Uncertain Harvest A Subsidy To End All Subsidies Plan Would Give Farmers A Single, Massive Payment

With Congress considering an end to federal farm programs, a small but potentially influential group of area farmers and agricultural businessmen is proposing the subsidy to end all subsidies.

In a document submitted last month to U.S. Rep. George Nethercutt, the group suggests a one-time “buyout” under which farmers would receive a single massive payment. After that, they would be on their own, ending in one fell swoop the decades-old program of federal price supports.

“It’s going to end one way or another,” said Andrew Thostenson, author of the so-called “Agriculture Revitalization Act of 1995.” “You can either draw it out and make it painful, or you can get it over with quickly.”

The single payment would help farmers clear their debts and revamp equipment to prepare for life in a free-market system, argued Thostenson, owner of the Spectrum Crop Development Corp. and a member of Nethercutt’s agriculture policy advisory group.

The proposal is not being embraced by mainstream agriculture. Many farmers worry about such a complete break from the federal safety net.

“I think we will see a great exodus of people that will just take that money and run with it,” said Phil Isaak, past president of the Washington Association of Wheat Growers.

The association itself refused to even second a motion to discuss the proposal when it was raised by the Lincoln County chapter earlier this month.

The buyout’s hefty price tag - proponents have broached the figure of $38 billion - is also certain to make it a tough political sell, said U.S. Sen. Patty Murray, D-Wash.

“My quick reaction is, in this Congress where we just went through horrendous budget proposals, there is not going to be $40 billion to be found,” she said.

But Nethercutt has mentioned the proposal to a bevy of fellow Republican legislators, including House Speaker Newt Gingrich, House Agriculture Committee Chairman Pat Roberts and Majority Leader Richard Armey. He also showed it to Agriculture Secretary Dan Glickman.

He said he received a good response “in broad terms,” particularly to other aspects of the proposal seeking tax relief, regulatory relief and less disruption in foreign markets for foreign policy purposes.

“I didn’t get any firm commitments that, ‘Yep, we agree this is what we want to do,”’ Nethercutt said. “But they did say this is an interesting approach and somebody’s given it an awful lot of thought.”

One House agriculture committee staffer called the buyout “an interesting concept” but said Roberts and other members are not fully convinced that government should entirely withdraw its financial support for farmers.

So far, farm bill proposals range from the Clinton administration’s desire to continue paying for farm programs at a cost of about $13 billion a year to a House proposal of $9 billion in cuts over the next five years. House Republican leaders earlier this month promised to re-examine the cuts if land values drop five percent or more by 1998 and if farmers do not get relief from various regulations, taxes and trade embargoes.

Buyout proponents loosely estimated that continued farm subsidies, which are favored by Murray and the Washington Association of Wheat Growers, will cost taxpayers more than $100 billion over the next 10 years. A five-year phasing out of subsidies would cost $40.8 billion.

Under the $38 billion buyout plan, payments would go directly to landowners. Tenants would be paid off in proportion to their share of a farm operation, said Thostenson.

The buyout proposal grew out of Nethercutt’s Fifth District advisory committee and includes among its creators the committee’s chairwoman, Mary Dye of Pomeroy. Two past Wheat Growers chairmen - Dan Blankenship of Washtucna and Chris Laney of Sprague - helped design it along with Tom Harding of Sprague, Curtis Hennings of Ritzville and Karl Kupers of Harrington.

One of their arguments for the buyout is that it would offset a decline in land values that would come from the loss of subsidies. It would also let farmers reduce their debts or simply leave farming with money to retrain themselves for a new livelihood.

A loss of subsidies would almost certainly spell a decline in land values for the wheat-dependent Palouse, said Marty Strange, an agricultural economist and program director for the Center for Rural Affairs in Walthill, Neb.

But a buyout scheme assumes all farmers are in the same financial position when they aren’t, he said.

Farmers who receive the largest federal payments tend to have the highest net worth, he said, and they could be the chief beneficiaries of a buyout.

“This kind of payment will be a tremendous windfall to a few,” Strange said. “What will they do with this extra money? They’ll go out and buy more farmland.”

A more central concern, he said, is that federal farm benefits tend to be distributed “without a social consequence,” based more on food prices than which farmers are more needy.

“Who are we trying to help here?” Strange said. “That question never gets asked in farm policy.”