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From food to fuel for farmers?

Erika Lovley / Politico.com

Agriculture Secretary Tom Vilsack is urging farmers long dependent on government subsidies to modernize, diversify and reposition themselves to latch onto a new kind of income: alternative fuels.

But the American Farm Bureau Federation and other large farm groups are worried the new secretary is foreshadowing a change in the way Congress might see the farm business. And it has lobbyists talking about whether farmers will be forced to use nonfarming methods if direct payments are reduced.

It's also earning Vilsack praise from small farmer groups, including the Organic Consumers Association, that originally opposed his nomination; the groups now say he could help close the direct payment gap between small farmers and large commercial operators.

In these tough economic times, Vilsack has been frank about the future of the farmers' more than $5 billion in direct government payments: They're likely headed for the chopping block.

The former Iowa governor recently told the National Association of Wheat Growers that he, instead, envisions farms dotted with wind turbines and growers profiting off of second- and third-generation biofuels, lessening the need for hefty government subsidies and allowing farmers to profit from climate change.

The idea isn't new or even far-fetched. A growing number of farmers in Vilsack's home state and other parts of the Midwest have taken the plunge.

But not everyone is ready to fall in line.

"Windmills are a great additional source of revenue, but they aren't farming," said a lobbyist for American Farm Bureau Federation, one of several farm groups that have sent a concerned letter to Vilsack.

"Farmers want to continue farming, and (windmills) are not a substitute for a safety net," the lobbyist said. "We're talking about nickel-and-diming farmers when we're writing checks for $800 billion."

In an interview, Vilsack said he's not for eliminating direct payments entirely. Instead, he wants to ensure that farms are sustainable in the long run.

"It's important for us, under the economic dynamics we face, to make sure agriculture is thinking long term. I want to make sure people understand that we have to engage in the conversation about climate change ... in which agriculture could play a very important role," Vilsack said. "I'm not suggesting something is going to happen (to direct payments) immediately."

American farmers collect more than $5 billion each year in direct payments, funds many consider a staple of the business. But the system has also left behind many small family farms.

Ten percent of direct payment recipients collected 64 percent of money in 2007 -- many of them wealthy commercial operators, according to Environmental Working Group.

A recent Government Accountability Office report found that the Department of Agriculture wrongly paid more than $49 million in overall farm subsidies to wealthy farmers who did not qualify for the funds from 2003-06 -- which President Barack Obama, during his campaign for the White House, vowed to stop.

Now, the nation's economic turmoil, coupled with lawmakers' growing intolerance for waste, may make it possible.

"We're seeing among Capitol Hill staffers a new openness to try new alternatives," said Ryan Zinn, national coordinator for the Organic Consumers Association. "The bottom line is, the Farm Bureau has lost a lot of its power, and it's a reflection of the changing demographic in the United States. Anyone in touch with reality knows we have to find a new way to allow farmers to survive."

Tinkering with the new farm bill would require congressional approval. Several lawmakers have tried regularly to trim, or redirect, agricultural subsidies over the years but have been shot down.

But a number of members of Congress with strong farm ties were turned out of office last November, and that might give Rep. Ron Kind, D-Wis., and others more maneuvering room to reexamine the payment structure.

Kind said he's drafting legislation addressing the issue. He had introduced a measure during the last farm bill debate that would have redirected $12 billion in direct payments and many other crop subsidies to rural development programs. But it never gained traction.

"No one is talking about cutting out the safety net entirely at first, but we do have to tighten things," Kind said. "There is too much waste in the farm bill, and it's skewed too heavily toward the large and wealthy farmers. We want to put our money where we get more bang for our buck, and we're not getting beneficial return from direct payments."

But Sen. Saxby Chambliss, R-Ga. -- the ranking member on the Senate Agriculture, Nutrition and Forestry Committee -- and panel member Sen. Pat Roberts, R-Kan., among other farm supporters, say direct payments will not be tinkered with on their watch.

"I find it odd that in times of financial turmoil, when the administration is passing out trillions of dollars to banks, labor groups and the unemployed, that our new secretary of agriculture would threaten to cut the safety net out from under American agriculture producers," Roberts said.

But Vilsack, who's been in his Department of Agriculture office barely a month, is still developing policies and timetables for implementing them.

"I'm just having a hard time figuring out what I'm doing next week," he said