Gazette Washington Bureau

WASHINGTON - Ranch and farm advocates called Tuesday for Congress to create a permanent disaster relief fund of at least $1 billion a year rather than struggling to push through emergency money each time a natural disaster hits.

At the same Senate Finance Committee hearing, federal officials also testified about $1.1 billion in questionable payments the Agriculture Department made to deceased farmers, some of whom had been dead for seven years or longer.

Tom Buis, president of the National Farmers Union, said that if his group could make one improvement to this year's farm bill, it would be permanent disaster relief.

"Our highest priority is let's set up a permanent program," he said. "... We would urge your support in helping America's farmers and ranchers creating a permanent program; give them a helping hand, not a handout."

Buis said farmers who lost crops in 2005 may not get money until 2008 because Congress just approved the funding earlier this year and the Agriculture Department has to write new rules each time Congress passes relief money.

Establishing permanent funding would provide more certainty to producers, allow the money to be distributed in a timely manner, help clear up abuse and fraud and stop lawmakers from slipping unrelated projects into disaster relief bills, he said.

Since 1998, Congress has approved 23 ad hoc disaster bills totaling $47 billion, Buis said. He called for $1 billion to $1.5 billion annually in permanent relief, saying it would not be enough in some years but in others it would not all be needed.

The House Agriculture Committee's approved version of the farm bill does authorize permanent relief but does not contain any funding for it, he noted. "Whether or not we have the money is going to be the big, central question," Buis said.

The Senate Agriculture panel has not yet passed its farm bill.

Terrance Fankhauser, an executive committee member of the National Cattlemen's Beef Association, also testified in favor of the permanent relief. Neither he nor Buis offered concrete ideas about where to find the funding.

The committee chairman, Sen. Max Baucus, D-Mont., who called the hearing, supports a permanent fund. He described the current disaster relief system "just deplorable" and said farmers "have to beg" and face uncertainty over when Congress is going to act. Because drought is not as sudden and dramatic, he said, farmers and ranchers in the West have to wait for hurricane relief bills and piggyback on them.

On another subject, a Government Accountability Office official testified about $1.1 billion in payments to nearly 173,000 deceased farmers made from 1999 to 2005 by the Agriculture Department.

About 40 percent of those farmers had been dead for more than three years, and 19 percent for more than seven years.

"It certainly appears the payments did not go to eligible recipients," said Lisa Shames of the GAO. "In our mind those payments are improper, questionable, suspicious."

The USDA cannot assure that the payments were proper because it does not systematically determine whether an estate is eligible to receive payments, she added.

"Enhanced oversight is needed," she said.

Most estates can continue collecting payments for two years, but after that officials must review the estate each year to determine whether it has been kept open solely for the purpose of obtaining program payments.

Shames noted the many legitimate reasons for keeping estates open after a farmer dies, such as to distribute assets. But for three-quarters of the estates the GAO studied, she said, the USDA did not make the required eligibility determination after the two years.

"FSA (Farm Services Agency) approved payments with limited information," she said.

The USDA has already begun to act on the GAO recommendations, she said.

Glenn Keppy, associate administrator for farm programs with the FSA, said 58 percent of the questioned payments went not to deceased individuals but rather to farming entities of which they had been members.

"In other words, more than half of the payments went to entities we have no reason to believe were ineligible," he said.

He said some county committees carried out less thorough reviews than others, and he acknowledged that FSA did not complete reviews of active estates as diligently as it should have.

But despite the lack of documentation cited by GAO, the agency did not find examples of estates kept open solely for the payments, he said.

In May, the USDA issued a directive to all field offices requiring review of all estates still open after two years that requested 2007 payments, Keppy said. All state offices must report to the national office by Sept. 15, with the review completed before payments begin Oct. 1, he said.

The department also is working to end self-certification, its practice of relying on farming operations to provide accurate information, including the death of a farmer. Now the USDA will obtain information on deaths from the Social Security Administration's database.

GAO also recommended that if the USDA finds that improper payments were made, it should recover them.

Copyright © The Billings Gazette, a division of Lee Enterprises.

Washington - Direct subsidy payments to farmers would be gradually reduced over a five-year period in an amendment unveiled Tuesday by Wisconsin Reps. Ron Kind and Paul Ryan and a coalition of lawmakers who want to reform the farm bill.  

