NCPA - National Center for Policy Analysis

Politicians Reconsidering Agricultural Subsidies

July 12, 1998

A decline in farm income in northern-tier Plains states has prompted some Democratic politicians to call for a return to farm subsidies. Republicans, on the other hand, contend the plight of farmers there can be mitigated by measures to stimulate farm exports.

  • From Wisconsin to Washington state, farmers' net income dropped last year anywhere from 7 percent below that of 1996 to 2 percent -- with North Dakota being hit the hardest.
  • The problem involves a plunge in the prices of wheat -- due to strong harvests around the world -- and livestock.
  • In addition, the Asian crisis has reduced demand for farm exports and a disease called scab has affected much of the Middle West's wheat.
  • Nationwide, however, corn farmers in Indiana, Ohio and Illinois expect a good crop this fall; cotton producers in Arkansas and Mississippi are doing well; and rice growers in the South are prospering.

Democrats want to roll back the 1996 Freedom to Farm Act by restoring farm subsidies, raising the ceiling on government-guaranteed loans to farmers and introducing a new emergency relief program that would help farmers affected by floods, drought and other natural disasters.

In sharp ideological contrast, Republicans want to exempt food exports to India and Pakistan from the sanctions imposed on those countries following nuclear testing in May.

Source: David E. Rosenbaum, "Common Ground is Missing in Battling Plains Farm Ills," New York Times, July 12, 1998.


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