Insurance firm, big farms benefit from buyout plan

WASHINGTON -- The John Hancock insurance company and big farming operations from Georgia to Texas stand to make millions of dollars from a plan in Congress to buy out their special licenses the government has used for decades to inflate the price of peanuts.

Plenty of retirees and numerous heirs of peanut farmers are on a list of 70,000 people and businesses who would be compensated $1.2 billion or more over the next five years, according to records compiled by the Environmental Working Group, a research and advocacy organization. "If they didn't have the buyout it would ruin us," said Kevin Love, a farmer near Seminole, Texas.

He and his wife, Kara, borrowed to purchase their licenses, or quotas, but stand to receive as much as $2.4 million under differing versions of the buyout that passed the House and Senate. His father and mother are in line for as much as $2.9 million.

John Hancock, which owns quotas in Georgia of 4.3 million pounds, would get up to $2.4 million.

The quotas date back to the Depression. Farmers owning or renting them are guaranteed $610 per ton for their peanuts. Farmers who do not have quotas must settle for much less, last year under $150 a ton.

Replacing quotas

Rising imports of low-cost peanuts are making it difficult for the government to control prices any longer. So Congress is proposing as part of a larger overhaul of farm programs to replace the peanut quotas with a new system of direct subsidies to growers -- similar to those now handed out to corn, wheat and cotton farms.

A House-passed farm bill would pay quota holders 50 cents per pound in payments spread over the next five years. The Senate version provides 55 cents a pound.

Critics of the plan say big farms will use the money to get even bigger. Holders of quotas say the buyout is only fair, that the quotas are just as much an asset as their land. Many say they depend on them for their retirement income.

Fewer than 7,000 of the total quota holders own 58 percent of total quota and would receive $676.5 million or $744 million under the House and Senate bills, respectively, according to the Environmental Working Group's compilation of Agriculture Department data.

Congressional negotiators working on compromise are under pressure from the Bush administration to shave the cost of the Senate bill, which would increase farm spending by $45 billion over the next five years.