Farmers from Georgia to California planted millions of acres of cotton last spring knowing their crop will probably sell at a loss this fall.

But they planted anyway, confident that American taxpayers would bail them out with billions of dollars in subsidies. Just as they did last year, and the years before that.

U.S. subsidies for cotton and selected other crops, born in the Great Depression to protect against the occasional bad year, have become a multibillion-dollar entitlement. The program undermines free trade and props up big farmers at the expense of small growers both here and abroad.

At least 30 types of subsidies insulate many of the nation's 2.1 million farms from loss or disaster, a degree of government protection unsurpassed in private industry.

Last year the subsidies cost $23 billion, almost all from taxes. Of that, cotton growers collected $3.4 billion.

The government pays if farmers grow too much, or nothing at all. It pays when it rains too much or too little. It pays much of a farmer's insurance premium and then, acting as the insurer, helps pay off losses.

By guaranteeing growers a minimum price, subsidies encourage them to plant what Washington will pay for, not what would earn a profit on the free market.

"We're just playing a game," said Stephen Houston Sr., a Miller County cotton farmer. "[Market] prices don't have anything to do with what we're doing. We're just looking at the government payments."

It's called "farming the subsidy," and it has turned many farmers -- once symbols of self-reliance -- into government dependents.

Critics say subsidies fuel overproduction and depress market prices, harming farmers in developing countries who receive little or no government support. President Bush's Council of Economic Advisers and the World Bank concur.

Four West African nations alone estimate lower prices cost them $150 million to $250 million in cotton sales a year.

"I used to think America stood for fairness and fair trade," said Bafing Diarra, a cotton farmer in Mali. "I don't anymore."

Nothing symbolizes the global dispute more than cotton -- Georgia's No. 1 cash crop.

Over the next three days and next Sunday, The Atlanta Journal-Constitution will explore the topsy-turvy logic of farm subsidies, which breed a cycle of overproduction that triggers even more payments.

The newspaper will show how subsidies, while supporting thousands of American farm families, paradoxically keep some smaller growers -- both in the United States and abroad -- from earning a decent wage.

And the series will explain how easily farmers can game the system to evade subsidy limits, and the difficulties regulators face trying to detect fraud and abuse in increasingly complex farming transactions.

Taxpayers lose 10 cents of every subsidy dollar to fraud, estimates Roger Viadero, former inspector general of the U.S. Department of Agriculture.

"You go down each farm program, and it generally takes them at most a half-hour to figure out a way to beat the program," he said.

Biggest growers benefit most

For generations, subsidies have minimized the financial risk inherent in farming, allowing growers to survive bad years while keeping cotton and food crops abundant. Even some ardent critics wouldn't eliminate subsidies completely.

But the program has strayed far from its original purpose of helping struggling farmers stay in business. Today, subsidies reward the largest growers and often flow to landowners who do not make their livelihoods from agriculture.

To see who benefits from subsidies, the Journal-Constitution interviewed more than 200 farmers, economists and government officials and analyzed databases covering 12 years of USDA payments.

Among the findings:

* The programs pay the most to farmers who grow the most, without regard to need, income or exposure to risk. Some $10.5 billion -- about half of all tax-funded subsidies -- flowed to just 5 percent of eligible farmers in 2005.

* Four percent of eligible farmers get half of all subsidies in Georgia. Those farmers averaged $200,900 in subsidies in 2005. Average for the other 96 percent: $8,300.

* At least 195 farming operations, including nine in Georgia, collected more than $1 million each from taxpayers in 2005.

* Subsidies help the largest farms to acquire the best land and squeeze out smaller growers. Georgia cropland prices have soared 65 percent in the past two years, in part because of guaranteed government payments. "I'd like to have more acres than what I got now, but big guys come in and drive up rents," said Neal Presley, who farms 300 acres in Colquitt County.

* Hundreds of millions of dollars have flowed to urbanites and large institutions, including major universities and Fortune 500 companies. The government pays owners of farmland regardless of whether they farm the land themselves. Atlantans have cashed at least $21 million in subsidy checks since 1995.

* State and local governments and public schools that own farmland also tap subsidies -- about $140 million since 1995.

