Feingold Bill Would Limit Subsidies To Rich Corporate Farms

For Immediate Release: 
Tuesday, May 24, 2005

WASHINGTON, May 24 — A prominent U.S. senator introduced legislation Tuesday to limit federal water subsidies to the richest corporate farms — a measure that could reduce the flow of cheap, taxpayer-subsidized water to many of the biggest agribusinesses in California and other Western states.

Sen. Russ Feingold, D-Wisc., introduced the Irrigation Subsidy Reduction Act of 2005, which would reform federal water programs such as the Central Valley Project (CVP) to better achieve their original goals — "to benefit and promote the development of small family farms and exclude large corporate farms." The bill would limit water subsidies based not on the acreage of a farm, but whether its annual income exceeds $500,000.

Under current law, farms up to 960 acres may buy below-cost water from federal projects — at pennies on the dollar of what urban water users pay — but big farms routinely flout the rule by subdividing their operations into smaller units. Feingold's bill would limit the amount of cheap water delivered to farms larger than 960 acres that earned $500,000 or more the previous year. If a farm made more than $500,000, that income threshold, or means test, would be used to pro-rate how much taxpayer-subsidized water it could buy and how much it would have to pay full price for. For example, a 1,000-acre farm that made $1 million could get subsidized water for half its acreage but would pay market rates for the other half.

"Sen. Feingold's bill is the right thing to do for American taxpayers and is also fair to family farmers," said Bill Walker of Environmental Working Group, which has calculated the value of water subsidies to CVP farms at more than $400 million a year, with two-thirds of the water going to the top 10 percent of recipients. "If the means test is successful in limiting water subsidies to the richest tenth of corporate farms, taxpayers could save an estimated $1 billion a year in handouts to wealthy agribusinesses."

Exactly how many farms in the Central Valley Project and more than 130 federal water projects in other Western states would be affected by Feingold's bill is unknown. But an Environmental Working Group analysis of U.S. Department of Agriculture records for 2002 shows that even before calculating annual income, 30 farms in the CVP receive more than $500,000 a year through federal crop subsidies alone. Earlier this year, a report from the Congressional Budget Office raised concerns about subsidized water being used to grow crops that, because of overproduction, also receive price supports.

Feingold's bill says water subsidies "encourage excessive use of scarce water supplies in the arid regions of the West, and reasonable price increases to the wealthiest farmers would provide an economic incentive for greater water conservation." It says establishing an income threshold for water subsidies is consistent with eligibility tests based on income that are applied to other federal entitlement and subsidy programs.

Best known for the McCain-Feingold campaign finance reform measure, Feingold is also a recognized leader in the fight to cut wasteful federal spending and reduce the deficit. A ten-time winner of the Concord Coalition's deficit hawk award, he is the lead author of legislation to institute pay-as-you-go legislation to enforce limits on federal spending in Congress.


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