Bush budget could slash rice subsidies

Tucked into the Bush administration’s federal budget proposal is a call to slash federal subsidies to rice farmers, a cut that could have serious consequences in Butte County, as those payments to farmers play an important role in the local economy.

The budget would cap subsidies at $250,000 to individual farmers. The current limit is $360,000, but loopholes such as creating “paper farms” by subdividing large farms among family members to bring in more subsidies make it possible for a single farm to easily top a million dollars in federal assistance.

United States Department of Agriculture officials say payments to farmers will be cut by 5 percent, or $587 million, next year and then save an estimated $5.7 billion over the next 10 years. Between 1995 and 2003, some 982 Butte County farmers received more than $308 million in subsidies, with the peak year being 1997, when 718 local farmers split $53.8 million among them.

Rice subsidies in Butte County date back to the Great Depression and have been in place in one form or another ever since. Rice and cotton growers are the largest recipients of federal government farm subsidies, followed by wheat, corn and soybean farmers. Farm interests are expected to fight the proposal, and its inclusion in the budget could cost support for local Republican politicians like Rep. Wally Herger, R-Chico.

Though only 30 percent of the nation’s farmers qualify for crop subsidies, those farmers have a powerful lobby working for them in Washington D.C.

Herger said it was too early to make specific comments, other than he trusts Bush’s handling of the economy.

“Agriculture is a mainstay of our northern California economy,” Herger said, “and one I will be constantly watching with respect to specific proposals that come about from the President’s budget. I commend President Bush for taking on the tough issue of reducing government growth. Considering we’re fighting a war on terrorism, and working to increase homeland security, the president’s budget sets an ambitious goal of halving the budget deficit by 2009.

“While I do expect some tough choices will have to be made, it’s still very early in the budget process. We’ll just have to wait and see what those choices are, and how they’ll impact our region.”

Assemblyman Doug LaMalfa, R-Richvale, comes from a rice family that has regularly received large subsidies over the years, including nearly a half-million dollars in 2003, the latest year for which records are available.

When asked for a comment on the Bush proposal, David Reade, LaMalfa’s chief of staff, replied via email message, “Just like the state budget, Doug LaMalfa believes that every line item expenditure in the federal budget ought to be justified each and every year.”

The Butte County Farm Bureau referred calls to Tod Kimmelshue, former president of the bureau and regional vice president for Northern California Farm Credit. Kimmelshue said he wasn’t familiar with the details of the Bush budget proposal but sounded some concern.

He said federal subsides are an important support for the local farm economy both as gross income to farmers and because they in turn revolve through the community.

“Farm subsidies, we believe, are not just subsidies to farmers but to rural California as well,” he said. “Agriculture is the economic engine for much of the Central Valley, and we’d hate to see them cut the subsidies in this area. Rural America is disappearing.”

The president, he added, “has been very good to agriculture,” including the farm bill he signed in 2002 that would have continued subsidies at their current rate until 2007.

“The price of rice is down at a level where, without the subsidies, it will be tough to make a profit,” Kimmelshue said. “It could well become more attractive for farmers to sell their water to interests in Southern California like Metropolitan Water [the source of much of Los Angeles’ water].”

Kimmelshue said he was just back in Washington visiting with Sen. Dianne Feinstein, but it was before the budget had come out.

On Feb. 3, prior to the release of Bush’s proposal but in anticipation of its cuts to agriculture, the American Farm Bureau Federation and a coalition of more than 100 groups ranging from the Alabama Peanut Producers Association to the Jewish Council for Public Affairs sent a letter to Agriculture Secretary Mike Johanns warning that restructuring the 2002 bill “could seriously damage many nutrition, conservation, crop insurance and farm programs that are important to all Americans.”

It added that, with major commodity prices falling sharply in the past year, “reductions to farm programs would come at precisely the time that these supports are most needed in rural America.”

Trade officials in poorer nations have long called for the scrapping of such subsidies because they help protect U.S. growers from competition with cheaper foreign commodities.

The budget proposal is supported by many in farm states who’ve lobbied to end the subsidies for the last 30 years, including Sen. Charles Grassley, R-Iowa.

"When 10 percent of the nation’s farmers receive 60 percent of the payments, it erodes public confidence in federal farm programs," Grassley, who describes himself as the only family farmer in the Senate, told the New York Times News Service last Saturday.