Although the press has paid scant attention to the fact, Ralph Clark -- mastermind of the Freemen movement now confronting FBI agents in Montana -- has, along with partners, received more than $650,000 in federal farm subsidy payments since 1985.
Moreover, he has personally received more than $2 million in federal farm loans since the late 1970s. And the federal government kept sending him annual payments of almost $50,000 for not growing on the land he bought with government loans -- long after he effectively defaulted on the loans. The very fact that he was uncreditworthy entitled him to loans from the Farmers Home Administration. That he kept losing money time and time again proved he needed -- and deserved -- more loans.
Studies indicate that the Farmers Home Administration actually encourages struggling farmers to continue farming until they destroy themselves financially.
Loan defaults at FmHA are legendary:
In the most recent survey, almost 40 percent of farmers with direct FmHA loans were delinquent -- a rate more than ten times higher than that of the average bank. And it could get worse; while Congress takes pride in phasing out farm programs, subsidized lending to farmers is scheduled to be increased between now and 2002.
Losses aside, critics of federal loan programs note that uncreditworthy borrowers enjoy interest rates up to four percentage points lower than those whose credit is up to bank standards. This gives the untrustworthy a significant competitive edge over those who can be relied upon to pay their bills.
Source: James Bovard, "Farm Loans: Only Bad Risks Need Apply," Wall Street Journal, May 21, 1996.
We cannot entirely blame the weather for spiraling grain prices, agricultural experts caution. Federal programs which continue to require tens of millions of acres of farmland to lie fallow are also responsible for the grain shortage, as well as the flood of beef which has come to market -- as a result of the higher grain prices -- and driven meat prices down.
President Clinton and Congress had a chance this year to end this self-defeating system when they passed the new farm bill . But politics-as-usual and farm votes won out, and the Conservation Reserve Program was renewed. The administration also had the option of making it easy for farmers to withdraw early from the program if crop prices were high enough to encourage planting, as they are now. Instead, it issued regulations so tangled that most farmers chose to stick with their current commitments.
Adding to the problem, the administration last year continued to spend lavishly on export subsidies, using tax dollars to underwrite foreign grain buyers, who wound up getting U. S. wheat at fire sale prices.
Moreover, despite signs of a potential shortfall in corn reserves, the administration last year required corn growers participating in support programs to leave five million acres idle. Since then, corn prices have more than doubled.
According to some agricultural specialists, the administration's farm policy seems to be to minimize harvests in order to maximize prices.
Source: James Brovard, "Free (Not) to Farm," New York Times, May 24, 1996.