End of the farm program as we know it?

A Washington, D.C., think tank is proposing an end to farm subsidies and the creation of a rural development initiative fueled by the billions of dollars now used to prop up farm incomes.

That would represent a seismic shift in farm-belt policies that date to the Great Depression.

By RON TSCHIDA, Chronicle Staff Writer

http://bozemandailychronicle.com/articles/2004/02/24/news/002subsidiesbzbigs.txt

But Rob Atkinson, vice president of the Progressive Policy Institute and author of the study, said the result would be a reversal of rural America’s economic decline.

"You can no longer with a straight face make the claim that (farm subsidies) help rural America," Atkinson said in a phone interview. "That’s a farce."

Farm subsidies come in many forms, but in general pay growers to make up for low market prices for commodities.

Opponents say the subsidies go to a shrinking number of farmers and do little to boost rural economies.

There have been many attempts to plow subsidies under.

Most recently, "Freedom to Farm" — the 1996 farm bill — was supposed to get the government out of agriculture. But instead spending mushroomed and U.S. agricultural subsidies totaled $114 billion between 1995 and 2002, according to the Environmental Working Group, a watchdog organization.

"I’m not naive," Atkinson said. "I know the pressures on the other side."

But lest one write off this proposal as another futile tilt at an entrenched program, Atkinson noted PPI has a successful track record of moving the debate on some big issues.

"Ending welfare as we know it — we were the one’s who laid out that program," Atkinson said, recalling the major welfare reforms of the 1990s. "(President Bill) Clinton used to be our chairman, before he ran for president."

PPI is a nonprofit corporation affiliated with the Democratic Leadership Council.

Vince Smith, a Montana State University economics professor who specializes in farm policy analysis, said he hadn’t seen the report and couldn’t comment on it specifically.

But eliminating subsidies ""would plainly have adverse effects in many of these rural areas," Smith said.

"In an average year direct payments from the government account for 15 percent of cash receipts for Montana farmers," he said.

Further, Smith said, the oft-repeated story about rural decline isn’t necessarily true.

"We see many areas of the Unites States where the rural areas are thriving, period," Smith said. "The story that is true for Montana is not a story that legitimately carries through for rural areas across America…. the notion that rural America is dying is one that actually doesn’t match up with all the rural areas."

In its report, PPI proposes money now spent on farm subsidies be directed to a "Rural Prosperity Corporation" that would fund research and make grants to support rural development.

Atkinson said immediately ending subsidies would be too disruptive. Instead, he proposes gradually phasing out U.S. subsidies, while Japan and the European Union, which spend far more than the U.S. on subsidies, do the same.

The full report is available at http://www.ppionline.org.