Also under the measure, the amount of subsidy money that farmers receive annually would be limited to $250,000 a person, and the "counter-cyclical" system would be replaced by a safety net that protects farmers against drops in income rather than drops in crop prices. Counter-cyclical subsidy programs provide special payments to farmers when commodity prices are below target levels.

The money saved by these reforms would be redirected to nutrition, conservation and rural development programs and would be used to reduce the deficit and meet international trade requirements.

"The really interesting dynamic is what they do to reinvest the savings," said Ken Cook, president of the Environmental Working Group, a Washington-based research and advocacy group specializing in agriculture.

Kind, of La Crosse, is a Democrat, and Ryan, of Janesville, is a Republican. "Not only are we bipartisan here, but we're bipartisan in Wisconsin," Ryan said at the news conference rolling out the reforms.

Kind estimates the amendment will save nearly $12 billion over five years. "This farm bill affects everyone, not just farmers," he said.

The coalition plans to bring the Fairness in Farm and Food Policy Amendment to the House floor later this week when the 2007 farm bill, approved last week by the House Agriculture Committee, is considered.

"Current farm policy results in large amounts of subsidy money going to few farmers," Kind said, noting that 10% of eligible farmers receive two-thirds of subsidy payments and more than half of the payments go to only 23 congressional districts in a handful of states.

"We should be giving true help to family farmers and not huge payoffs to hobby farmers," said Ryan, who is the top Republican on the House Budget Committee. "The House farm bill is being held together by gimmicks. Not only is it shallow reform, it also breaks the budget. My number one job is to protect and watch over taxpayer money."

Wisconsin farmers received $791 million in commodity program payments in 2003-'05, according to the Environmental Working Group.

Cal Dalton, a farmer in Pardeeville, Wis., was in Washington last week to meet with Kind, Ryan and Agriculture Committee Chairman Collin Peterson (D-Minn.).

Dalton is skeptical of the reforms and said he is more inclined to support the farm bill as it came out of the Agriculture Committee.

"I'm not opposed to Kind, who wants to shake things up and gear things more to nutrition and conservation, but I don't want family farmers to go out of business," he said.

Columbus, Wis., farmer Bill Hoffman is intrigued by the amendment but wants to see details. "I'm not sure how (Kind) is saving all that money. My question is what he's cutting to save," he said.

"What Kind is proposing is quite a bit outside of what has been agriculture policy in the past," said Ed Jesse, a dairy and agriculture policy economist at the University of Wisconsin-Madison College of Agricultural and Life Sciences. "But some of the things are positive."

The current distribution of payments skewed to the largest farmers doesn't make sense, he said, but counter-cyclical payments are logical when prices drop below a certain point.

Cheerful and smiling, Peterson told the lobbyists they should point out to members that an extension would mean the additional money in his bill for food stamp beneficiaries, conservation and energy programs, and fruit and vegetable growers would drop, according to one of the lobbyists present.

And the stricter limitations on farm subsidy payments in his bill would not be imposed if the existing law is extended. An Agriculture Committee source confirmed Peterson's comments.

Kind and Flake got only 18 co-sponsors for their original bill, but Tuesday introduced a revamped version they plan to offer Thursday when the farm bill is debated.

Their proposal would ban subsidies for any farmer earning more than $250,000 a year and cut $12 billion in subsidies over five years. It also would cut the direct payments program and eliminate the increase Peterson has proposed for the sugar program.

But as the bill heads to the floor, Peterson appeared to be building on momentum he has gained by facing down similar challenges this year. He came up with unexpected money and has proved to be a more adept strategist than expected.

He occasionally has played the tough guy -- as evidenced by his Tuesday speech to lobbyists -- who could tell cotton, rice and peanut growers they had to accept a payment limitations deal.

Events in world agriculture have given Peterson some advantages in blunting the efforts of reformers who had hoped to reshape federal farm programs more to their liking this year.

Environmentalists, agribusiness executives favoring free trade and anti-hunger advocates have long favored cutting subsidies for corn, cotton, wheat and other commodities to put more money into conservation, nutrition and fruit and vegetable programs.

And growing concerns about obesity -- of the kind raised by experts like Michael Pollan, a University of California-Berkeley professor -- appeared to be helping their cause.

Pollan contends that subsidies of corn had led to cheap animal feed and increased production of the high fructose corn syrup used to produce junk food and blamed for the epidemic of obesity among Americans.

