benefit from federally subsidized crop insurance. So Collins says overall farm income has soared while the federal budget deficit has mushroomed.
COLLINS: I don't think most people expected that direct payments would be made in 2013, but alas, here we are.
GREG COX: It is absurd. It's bad farm policy on autopilot.
MORRIS: Greg Cox with the Environmental Working Group has railed long and hard against the $5 billion-a-year direct payment subsidy.
COX: It doesn't matter whether farmers are doing well and whether prices are high, prices are low. The cash just flows and the cash flows to people who aren't even farmers.
MORRIS: That's true. Back at the Farm Service Agency in Harrisonville, Ron Highley will tell you about it.
HIGHLEY: We do quite a bit of business for people that live in the city but own land somewhere else in the United States - millionaires, ball players, actors, whatever, that own land.
MORRIS: Greg Cox says it just shows that direct payments are benefitting land owners, not necessarily farmers, and he says support for them has all but vanished.
COX: It looks like if we ever get a farm bill done that direct payments will finally, finally go away. That's the good news.
MORRIS: The bad news: If Congress can't agree on new farm policy this fall, the outdated, discredited subsidy called direct payments might just survive anyway. For NPR News, I'm Frank Morris in Kansas City. Transcript provided by NPR, Copyright NPR.
