2013 Farm Bill Update - Time to Plant Better Policies | Citizens Against Government Waste

2013 Farm Bill Update - Time to Plant Better Policies

The WasteWatcher

During the 112th Congress, progress was made by both the House and Senate to enact a new Farm Bill.  As the House and Senate Agriculture Committees prepare to mark up draft Farm Bills in mid-May, they should examine the progress, as well as the missteps, that were made during the last Congress.  Lipstick won’t change the Farm Bill from being a piggy piece of legislation.

On June 21, 2012, the Senate voted 64-35 in favor of S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012.  S. 3240 would have some eliminated profligate programs, such as the Average Crop Revenue Election program, direct payments, and counter-cyclical payments.  However, the bill did not do nearly enough, as it left many programs largely unreformed and opened the door for additional wasteful spending.  Although the Congressional Budget Office (CBO) originally projected that S. 3240 would cut the deficit by $23.1 billion over a 10-year period, CBO re-estimated the savings on March 1, 2013 and reduced the amount by 43 percent to $13.1 billion.  

The House version of the Farm Bill in the 112th Congress, H.R. 6083, would have reduced spending by $35.1 billion over 10 years.  The bill included many of the same changes in farm programs proposed in the Senate bill.  The additional savings in the House bill were largely achieved through revisions in the nutrition title, affecting program eligibility for the Supplemental Nutrition Assistance Program, or food stamps, which accounts for more than 70 percent of the overall Farm Bill.

While every farm program is need of reform, in some cases the House and Senate bills created costly new programs to replace complex and expensive current programs.  For example, direct payments of $5 billion annually to farms based on historical production totals, $1.3 billion of which goes to farmers living on what once was farmland but who do not farm, have rightly come under fire in recent years from lawmakers and policy groups on both sides of the aisle.  As a result, the program was terminated in both the House and Senate versions of the Farm Bill.  To fill the void, however, S. 3240 would have expanded a shallow-loss program that guaranteed farmers would receive 88 to 90 percent of current revenues in the event of price reductions.  Lawmakers should eliminate direct payments in the 2013 Farm Bill, but the proposal to expand shallow-loss coverage should be discarded.

The new Farm Bill should also focus on reforming the sugar program, which was left untouched in both the House and Senate proposals during 2012.  The current U.S. sugar program could accurately be described as an outdated, Soviet-style command-and-control program that uses price supports, tariffs, import quotas, loans, and marketing allotments to artificially inflate the price of sugar.  The federal government establishes a minimum price for sugar in the U.S., which averages roughly double the world price.  The government also imposes marketing controls, limiting how much sugar processors are allowed to sell.  These allotments are enforced and administered by a small cartel of sugar processors. 

The sugar program has been costly to the economy as well.  Between 1997 and 2011, nearly 127,000 jobs were lost in sugar-using industries.  For every sugar growing job that is protected under the program, about three manufacturing jobs are lost.  The program should be replaced with market-oriented reforms in order to help consumers, food manufacturers, taxpayers, producers, and the environment.

Current U.S. dairy policy is aptly defined as a complex and wasteful arrangement of subsidies that artificially boost prices paid by consumers.  According to a November 15, 2012 joint op-ed in Politico by Tom Schatz, President of Citizens Against Government Waste, and Pete Sepp, Executive Vice President of National Taxpayers Union, “Since the Great Depression, the federal government has meddled with the market for milk in the name of ‘helping dairy farmers,’ ranging from outright taxes to incentives for slaughtering cows.  In 2002, Congress embarked on a manipulative system whereby the government artificially inflates milk prices by purchasing and warehousing items such as cheese and butter.  It also concocted the Milk Income Loss Contract (MILC) program, which pays dairy farmers directly every time the price of milk falls below what the government believes the market will bear in Boston, Massachusetts (!). According to the Congressional Research Service, in 2009 the federal government spent more than $1.3 billion to support the industry through the MILC program and other dairy support programs.”

Unfortunately for taxpayers, the Dairy Market Stabilization Program (DMSP), which was included as a new program in both the House and Senate Farm Bills in 2012, is in no way an improvement, as it would artificially keep milk prices high while suppressing supply.  DMSP would also allow the federal government to purchase excess supply from producer and offer subsidized insurance against drops in price, two provisions that taxpayers simply cannot afford.  According to a September 18, 2012 Congressional Research Service (CRS) report, “The concept behind the DMSP program is that payment reductions are intended to have one or both of two basic effects, either of which is expected to result in a higher future farm price for milk.”

After last year’s failed effort to reform America’s outdated agriculture policies, the 2013 Farm Bill must not include the same mistaken provisions.  At a time when all Americans, not just farmers, are experiencing financial hardships in a sluggish economy, taxpayers simply cannot afford to prop up a single industry.  It is incumbent upon Congress to craft a fiscally responsible Farm Bill, not just dress up waste.  As the saying goes, “you can put lipstick on a pig, but it is still a pig.”  Congress needs to enact real reform and move farm policy toward free markets and competition rather than continuing costly government intervention.

-PJ Austin

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