Congress Debates Subsidies for US Farmers

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20 May, 2013

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From VOA Learning English, this is the Agriculture Report.

Congress has been debating a new Farm Bill -- a huge 5-year plan that includes subsidy programmes for American farmers.

Government payments make up eight percent of the income on farmers growing such major crops as maize, wheat, soybeans, cotton and peanuts. That eight percent is one of the lowest rates among developed countries. The Organization for Economic Cooperation and Development (OECD) says the average among its members is twenty percent.

One reason for the low payments is high global crop prices. The subsidy that pays farmers when the markets are down has not been used much recently. Grain prices are way up, farmers have earned record or near-record profits in the past few years. But they still receive about $5 billion per year in what are called “direct payments.” These payments go to farmers whether crop prices are high or low. Farmers do not even have to grow a crop to get direct payments.

But Congress want to cut $20 to $40 billion from the Farm Bill. Even the largest farmers' group, the American Farm Bureau Federation, expects that direct payments will soon end. Mary Kay Thatcher is the chief lobbyist for the group.

"Well, I think politically people feel like it's farmers getting money for doing nothing."

But there are proposals to increase subsidies once crop prices go down again. One version would raise the market price below which farmers receive a payment. Another version would protect their total income when prices fall.

David Orden is an economist with the International Food Policy Institute. He says both versions would anger farmers in other countries, that is because American farmers would receive payments when farmers in other countries are also dealing with falling prices.

"Right at that point they would see the U.S. expanding its subsidies and they’d shake their heads and say, ‘There goes the U.S. again, protecting its farmers right at the time that we’re feeling the pain.’”

But Agriculture Secretary Tom Vilsack tells VOA that the payments would not hurt farmers in other countries.

"I’m confident that the work that has been done up to this point by the U.S. and the work that will be done in the future will not get us in a position where we are doing more than the international community will allow."

David Orden says that is probably true. Under World Trade Organizaiton rules, the United States can spend $19 billion on the kind of subsidies proposed in the new Farm Bill. Mr Orden says American farmers would have to face an especially bad year to go over that limit.

Negotiators have been working for more than ten years on new WTO rules that would lower that limit, but Mr Orden says no progress is being made.

And that's the Agriculture Report from VOA Learning English, I'm Steve Ember.