NCPA - National Center for Policy Analysis


July 18, 2006

The Livestock Compensation Program, originally intended as a limited helping hand for dairy farmers and ranchers hurt by drought, has rapidly become an expensive part of the government's sprawling system of entitlements for farmers, which topped $25 billion last year, say observers.

The program was supposed to compensate for droughts alone, but a 2003 expansion by Congress allowed other forms of weather to be included.  The revision made it exceedingly easy for officials to find qualifying disasters, even if little economic damage was done:

  • In one county in northern Texas, ranchers collected nearly $1 million for an ice storm that took place a year and a half before the livestock program was even created.
  • In Washington state, ranchers in one county received $1.6 million for an earthquake that caused them no damage.
  • In Wisconsin, a winter snowstorm triggered millions of dollars more.
  • For hundreds of ranchers from East Texas to the Louisiana border, the Columbia shuttle explosion opened the door to about $5 million, even if there livestock were not affected.

Instead of reining in the obvious abuse, the program continued to grow larger and costlier, say observers:

  • Some 765 counties that had no droughts in 2001 or 2002 qualified for cash in 2003.
  • In some cases, entire states -- including Arkansas, Florida, Mississippi, West Virginia and Wisconsin -- were included.
  • In 2003 alone, the USDA handed out an additional $234 million.
  • In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003.

Source: By Gilbert M. Gaul, Dan Morgan and Sarah Cohen, "No Drought Required For Federal Drought Aid," Washington Post, July 18, 2006

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