That allowed reformers to argue that the core of the farm bill debate should be to reduce subsidies for commodities in favor of spending more money on fruits and vegetables.

But the rising use of ethanol undercut those arguments.

As Congress encouraged the development of renewable fuels, corn prices went up and, as farmers shifted acreage from other commodities to corn, all commodity prices went up enough to significantly reduce the payment of subsidies.

From about $20 billion per year, CBO projects subsidies will cost $8 billion to $10 billion per year over the next five years, with corn growers unlikely to get any subsidies beyond basic direct payments.

That drop in farm subsidies made it difficult to argue that corn would continue to provide a cheap food supply over the next five years -- and reduced the size of the commodity spending reformers were hoping to tap for their own programs. Politics also entered the picture, as Peterson and House Speaker Pelosi became focused on passing a bill to help the eight Democratic freshmen and other vulnerable members on the Agriculture committee get re-elected.

But lobbyists say Peterson is likely to get last-minute help for his bill from Agriculture Committee Republicans worried about their re-election bids.

By Jerry Hagstrom

In one corner: Powerful farm organizations are united behind a bill that guarantees tens of billions of dollars in subsidies. In the other corner: A hodgepodge of taxpayer advocates and self-styled reformers seeks serious change.

On Thursday, the two sides bring their long-running conflict back to the House floor.

"It's very difficult to squeeze all the hopes and dreams of members into a bill like this," Rep. Dennis Cardoza, D-Merced, acknowledged Tuesday.

The House farm bill would cost an estimated $286 billion over the next five years, according to the Congressional Budget Office. The money would pay for subsidies, food stamps, block grants and more.

Sprawling across 744 pages, the House bill will face multiple amendments during debate Thursday. The most important and closely watched alternative would cut subsidies and impose much tighter payment limits than those written by the House Agriculture Committee.

The House bill would block subsidies to growers with gross annual incomes greater than $1 million. However, it also would increase the amount that eligible farmers could receive. For instance, a farmer could receive $60,000 in direct payments instead of $40,000. Spouses could receive an additional $60,000.

"With the loopholes that continue to exist, you can drive a combine through them," Rep. Ron Kind, D-Wis., said Tuesday.

Five years ago, Kind pushed a farm-bill revision amendment. It failed by a 226-200 vote, a relatively close call that may be hard to duplicate this year. Among Kind's 2002 supporters, for instance, was Rep. Nancy Pelosi, D-San Francisco. Pelosi is now House speaker, and unlike in 2002, she now supports the House Agriculture Committee bill for policy and political reasons.

"It is a careful balance that I think says you're never going to see a farm bill that looks like past farm bills again," Pelosi declared in a statement.

With the help of Pelosi and Cardoza, who represents part of California's fertile San Joaquin Valley and chairs the House horticulture and organic agriculture subcommittee, the House bill includes record funding for the specialty-crop industry. The legislation includes some $1.7 billion over five years for specialty crops, which primarily means fruits and vegetables.

The specialty-crop spending approximately quadruples what the last farm bill offered in 2002. It's one of the newer inducements for a package considered crucial in some 2008 re-election campaigns. In particular, House leaders are attuned to the political needs of eight Democratic freshmen serving on the House Agriculture Committee.

The freshman Democrats represent rural districts in states such as Florida, Georgia and Kansas, where a successful farm bill could help ward off conservative challenges next year. All 21 of the House Agriculture Committee's Republican members voted for the legislation.

"We need to make sure that as we move forward, we do it as a team," stressed Rep. Robert Goodlatte of Virginia, the agriculture committee's senior Republican.

Republicans, Goodlatte added, will insist that the bill avoids anything that could be construed as a tax increase.

While boosting specialty-crop spending, the House bill keeps largely intact commodity subsidies for crops such as cotton, rice, wheat and corn. In some cases, as with sugar cane and sugar beets, the House bill is more generous than current law.

Sugar policies invite most heated House debates, but the Agriculture Committee typically wins them. In 2002, for instance, the House rejected a reduction in sugar price supports by a 239-177 vote.

The rhetoric remains severe, but the vote margins may have stayed the same.

"It is a complete failure on the part of the House not to reform our nation's sugar policy," declared former California Democratic Rep. Cal Dooley, now president of the Grocery Manufacturers Association.