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Excerpt from The Agribusiness Examiner, Issue # 76, June 1, 2000

CONGRESS PASSES, CLINTON PREPARES TO SIGN ANNUAL FREEDOM TO FARM BILL BAILOUT MONEY

Congress has passed and Bill Clinton is expected to sign a $15 billion package of farm assistance --- including $5.5 billion in direct payments that would reach farmers by September 30, in the midst of the congressional campaigns --- to compensate growers for a third straight year of low commodity prices and to allow growers to buy cheaper crop insurance.

Also, in another apparent political coup by the American Farm Bureau Federation, some $8.2 billion would go toward reducing premiums on federally subsidized crop insurance over the next five years while making a series of changes in the insurance program designed to get more farmers to buy the coverage from an insurance industry in which the Farm Bureau has numerous vested financial interests.

Congress has now given farmers $15 billion in extra income assistance over the past two years, stemming from the consequences of the disastrous 1996 Freedom to Farm legislation, and the Agriculture Department has estimated that net farm income this year would drop $7.6 billion, or 16%, without another round of aid. The $5.5 billion in direct farm payments would go to grain and cotton producers who have annual "market-transition" contracts with the government, in addition to $5.1 billion in payments that those producers already were scheduled to get this year.

USDA Secretary Dan Glickman while praising the insurance overhaul, criticized Congress for refusing to alter the 1996 farm law, which was designed to wean farmers from government support. "Stopgap, quick-fix emergency assistance is not the most effective or efficient way to help struggling farmers," Glickman said.

Glickman. like many others in the nation's agricultural community, also objects to the way that the direct farm payments would be distributed, contending the money is not targeted to producers who need it the most, but in typical Glickman fashion he has stopped short of recommending that Clinton veto the current legislation.

Yet, as Abner Deatherage, a retired U.S. foreign service officer who lives in Prairie Village, Kansas and James D. Baldwin, a former rancher from Independence, Missouri and chairman of Local 249 Retiree Chapter of the United Auto Workers, rightfully pointed out in a recent Kansas City Star op-ed essay, "these bailouts are unsatisfactory -- many farmers are underpaid while some are overpaid.

"Also, bailouts are uncertain and cost taxpayers substantially more than would a dependable, fair permanent price support program. A basically reformed foreign policy --- especially its unconstitutional trade element --- is keenly needed. United States agricultural and other exports must recover and increase under a rational, mutually beneficial trade policy," they add.

Pointing out in addition that the U.S. "recently received an added farm/rural economic problem in the form of the Organization of Petroleum Exporting Countries' blackmail oil pricing. Family farmers are keenly affected by this because, of course, it takes gas to run farm machinery and some fertilizer and farm chemicals are crude oil/natural gas derivatives.

"If this blackmail, the Freedom-to-Farm law and the lack of a viable agricultural trade policy are allowed to continue much longer, they will complete the ruin of our family farming. Furthermore, continued high gasoline/diesel prices will raise transportation system costs, substantially increasing retail prices of most or all consumer goods and services.

"Some sources contend inflation-adjusted gasoline prices are the lowest ever and pose no harm to the United States. Wrong! This adjustment uses the government's Consumer Price Index, which incorrectly measures inflation-adjusted income for several groups of our society, and most family farmers have the lowest absolute and inflation-adjusted crop and livestock prices in at least 20 to 30 years.

"Continuation of these farm, energy and foreign policy problems, " Deatherage and Baldwin conclude "will substantially increase interest rates, inflation, unemployment and food supply problems and adversely affect the stock market. Such developments would cause an economic meltdown, making the Great Depression pale in comparison, and greatly weaken our military security."