WASHINGTON (DTN)--As the Senate Agriculture Committee prepares to debate yet another subsidy-filled package for U.S. farmers, an economist specializing in rural issues with the Federal Reserve Bank of Kansas City argues that conventional farm policy won't help rural America in the 21st century.

"The time has come to ask whether we can address all the challenges of rural America in the farm bill," said Mark Drabenstott, who heads the Kansas City Fed's Center for the Study of Rural America. "Are we going to solve the problems in rural America by spending more money on farm programs?"

It's a question the Bush administration pondered when it cited trade as its leading agriculture policy priority, says Futures World News.

Sen. Richard Lugar, R-IN, and the top Republican of the Senate Ag Committee, did the same when introducing a bill earlier this month that seeks to phase out farm subsidies over the next five years, adds FWN.

Nevertheless, the U.S. House has already approved a Farm Bill that would continue many subsidy programs from the 1996 "Freedom to Farm" act.

The House bill and one introduced last week by Sen. Tom Harkin, D-IA and chairman of the Senate Ag Committee, both would increase federal spending on agriculture by $73.5 billion during the next 10 years while maintaining a hodgepodge of direct payments, crop subsidies and increased conservation spending to U.S. farmers.

Drabenstott, though, says the lesson of the 1990s is that U.S. farm policy, historically centered on crop subsidies, hasn't boosted rural economies or halted population flight to metropolitan areas.

In the '90s, U.S. farmers received $104 billion in direct farm subsidies. Yet three of every four counties considered "rural" by the U.S. Census Bureau still experienced below-average economic growth compared with the overall U.S. economy. Meanwhile, population shrank in 50% of all rural counties while the nation's overall population increased 13% between 1990 and 2000.

"Those counties got a lot of farm payments in the 1990s," Drabenstott said at a Kansas City agricultural conference. "It didn't stop people from leaving."

Commodity-based farm policy doesn't address a changing agricultural landscape where the best opportunities for farmers lie beyond traditional crops, he contends.

"Commodity agriculture will persist," he said, "but the biggest payoffs for rural America lie in products."

An example, he said, occurred this spring in western Iowa. There, selected farmers grew corn designed to fight cystic fibrosis for a France- based pharmaceutical company. The first such crop grown in the U.S. gave those farmers a non-traditional outlet for their crop, one that provided a substantial income premium compared with standard corn production.

Cooperation between rural business leaders, farmers and state-university research systems can magnify such opportunities, he said.

"That business model is completely different from growing No. 2 yellow corn," he said.

Drabenstott advocates transforming policy to address a new rural paradigm, one based on "place" instead of crop sector, collaboration between various private and public-sector entities and a focus on regional competitiveness instead of ensuring basic commodities across a national spectrum.

That policy should focus on lifting the quality of life in rural America, targeting equity investment toward economic building blocks such as increased broadband capability, and developing new cultural outlets, he says.

If that happened, bright college students from small towns would be more inclined to return to their communities after completing their degrees.

"There is a brain drain going on in rural America," he said, flatly stating that rural America suffers from a shortage of entrepreneurs. "Agricultural policy really can no longer rest as rural policy. Most rural places are looking for a new economic engine."

Rural citizens need to recognize that not every small town will survive, he says. But regional teamwork could allow rural economies to thrive while maintaining small-town values that many Americans treasure.

Simply including money for rural development in a new farm bill that still concentrates on crop subsidies won't adequately kick-start rural economies, Drabenstott suggests.

But his advice likely won't alter current farm bill negotiations as legislators prepare for the expiration of current federal programs next year.

In addition to the bills already on the table, another senator, Charles Grassley, R-Iowa, introduced a bill Friday that would make crop subsidy payments based on precipitation and weather factors rather than price or production targets. Grassley's bill also would give farmers matching $2,500 grants for risk management accounts.

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