Farm subsidy debate could play major role in U.S. Senate race

Jerry Gentry, who operates a dairy farm in Pulaski County, said the farm subsidies he receives are "like unemployment."
Jerry Gentry, who operates a dairy farm in Pulaski County, said the farm subsidies he receives are "like unemployment."

The positions of Republican Rand Paul and Democrat Jack Conway on federal farm subsidies could become a sticky political issue as the U.S. Senate candidates woo Western Kentucky farmers, a constituency critical to winning in November.

The votes of those who till the rich soil of Western Kentucky have long been important to politicians who hope to carry the conservative region, where most people register as Democrats but tend to vote Republican in federal elections.

Paul's position that subsidies are not a good idea — a stance he took in May that meshes with his overall Libertarian-leaning philosophy — isn't popular with many of those voters. More recently, Paul has said he's "not sure" what level of spending on farm subsidies would be appropriate but suggested that cutting subsidy payments to the richest farmers would be a good starting point.

Paul's initial statement caused concern among farmers.

"It raised a lot of eyebrows in the farm community," said Chris Clark, agriculture extension agent in Hart County.

On Thursday, Paul and Conway will get another chance to define their stances on farm subsidies during a Kentucky Farm Bureau forum in Louisville. Conway has been critical of Paul's comments, but the Louisville Democrat also hasn't said whether he would favor any cuts to subsidy programs.

During the past 15 years, the 1st Congressional District, with its sprawling green farmland dotted by corn, soybean and wheat crops, has netted 50 percent of the $3 billion in federal subsidies issued to Kentucky farmers, according to the Environmental Working Group, an anti-farm-subsidy organization that maintains a database of U.S. Department of Agriculture records.

Subsidies are important in other parts of the state as well.

Farmers said the payments help them stay afloat when prices drop or drought withers their yield, which they can't control.

"They provide a safety net for farm income," Bob Watson, a Henderson County farmer, said of subsidies. "It helps to guarantee a small cash flow."

Without subsidies, many farmers might go out of business in lean years, putting an abundant domestic food supply in danger, farm leaders said.

"It's important that we be able to keep folks in the business of agriculture long-term," said Mark Haney, president of the Kentucky Farm Bureau.

But as the nation's beleaguered economy struggles under the weight of huge deficits, record unemployment, and a banking and foreclosure crisis, the Obama administration and members of Congress will again reconsider the perennial issue of reforming federal farm subsidy programs.

"In the current budget/political environment, it will be a challenge to maintain the current level of direct payments," said Will Snell, a professor of agricultural economics at the University of Kentucky. "It is more budget-driven right now, which is making it an election year issue as the current farm bill debate begins for 2012."

Although there is widespread sentiment among conservative voters to cut federal spending, trimming farm subsidies is an especially thorny topic in an agricultural state such as Kentucky. In 2007, Senate Minority Leader Mitch McConnell and fellow Republican Sen. Jim Bunning voted against limiting farm subsidies to people earning less than $750,000.

"For a lot of farmers, subsidies have become a sort of birthright, and there's talk about 'Why us. Why go after farmers and not someone else,'" said Donald Gross, a political science professor at UK. "If you say cut spending and that means eliminate these subsidies that you've had for the past 50 years, then people will kind of go, 'Oh, well now, wait a minute.'"

Evolving position

Paul's position on farm subsidies has appeared to evolve during the campaign.

Before the May 18 primary, he said during an appearance on Kentucky Educational Television he did not think subsidies were a good idea, without qualifying the statement.

In a Louisville radio interview at the end of June, however, he said his position was more moderate than a call to end subsidies, then pinpointed what he saw as waste and abuse in the program.

Paul said a survey showed the USDA had paid 234 dead farmers a total of more than $9 million in the Miami area in 2009, and he said the government paid subsidies to 2,700 farmers nationwide who made more than $2 million.

Paul said cutting subsidies for dead people and those making more than $2 million would be a good place to start. However, the article on which Paul based his statement about dead farmers has since been discredited.

Tim Manning, the head of the USDA's Farm Service Agency office in Florida, said the agency did not pay 234 dead farmers. "That's absolutely absurd," Manning said.

He looked into the issue after being contacted about Paul's statement and determined there were five cases in which farmers qualified for a subsidy, then died, and the money went to their estates.

At a Tea Party movement rally in Frankfort earlier this month, Paul said he was being facetious in the radio interview to make a point.

Paul said there needs to be a discussion of farm subsidies as part of the overall effort to cut federal spending and reiterated that payments to people making a lot of money would be a good place to start.

"Why don't we start with the most egregious abuses of most of the government programs?" he said. "In fact, I think what we need to do is look at every government program and have a step-wise process — can we eliminate it, can we downsize it, can we privatize it, or can we do nothing?"

Asked whether he would favor leaving some level of subsidies in place and what that would be, Paul said, "I'm not sure, exactly. I mean, I think we'll have to look at it and see."

In a statement, Conway accused Paul of favoring elimination of programs to help farmers. Conway did not say whether he would favor any cuts in subsidies.

Conway "would ensure that Kentuckians have a safe food supply, support our farmers and provide nutritional assistance for low-income pregnant mothers and school lunches for our children," Conway's spokeswoman, Allison Haley, said in a statement.

'Wasteful' programs

Some farmers in Kentucky have gotten significant subsidy payments, according to the analysis by the Environmental Working Group.

From 1995 to 2009, the richest 10 percent of subsidy recipients in the state received 81 percent of all money, averaging a total of $450,000 during that period.

"In a time of growing federal budget deficits and increasing populist anger over government spending, it would seem prudent to trim wasteful agriculture programs," said an Environmental Working Group news release from May. "Instead, Congress — at the behest of the biggest agriculture interests representing just five commodity crops — has constructed a system that ensures profits for the largest growers of corn, cotton, rice, soybeans and wheat."

Still, the Environmental Working Group's numbers don't tell the full story, Kentucky farmers said.

Jim Ellis of Shelby County operates a family farming partnership with his brothers Mike and Bob that got $2.8 million in subsidies from 1995 through 2009, according to the Environmental Working Group's analysis. That was one of the highest totals in the state.

That wasn't all profit, however, Jim Ellis said. The partnership will have more than $1 million in costs to grow more than 5,400 acres of corn and soybeans this year in Shelby and Henry counties, Ellis said.

Ellis said subsidies help provide working capital but don't make farmers rich. For instance, subsidies made up only 2.5 percent of the partnership's revenue last year, when grain prices were good, he said.

"It's not money that we can stick somewhere and take a cruise with it," Ellis said. "It's something that gives us stability."

Roughly 80 percent of the farmers in Kentucky who received subsidies during the past 15 years got less than $10,000, according to the Environmental Working Group's analysis.

Kentucky ranks 25th in agricultural subsidies, but 65 percent of the state's farmers receive no such aid. The money can make the difference in being able to stay in business, however, several farmers said.

Jerry Gentry, who operates a dairy farm on land in northern Pulaski County that his father cleared with a mule, said he has lost money the past three years as costs went up and the price he got for milk went down.

He has taken money from his savings and extra work on other farms to stay afloat. In May, he gave up his health insurance.

Gentry, 49, said he would have been forced to quit the dairy operation last year if not for $11,000 in milk-subsidy payments he got on gross sales of $230,000.

"To me, it's like unemployment," he said of subsidies. "It's to get you through the hard times until times get better."