Seldom-Used USDA Ag Subsidy
Program Is Suddenly Popular

WASHINGTON —(AP)— The farm economy is so bad that the federal government will pay $3 billion in subsidies for 1998 crops and even more for this year under a program that was once rarely used, an Agriculture Department official said last Thursday.

The subsidies, known as ``loan deficiency payments,'' are triggered only when commodity prices fall to very low levels.

The Agriculture Department so far has paid $2.2 billion for last year's crops, 100 times as much as the year before, with farmers expected to make additional claims of $1 billion for commodities still in storage.

USDA predicts subsidies for this year's crops will reach $4 billion to $5 billion.

``This has crept up on us very, very swiftly,'' August Schumacher, undersecretary for farm and foreign agricultural services, told a House Agriculture subcommittee.

It has become one of the USDA's biggest programs, rivaling the $5.6 billion in annual ``market transition'' payments that go to all producers under the 1996 farm law.

Demand for the subsidies has overwhelmed USDA's county offices. Some are weeks and even months behind in processing requests at a time when growers also are signing up for disaster aid and other assistance.

``This has turned out to be a super thing,'' Minnesota farmer Gerald Tumbleson said of the subsidy program.

The backlog of applications has critics saying that USDA cut too deeply into its staff in an effort to streamline the department.

The White House last week asked Congress for $43 million to hire 3000 temporary employees. The department has 10,000 workers in its county offices, down 34 percent since 1993.

``The loan deficiency payments are invaluable to pay off debts and to ensure lenders of a positive cash flow,'' said Rep. Bill Barrett, a Nebraska Republican who chairs the House general farm commodities subcommittee. ``Getting this income to our producers should be a No. 1 priority at the department.''

The program was created for cotton and rice in 1985 and expanded to wheat, corn, soybeans and other crops in the early 1990s.

Corn has been averaging as little as $1.80 bushel in recent months, compared to $2.71 two years ago. Soybean prices are down to $4.60 a bushel from $6.45.

Some $789 million has gone to corn growers for this year's crop, with another $506 million for soybeans and $434 million for wheat.