Agriculture has been the most highly controlled and subsidized sector of the U.S. economy for more than 60 years. Federal crop subsidy and export promotion programs have cost taxpayers more than $14 billion annually for the past 10 years.

At the same time, productivity gains in agriculture due to improved technology and increased mechanization have been substantial:

• Land cultivated per individual farmworker increased fivefold between 1930 and 1980.

• Less than one-third as much labor is used today as in 1950, even though agricultural output has doubled.

• The amount of farmland has dropped from 1.2 billion to 975 million acres since 1950, with cropland representing about half of those acres.

Despite these improvements in efficiency, the U. S. share of the world market for many agriculture products has been steadily declining. Over the last 30 years, world consumption has increased by 65 percent for feed grains, 100 percent for wheat and more than 400 percent for oilseed meal, but the U.S. share of these markets has remained flat.

Rather than reform the programs that restrain farmers from claiming a bigger share of the markets, government has relied on export subsidies and import restrictions. Export promotion programs cost U. S. taxpayers about $1 billion annually - $900 million for the Export Enhancement Program, $50 million per year to encourage exports of cottonseed and sunflower oil and about $30 million for the Dairy Export Incentive Program.

Combined with domestic price supports and restrictions on imports, such subsidized exports have depressed world prices relative to those of the U.S., creating a price differential that turns the United States into an importer of some agricultural products. For example:

• In 1994, U. S. supply control and export subsidy policies contributed to a shortage of durum wheat, used in pasta products.

• When pasta makers turned to Canada to fill the gap, the U. S. government threatened to restrict imports of less expensive Canadian wheat.

• Meanwhile, the U. S. continued to subsidize wheat exports.

At the same time that the U. S. government subsidizes exports, other policies are designed to reduce farm output. For example, the Conservation Reserve Program has required farmers to idle millions of acres for 10 years as in order to participate in subsidy and marketing programs for the rest of their land. Additional millions of acres are taken out of production by the Acreage Reduction Program. Although policies aimed at controlling the available supply have raised product prices at times, they have failed to raise farm incomes in the long run. In fact, they have seriously damaged the rural economy:

• Revenue lost by agricultural supply industries (such as grain elevators and fertilizer stores) alone averaged about $3.5 billion between 1990 and 1993.

• The rural population has been reduced over the past 40 years by one-third more than it would otherwise have been.

If the controls that restrict output were abolished, even with the loss of subsidy payments and slightly lower prices:

• Between 1996 and 2001, an additional $25 billion would be injected into the rural economy in new spending on such things as fertilizer and seed.

• The additional net income of farmers from production would exceed $2 billion in 1996, rising to nearly $4 billion by 2001, and totaling more than $18 billion during 1996-2001.

• After the loss of subsidies is taken into account, net income of farmers would still be $877 million higher than projected under current policies.