Invest tax money in rural business, not mega-farm subsidies

By Chuck Hassebrook

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When President Obama and Gov. Romney visit Iowa, they should tell us what they will do in the next 12 months on two critical rural issues: unlimited subsidies to mega farms and falling federal investment in the future of rural America.

Both parties occasionally give lip service to these two issues that are so crucial to Iowa's small towns and rural communities. But, not withstanding a few outspoken members of Congress, neither party has demonstrated the courage to stop excessive spending on the rich and powerful and focus instead on investments to serve the common good.

A 2007 Center for Rural Affairs study shows the U.S. Department of Agriculture spent nearly twice as much to subsidize the 20 largest farms in Iowa as it invested in rural development programs to create economic opportunity for the 316,000 people and 185 towns in the 20 rural Iowa counties suffering the worst population loss.

And over the last nine years, real federal investment in USDA rural development programs has been slashed in half.

The impact will be felt in rural Iowa. One USDA program that focused on the small businesses that provide most jobs in many small towns and rural counties, the Rural Microentrepreneur Assistance Program, funds loans and business planning assistance to businesses with up to 10 employees.

Last year, the program helped Holland Moving & Rigging Supplies of Forest City expand into new markets by enabling it to receive business planning assistance from Iowa's Pappajohn Entrepreneurial Center. But going forward, there will be no assistance to rural business from the since defunded program.

Congress has cut more than half the funding from the Value Added Producer Grants Program that helps farmers improve their incomes by selling higher value products. In Iowa, it helped Unruh Greenhouse of West Union expand its greenhouse and food processing business to sell ready-to-use produce to hospitals, universities and restaurants and reach six additional cities.

Businesses like these are creating jobs and sustaining families across rural America. But Congress has been cutting these investments in our future, while it increases vastly more expensive subsidies to the rich and powerful.

For example, if one corporation farmed all of Linn County, Congress has obligated taxpayers to pay 60 percent of its premiums for crop insurance on every acre. And mega farms draw premium subsidies every year - more in years of high crop prices and record profits. The higher the price of crops, the more the government pays because it costs more to insure $8 corn than $4 corn.

Crop insurance premium subsidies have ballooned to twice their cost just five years ago and four times their cost ten years ago, even as farm prosperity has boomed.

According to the Government Accountability office, we could have saved $1 billion last year just by capping premium subsidies at $40,000 per farm. That savings is three times the amount needed to restore the entire cut in rural development programs over the last nine years.

We need a strong federal crop insurance program for farms of all sizes, as the current drought demonstrates. But it is terrible policy for ordinary taxpayers to subsidize 60 percent of the premiums on unlimited acreages for the nation's largest farms and wealthiest landowners. With no cap on the subsidies, we are effectively subsidizing mega-farms to drive smaller operations out of business.

The door is open to either party. There are electoral rewards for demonstrating the courage and conviction to set us on the right course. But talk won't cut it. We've heard it before. It is time to act.

Chuck Hassebrook is Executive Director of the Center for Rural Affairs of Lyons, Neb. (www.cfra.org). Comments: chuckh@cfra.org