Opinion: Don't shell out for peanut farmers

While the Bush administration is talking about tightening up welfare for the poor, Congress is busy expanding welfare for rich farmers. The latest windfall proposal in the 2002 Farm Bill would favor peanut farmers with more than $4-billion in redundant subsidy payments. As usual, this bailout by taxpayers would help the large agribusinesses that need it least rather than the family farmers it claims to protect.

For 70 years, peanut growers were under a quota that kept prices artificially high. To control the supply of peanuts for domestic consumption, the federal government issued a limited number of licenses needed to grow the crop. But the licenses became valuable commodities themselves, and are rented out by some license holders to farmers who actually dig in the dirt.

A list of quota farmers compiled by the Environmental Working Group reveals the absurdity of the program. For example, 1,346 license holders in Georgia, the leading peanut producer, don't even live in the state. Five license holders reside in Alaska, and one of the biggest "growers" is John Hancock Mutual Life Insurance Co. of Boston, whose goober expertise likely ends at cocktail peanuts.

For decades, the U.S. peanut market was essentially closed to other countries, so American consumers pay more for peanut products. But that all changed with the passage of the NAFTA treaty. Now, cheaper Canadian peanut paste and Mexican raw peanuts are coming into the country, so quotas on domestic production no longer work.

Rather than tossing out the quota system, Congress wants to "buy" the licenses at a total cost of $1.3-billion to taxpayers. So John Hancock would get $2.1-million and the largest individual peanut farmer in Georgia would be reimbursed $1.5-million.

Never mind that the licenses have no real value to the government. In fact, once the government ends peanut quotas, it would replace them with a direct subsidy program to peanut farmers valued at $3-billion. So American peanut farmers would be able to overproduce and get bailed out by taxpayers.

The entire Farm Bill is an embarrassment to the concept of free markets and competition. In fact, with farm subsidies on the rise and the bulk of the money ending up in the hands of the largest agribusinesses -- making it easier for them to buy out their smaller rivals -- even farmers are starting to question the system. But that message hasn't gotten through to Congress, which is using the Farm Bill to attempt to buy votes in agricultural districts. Only in that world does it make sense to pay peanut farmers to give up a subsidy, then reward them by giving them a larger subsidy.

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