At one of his recent transition news conferences, President-elect Barack Obama paired two words that jangled some nerves across Minnesota and other agricultural states: “millionaire farmers.”
Offering an example of waste that could and should be trimmed from the federal budget, Obama cited a new Government Accountability Office (GAO) report on “millionaire farmers” receiving subsidies.
“Millionaire farmers received $49 million in crop subsidies even though they were earning more than the $2.5 million cutoff for such subsidies,” Obama said at the news conference, citing the GAO report. “If it’s true, it is a prime example of the kind of waste I intend to end when I am president,” he said.
Voted for the 2008 Farm Bill
As a senator during the presidential campaign, Obama voted for the 2008 Farm Bill, which continues a wide range of farm subsidies and other direct payments.
But what caught his eye last week was the GAO finding that more than 2,700 U.S. farmers received subsidies between 2003 and 2006 despite having an average of more than $2.5 million in adjusted gross income over three years, which was the eligibility cutoff.
“Everybody in agriculture winced when Obama brought it up,” said Dave Torgerson, executive director of the Minnesota Association of Wheat Growers, based in Red Lake Falls.
“We’re worried about the public perception that every farmer is rich and they’re all getting richer through the farm programs,” he said. “That really isn’t the case.”
99 percent ‘will never hit those limits’
Torgerson doesn’t dispute that the GAO found people who have substantial incomes from other sources and also receive crop subsidies on farmland despite statutory income limits, “and hopefully that gets cracked down on,” he said. “But 99 percent of the farmers in Minnesota will never hit those limits,” even though they were reduced in the current Farm Bill to $750,000.
Rep. Collin Peterson, D-Minn., chairman of the House Agriculture Committee, was a key figure in shaping the 2008 Farm Bill.
“I haven’t seen [the GAO report] yet, but apparently it’s about making payments to people who are ineligible under the law,” he said. “That shouldn’t happen, obviously. We will be on top of this to figure out how to fix it.”
But the $49 million in overpayments hardly ranks with “the rate they’re spending money on this bailout” of financial and other corporate interests, Peterson said.
The overpayments also represent only a tiny fraction of the more than $16 billion farmers receive annually in federal farm programs for crop subsidies, conservation practices and disasters, he said.
Peterson said he didn’t read Obama’s comments as an opening shot in a broader assault on the traditional farm safety net.
‘We’re always a target’
“We’re always a target, and it sounds good” to criticize subsidies, he said. “But Obama can’t be any worse than Bush was on this, and we survived that.”
Peterson has been mentioned frequently as a potential agriculture secretary in Obama’s Cabinet, but he continues to deny any interest in the job.
“I don’t know why it keeps coming up,” he said last week before leaving for talks with European leaders on aspects of international financial regulation. “Maybe they’re using me as cover for what they really want to do. Anyway, I’m in the right place now. I can do more for my constituents where I’m at.”
Roger Johnson, North Dakota’s commissioner of agriculture, also said he wasn’t too alarmed by the GAO report and Obama’s comments.
“I’ve long been a strong supporter of income limits on payments, and I believe there’s been for a long time a too relaxed approach” to them, he said.
Regarding the lowered eligibility limit on adjusted gross income, from $2.5 million to $750,000, “I would like to see it lower,” Johnson said. “That’s still a very high number.”
Peterson would like to preclude nonfarmers
Peterson said he would “prefer we eliminate nonfarmers from the program entirely, so people who are actually farming would get the payments, not landowners” who are off making good incomes elsewhere.
“That’s what the program was intended for, to support people who are producing food,” he said, “and that would force out these people who get all the bad publicity” and distort public perceptions.
The GAO report noted that “farmers” who collected big subsidy payments in the period covered included a founder and former executive of an insurance company, an owner of a professional sports franchise and a top executive of a major financial service.
To qualify for the farm subsidies, the “farmers” were supposed to derive at least 75 percent of their income from farming, ranching or forestry operations.
The problem, according to the GAO, is that the Department of Agriculture “does not have adequate management controls to identify potentially ineligible high-income individuals.” With the income cap lowered, “the number of individuals whose (income) exceeds the caps will likely rise.”
Earlier investigations by the GAO found other shortcomings with direct payments to farmers, including a 2007 report that said USDA “needs to strengthen management controls to prevent improper payments to … deceased individuals.”