Crisis in Farm Belt Becoming Issue in Beltway as Election Nears

WASHINGTON —  At a time when the Farm Belt is being battered by declining exports and plummeting prices, Republicans in Congress are under pressure to provide election-year relief for a core constituency.

But the proposed cure for the ailing farm economy--a rare dark spot in the go-go U.S. economy--is not to restore the income subsidies that the Republicans eliminated with great fanfare in a landmark 1996 law. Instead, they are hoping to shore up flagging agriculture markets by doing more to promote exports of U.S. commodities.

“Farmers and ranchers tell us that they don’t want the government back in their back pockets,” said Sen. Conrad R. Burns (R-Mont.). “That means doing everything we can to open up markets to them.”

Members of Congress from both parties are just beginning to come to grips with the fact that the nation’s farmers, especially in the Midwest and upper Plains states, are suffering the ravages of bad weather, the Asian economic crisis and other developments.

As a result, Congress’ legislative agenda is now littered with measures to bolster farm interests, which also have broad implications for trade, tax and foreign policies. For instance:

* Lawmakers are moving to carve out a huge loophole in the sanctions imposed on India and Pakistan to allow the export of wheat and other farm commodities to those countries, which are supposedly being punished for testing nuclear devices.

* GOP leaders have muscled through legislation to extend federal tax subsidies for ethanol, an alternative fuel created from corn.

* House Speaker Newt Gingrich (R-Ga.) has promised action on a farmers’ export-promotion agenda, including funding for the International Monetary Fund, renewal of the president’s “fast-track” authority to negotiate trade treaties and continuation of normal trade relations with China.

* Democrats, saying export promotion is not enough, plan to offer a raft of amendments in the coming weeks to provide relief to farmers and undo key elements of the 1996 farm law, which phased out subsidies that had insulated farmers from market vacillations.

“We have an incredible economic crisis,” said Senate Minority Leader Tom Daschle (D-S.D.) on Wednesday. “The situation in rural America today is as bad as it has been now for perhaps 15 years.”

Some Democrats also are seizing on the farm downturn as a political opportunity to build an issue that could help them gain some of the 11 seats they need to win control of the House.

In the absence of broad national themes shaping this year’s fight for control of the House, a volatile farm economy is just the kind of local issue that could cause a few House seats to change hands. According to an analysis by Daschle’s staff, 17 of the 40 most closely contested House seats this year are in rural areas.

Major elements of the farm economy have been hit by falling prices and exports for reasons that include the economic crisis in Asia, which has depressed demand for U.S. goods abroad; worldwide oversupply of certain commodities; El Nino and other bad weather that has hurt production; and a devastating disease that has hit wheat in many places.

As a result, the prices of wheat, corn, livestock and other commodities have plunged. According to the Commerce Department, farm income dropped in more than half the states in 1997 compared with 1996. The hardest hit were Plains states, such as North Dakota, where farm income dropped a staggering 98%, Minnesota (down 38%) and Missouri (down 72%).

Farm income in California, the nation’s largest agricultural producer, rose 10% in 1997, but the state’s farmers have had their share of problems. The California Department of Food and Agriculture estimates that El Nino and other winter storms have caused $422 million worth of damage to the state’s agriculture.

“El Nino has had a devastating impact on farmers of this region,” said Sandie Dunn, a Democrat who is running for an open House seat in California’s Central Valley and who has invited a top Agriculture Department official to the area this month to meet with farmers.

What’s more, the U.S. Department of Agriculture estimates that farm exports nationwide will drop to $55 billion in fiscal 1998, down from a peak of $60 billion two years ago, in part because of a drop in sales to Asia. The department could not say how much of that decline would affect California, but about half of California’s $11.7 billion in farm exports in 1995 went to the Pacific Rim.

“The difference between profitability and bankruptcy in the agricultural sector is exports,” said Rep. Calvin M. Dooley (D-Visalia), whose family has farmed in the Central Valley for four generations.

The nation’s farmers are facing this economic turmoil at a time of transition in federal policy. The 1996 farm law gave farmers more freedom to decide what crops to plant while gradually reducing the subsidies that had for decades protected farm income from market fluctuations.

Against this backdrop, farm groups complain that issues vital to agricultural interests have been stuck in congressional backwaters. The groups bridled at Congress’ failure to pass fast-track trade powers for the president last fall and for delaying additional funding for the IMF, which they see as a way to shore up the economies of the countries to which they want to export goods.

“Congress has lost perspective regarding the importance of a stable world economy, which is vital to U.S. farm exports,” the American Farm Bureau Federation and 10 other agriculture groups said in a letter to congressional leaders in May.

In recent weeks, Republican leaders have met with farm groups and promised action this year on IMF funding, China’s trade status and fast-track, which would restore the president’s power to reach trade pacts with other countries without fear Congress would revamp them.

But the GOP leaders have firmly resisted Democratic demands that they consider changes in the 1996 farm law--such as lifting the caps on loans to farmers--to ease the effects of the emerging farm crisis. Although those proposals may go nowhere in Congress, some Democrats are taking them onto the campaign trail.

In Montana, a state heavily dependent on wheat and other hard-hit commodities, Democratic challenger Robert “Dusty” Deschamps is making the ailing farm economy an issue in his bid to unseat one-term Rep. Rick Hill, a Republican. Deschamps, a county attorney, reminds voters that he is also a rancher. He has called the 1996 farm law a big mistake that should be revisited.

In Idaho, where falling wheat and potato prices are taking a heavy toll and an open House seat is closely contested, Democratic candidate Richard Stallings is touting his record of helping farmers as a member of the House Agriculture Committee when he served in Congress from 1984 to 1992.

Nowhere is the souring of the farm economy a bigger issue than in North Dakota, where bad weather, falling wheat prices and crop disease have devastated the state. It has become a central issue in the reelection campaign of Rep. Earl Pomeroy, a seat the Democrats can ill afford to lose in its bid to retake the House.

His GOP foe, Kevin Cramer, is trying to blame Pomeroy and the Clinton administration for not doing enough to promote U.S. farm exports. He’s even called for the resignation of Agriculture Secretary Dan Glickman.

But Pomeroy blames the farmers’ plight on the 1996 farm law and predicts that the state’s problems will soon surface in other agriculture-dependent locales.

“We’re ground zero for agriculture under severe stress,” Pomeroy says. “We are the first part of the country to experience a real double whammy--poor production and horrible prices--without a safety net.”