NCPA - Daily Policy Digest - Proposed Cash to Farmers Isn't Peanuts

NATIONAL CENTER FOR POLICY ANALYSIS
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Proposed Cash to Farmers Isn't Peanuts

Buried in the proposed farm bill is an entirely new $3 billion subsidy for peanut farmers -- an initiative which shocks even some agricultural economists who thought they had seen it all.

In addition to the $3 billion subsidy, the government would pay another $1.3 billion to "buy out" many of those same farmers and others who own lucrative licenses, known as quotas, to grow peanuts.

Under the current 70-year-old system, only 1.5 million acres can be used for planting peanuts for domestic consumption -- and the quotas to farm those acres have grown increasingly valuable.

Under the new system, the government would buy up those quotas from their owners -- who could them continue to grow peanuts under the new subsidy system.

Once a basic price support program, quotas can now be traded and rented and are even part of investment portfolios owned by people who have no intention of growing peanuts.

The biggest owner of those quotas is the John Hancock Mutual Life Insurance Company of Boston -- which stands to receive $2.1 million from the government to give up its licenses controlling 3.8 million pounds of peanuts grown in Georgia.

Agricultural economists say they can think of no parallel for such a plan, in which taxpayers subsidize farmers against competition from rising Canadian and Mexican imports.

Source: Elizabeth Becker, "Peanut Proposals Put a New Wrinkle on Farm Subsidies," New York Times, March 4, 2002.

For text
http://www.nytimes.com/2002/03/
04/politics/04NUTS.html

For more on Agriculture subsidies
http://www.ncpa.org/iss/bud

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