Bounty From Uncle Sam

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The word welfare usually calls up images of broken families in hard-pressed city neighborhoods. But controversial provisions of the Food Security Act of 1985, the farm bill passed by Congress last December, have given new meaning to the term. Even as thousands of farmers struggle to make ends meet, some affluent growers will reap multimillion-dollar federal subsidies for this year's crops. These farmers, says Robert Thompson, Assistant Agriculture Secretary for Economics, "may get looked upon as the welfare queens of 1987."

J.G. Boswell, a California company that is one of the largest U.S. producers of cotton, may collect nearly $20 million in subsidies this year, according to a preliminary estimate by the Sacramento office of the Agricultural Stabilization and Conservation Service (ASCS), which administers subsidies for the U.S. Department of Agriculture. Salyer American, a Corcoran, Calif., cotton producer, may collect more than $3 million. As huge as these payments sound, Boswell insists that it might not turn a profit without them. "It is ludicrous to believe that we will be sticking any Government money in our pockets," says Boswell Spokesman Walter Brown. "This is survival money."

Maybe so, but questionable farm subsidies are swelling the already bloated federal budget. U.S. spending on agricultural price and income supports, which totaled $17.8 billion in fiscal 1985, is expected to reach a new high of $35 billion this year. "It's ridiculous," says New Hampshire Senator Warren Rudman, who co-sponsored the Gramm-Rudman deficit-reduction bill last year.

Subsidies began to grow rapidly when Congress restructured the farm-support program last year to boost U.S. agricultural exports. Overseas farm sales had slipped badly, from a high of $43.8 billion in fiscal 1981 to $27.5 billion in 1986. In May and June, the U.S. suffered its first farm-trade deficits in 15 years: imports exceeded exports by $419.9 million.

The Government has long protected farmers' income by supporting farm prices and by making direct subsidy payments. For many crops, it has established loan rates, like $2.40 for a bushel of wheat in 1986. These rates put a floor under prices. Farmers can then borrow from the Government at the rate set for their crops, offering their unsold harvest as collateral. If the farmers manage to sell their crops on the market at a price higher than the loan rate, they can repay the loan and keep the difference. But if the growers are offered only a price lower than the loan rate, they can forfeit the crop to the Government as payment of their loans.

The 1985 farm act gave the Secretary of Agriculture the authority to slash the basic loan rates to force farm prices down and make American products more attractive overseas. But Congress cushioned the impact of lower prices on farmers by increasing cash subsidies. Moreover, the lawmakers relaxed a $50,000 cap on payments to individual farmers.