Most farmers survive without regular government aid. Only one farm in four produces a commodity eligible for a subsidy, primarily cotton, rice, corn, wheat or soybeans.

In Moultrie, the Mobley family does good business marketing plant seedlings for customers across North America -- all without a dime of taxpayer aid. But the Mobleys also grow cotton and peanuts, and USDA subsidies account for 30 percent to 40 percent of the family's revenue from those crops.

"If you unplugged my USDA column, I'd be way south of break even," said Mike Mobley, the middle of the late John M. Mobley's three sons. Since 1995, the family businesses have collected more than $7.5 million in subsidies.

The conservative Heritage Foundation and other observers on the right and left say that farmers' long-term dependence on government payments invites comparison with the nation's welfare system.

Last year, subsidies cost federal taxpayers about half of the $45.1 billion spent on welfare and food stamps. In 51 of Georgia's 159 counties, subsidies cost more than welfare and food stamps last year.

Some growers see little difference between the programs.

"Shoot, we're on welfare," said Houston, the Miller County cotton farmer. "We're no different than people driving up to the welfare center and getting food stamps."

Welfare benefits are intended for low-income families, and they run out after several years. Farmers may collect subsidies for a lifetime without regard to their income.

The USDA says one-fourth of subsidy recipients earn at least $160,000 a year, and one in 10 earns at least $343,000 a year, including farm, nonfarm and subsidy income.

Subsidy backers note the payments support the rural economy, benefiting hardware stores, tractor dealers, banks and other businesses. They also argue that subsidies help prop up rural America by keeping people from moving away.

But the impact of subsidies on the rural economy is unclear. From 2000 to 2003, the growth rate for jobs trailed the national average in nearly two-thirds of counties getting heavy subsidies, according to the Federal Reserve Bank of Kansas City, Mo. A majority of heavy-subsidy counties lost population.

Global ramifications

Farmers say subsidies tide them over during years of bad weather, poor crops and low prices. U.S. Sen. Saxby Chambliss, the Moultrie Republican who chairs the Senate Agriculture Committee, considers the payments "a safety net" protecting farmers in bad years.

Under the 2002 farm bill, subsidies climb as commodity prices fall.

"Most of our farmers gamble all their life savings every year when they put their investment in the ground for that season," Chambliss said in an interview. "They don't know what they'll get for their crop, if they get anything. If they get a natural disaster, they'll get totally wiped out."

But farmers collect billions in subsidies even in high-price, high-yield years. In Chambliss' home of Colquitt County, for example, farmers collected $4.9 million in cotton subsidies for the 2003 crop year even as prices hit a six-year high.

Subsidy proponents also argue that payments are crucial in maintaining a safe and affordable supply of food and fiber. Without them, they say, the United States wouldn't grow enough cotton or staple foods, and the country would be at the whim of foreign growers.

In fact, the U.S. cotton supply far exceeds domestic demand, and more than two-thirds of the crop is shipped overseas. America exports about half of its subsidized wheat and rice, and smaller portions of other heavily subsidized food crops.

Around the world, competitors are pressuring the United States to drop or curtail subsidies. The World Trade Organization, in response to a lawsuit brought by Brazil, ordered the United States two years ago to drop a few trade-distorting cotton subsidies.

More challenges to American subsidies, perhaps against corn, soybeans and rice, are possible.

World trade negotiators tried for five years to curtail all countries' subsidies as a way to reduce global poverty by raising crop prices. The talks collapsed in July, increasing the odds that Congress will extend billion-dollar subsidies when the farm bill comes up for renewal next year. Debate on Capitol Hill is already under way.

Chambliss said Congress must address the possibility of more legal challenges to subsidies in the next farm bill, while continuing to support American farmers.

At least until then, many of America's trading partners will remain convinced that Washington doesn't practice the free trade that it preaches.

"The United States is rich. We are poor," said Nouhoum Sissoko, a Malian farmer who quit growing cotton this year because of the low price. "They must stop their subsidies if we are to have fair trade. Otherwise, we will die."

ABOUT THE SERIES

To understand the benefits and drawbacks of American farm subsidies, reporters Dan Chapman and Ken Foskett interviewed more than 200 farmers, economists, government officials and agricultural experts on three continents.