New farm legislation trims subsidies

November 06, 1990|By Liz Atwood | Liz Atwood,Evening Sun Staff

More soybeans probably will sprout on the Eastern Shore and Maryland's dairy farmers will be discouraged from increasing production as the result of the 1990 farm legislation recently passed by Congress.

The legislation, which is in two parts, is designed to cut farm subsidies by $13.6 billion, but give farmers greater flexibility in deciding what to grow.

President Bush last night signed one part of the legislation that specifies what cuts will be made in farm programs. The actual 1990 farm bill, which outlines the government's farm programs for the next five years, is expected to be signed later this month. The cost of the subsidies is projected to be $43 billion nationwide from 1991 to 1995.

"It's not quite as good as the 1985 farm bill, but we're pleased about its flexibility," said Norman Astle, public affairs director for the Maryland Farm Bureau.

If nothing else, the farm law is more complicated than the last one, he said. "Until all the procedures are fully understood and worked out, I don't think we know what the results will be," Astle said.

Lawmakers tried to reduce costs by reducing the amount of acreage a farmer has in federal crop-support programs.

Currently, the government tries to control the flow of commodities in the market by giving farmers loans on subsidized crops such as corn, wheat and cotton. The farm bill establishes the loan rate.

If the crop prices rise to targeted levels, the farmer sells his goods in the marketplace. If not, he can keep the loan money and the government keeps the crops. The farmer also is eligible for deficiency payments if the prices for his goods did not meet established target prices.

The U.S. secretary of agriculture has the authority to establish acreage-reduction programs in which farmers have to withhold from production up to 20 percent of their acreage in a farm-support program.

Under the new "triple-base" plan, 15 percent of a farmer's acres in the government program must be set aside. But, instead of leaving the land fallow, farmers will be allowed to grow whatever they want on it except fruit and vegetables. This exclusion will protect vegetable and fruit growers from unfair competition from subsidized farmers, farm representatives said.

Farmers also will have the option of setting aside another 10 percent of their government-supported acreage for whatever crops they want to plant (again excluding fruits and vegetables).

The secretary of agriculture still can establish acreage-reduction programs, ordering certain lands to be kept fallow.

Lawmakers chose to trim subsidies this way hoping farmers could recoup some of their lost income on the open market. They also hoped to encourage more production of soybeans, which are in demand.

Lawmakers from soybean-producing states unsuccessfully argued that the new law would drive down soybean prices.

But included in the law is a loan rate for soybeans that should give farmers some protection if market prices dip too low.

The effect in Maryland will be to encourage more soybean and hay production, state agriculture officials said.

"My gut feeling is it's not going to negatively affect Maryland farmers," said James C. Richardson, state executive director of the Agriculture Stabilization and Conservation Service.

This year, the 2,526 state farmers enrolled in federal price-support government programs are expected to receive $6.9 million in payments. The vast majority of that is for corn subsidies.

Last year, 2,401 farmers received $8 million. The all-time high in Maryland was in 1987 when farmers received $72 million in support payments.

"Most are what you would call mid-size, middle-income participants," Richardson said.

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