Farm relief growing into permanent cash-crop

WASHINGTON - During the 1930s, extreme drought seared the Great Plains. Communities vanished, families fled, hundreds died from "dust pneumonia" and farm fields turned into dunes of dirt.

Responding to that epic Dust Bowl crisis, Congress approved $1 billion in emergency relief over a decade.

Now, some 70 years later - even with sound crop prices and rosy farm income forecasts - Congress has just approved a multibillion-dollar "emergency" bailout for the sixth time in the past nine years.

Tucked into the big Iraq war spending bill approved Thursday, it will send an additional $3 billion for drought and severe weather losses.

U.S. Rep. Collin Peterson, D-Minn., chairman of the House Agriculture Committee, and some farm leaders want to go a step further. They want to make disaster aid a permanent feature of the multiyear farm bill Congress is expected to approve later this year.

That could cement a new entitlement for farmers.

"It would be somewhat of a new subsidy," Peterson said. "It'd be a way to share risks, like we do for people who suffer damages from hurricanes or tornadoes."

Such a program would add to four existing subsidy programs that send more than $10 billion most years to farmers and ranchers.

They receive direct payments for major crops, payments when prices fall, payments to buy crop insurance and payments for conservation efforts.

With repeated requests for disaster aid, some Capitol Hill lawmakers increasingly question the hardship, the way cash previously was handed out and the impact on farming.

Most farmers who file a disaster aid claim get paid, and without much scrutiny. Some farmers are double-dipping into disaster aid and crop insurance payments. And many farmers take emergency payments for granted.

"Emergency assistance has become an expected part of the federal safety net. How much need is there, I think, is debatable," said Brad Lubben, a University of Nebraska-Lincoln agricultural economist.

The Environmental Working Group and other critics say the disaster packages promote a reliance on aid programs, compete with the government's subsidized crop insurance program and often reward farmers for planting on marginal farmland.

"Farmers are getting payments every other year or more often," said Ken Cook, president of the Environmental Working Group, a Washington-based organization that tracks federal farm subsidy payments.

"Taxpayers have every right to ask, just as they ask about flood insurance, 'Should we be letting people build right up against flood plains?' - that's the same thing here with drought assistance."

Farm advocates "have been very effective in making the case they need an entitlement program, and they've expanded that to all kinds of entitlements," Cook said.

By analyzing U.S. Department of Agriculture subsidy data, Cook's organization found a pattern of what it calls "chronic recipients" of disaster aid.

Some 21,000 farmers and farm operations have collected emergency disaster payments in 11 of the past 21 years. Some were in Nebraska, but most were in the Dakotas, Kansas, Oklahoma and Texas.

Still, the group's data show that from 1995 through 2005, Nebraska and Iowa farmers and ranchers raked in disaster aid.

Nebraska, which has been suffering a multiyear drought, received the sixth-highest amount of emergency disaster aid among the states, according to the environmental group, which opposes making disaster aid permanent.

Nebraska farmers and ranchers received $626 million, the group's database shows. Iowa ranked 19th, receiving $243 million.

Nationally, taxpayers sent farmers and ranchers $15 billion in disaster aid during that decade.

More aid is heading to farm country even though the USDA estimates that farm income nationwide this year will be $67 billion - slightly higher than in 2006.

Nebraska farm income is estimated to be $3.5 billion this year, higher than in the previous two years, according to the UNL Bureau of Business Research.

Under the aid package approved Thursday, crop farmers must demonstrate a 35 percent loss in any single year in 2005, 2006 or before March 2007 to qualify for disaster subsidies. They also must have crop insurance.

Livestock producers also could qualify for aid for losses in any one year if they live in a county declared a disaster by Agriculture Secretary Mike Johanns.

Typically, nearly all who apply for emergency disaster aid receive checks.

Previous disaster aid packages made payments to between 300,000 and 400,000 farmers and ranchers nationwide, according to the USDA. Denial rates have been less than 1 percent, federal officials say.

Determining whether losses were caused by poor management is difficult, because the payouts often come several years after a declared loss.

The USDA's Farm Service Agency in Nebraska examines loss claims against the average yields in the farmers' county. Agency staff also consider crop insurance loss claims; verbal reports from their county committee members, who are farmers; and reports from local bankers.

Applicants are denied only if the Farm Service Agency believes a loss wasn't tied to a natural disaster.

"Those types of situations are pretty few and far between," said Dan Steinkruger, a program specialist with the agency.

In McCook, Neb., Marshell Sis said he would probably qualify for disaster aid because areas of his 4,000-acre spread have produced sparse crops in the past two years.

When Congress last approved disaster aid in 2005, the Sis family's corn and soybean operation received $160,000 in federal payments. That was the highest in Nebraska, the Environmental Working Group's database shows.

"As far as getting wealthy or rich: No, we're not," Sis said. "We're just surviving, keeping stability."

The disaster aid conflicts with the USDA's crop insurance program, experts said. That program provides subsidies to help farmers buy insurance to cover most of their possible losses.

Some farmers - particularly in Texas - have skimped on buying crop insurance over the years, banking on Congress coming through with disaster aid. Most Nebraskans have the insurance, but it doesn't cover all losses.

Those who buy crop insurance can win, too.

They can receive insurance payments for crop losses, plus an additional disaster aid payment.

A proposal has surfaced in Congress to limit the two payments to 95 percent of a crop loss.

Said Keith Olsen, who grows wheat and corn in Nebraska's Panhandle: "We shouldn't use the disaster programs to make people 100 percent whole."

But losses can be severe in one area, not so bad just a few miles away. Generally, in recent years, western Nebraska has received far less rain and snow needed for healthy crops, he said.

Jeff Metz, who farms near Scottsbluff, said disaster aid is needed because crop insurance payouts are dropping.

Those payments are calculated based on an average yield over several years. With several seasons of poor crop yields, his average yield is down, which trims his federal insurance payouts.

Seven years ago, Metz's wheat crop yielded an average of 35 bushels per acre. Lately, it has sunk to 25 bushels.

"If I lived in Omaha or Washington, D.C., I'd probably squeal for someone getting a crop insurance payment and a disaster payment," he said. "It all works hand in hand."

Later, Metz acknowledged: "A lot of this ground should never have been torn up for farm ground. But that's the way our economy works."