Senate Ag Committee Chairman
Argues Against Subsidy Return

INDIANAPOLIS —(AP)— Under pressure from farmers squeezed by slumping crop prices and growing stocks of unsold grain and soybeans, many in Congress want to reinstate subsidies abandoned just three years ago.

The idea may seem appealing, but it would hurt the nation's farmers even more than the current economic crisis, Sen. Richard Lugar said Friday.

Lugar, Senate Agriculture Committee chairman, told a meeting of the Indiana Agricultural Leadership Institute he opposes changes in the 1996 ``Freedom to Farm'' law, which ended a Depression-era system of farm subsidies, and another proposal to lower the premiums farmers pay for federally subsidized crop insurance.

``We will either be competitive with our best acres and our best practices or many of us are going to have to do something else,'' said Lugar, a Republican who farms 600 acres of corn and soybeans in Marion County.

Lugar has resisted calls to hold hearings on either proposal, arguing instead for an approach that combines payments to farmers who take steps to reduce financial risks and a worldwide lowering of trade barriers.

But as a worldwide glut of grain and soybeans continues to drive prices down, pressure for bailing out the agricultural economy has grown on Capitol Hill.

The House approved legislation last month to double the federal subsidy for the crop insurance program to $3 billion a year, but Lugar's opposition has delayed the proposal in the Senate until next year.

``I'm trying to hold my finger in the dike and I hope you will help me,'' he said.

Mike Boehlje, an agricultural economist at Purdue University, predicts crop prices won't rebound until 2001 or 2002 because of the strong dollar, increased production and the modest pace of Asia's economic recovery.

``Prices would move up if there was a drouth someplace, but farmers can't count on that. They need to position themselves to be successful without counting on bad weather,'' Boehlje said.

Earlier this year, after Congress agreed to set aside $6 billion in 2001 for improving the crop insurance system through 2004, Lugar proposed giving that money to farmers who take steps to manage risk, such as reducing their debt, planting more diverse crops, or signing futures contracts to lock in prices.

Farmers are ``planting for the insurance'' on marginal land where crops do not grow well and producing commodities already in surplus because the government bears most of the risk, Lugar said.

The nation's corn growers are divided over Lugar's proposal, although most in Indiana support trying the idea in one or two states to see if it works, said Michael Aylesworth, a Porter County farmer who heads the Indiana Corn Growers Association.

``Let's give it a shot,'' he said.

Lugar and other Republicans also have complained the Clinton administration hasn't pushed hard enough to open new markets for U.S. crops in the current price slump. He said Clinton should press Congress for ``fast-track'' authority to sign agreements such as the North American Free Trade Agreement that reduce trade barriers. By increasing crop exports, NAFTA has been a great benefit to Indiana farmers since taking effect in 1994, Lugar said.

``We can't go anywhere in this business without (fast-track),'' he said.