Farm Bill Should Buy the Farm | Citizens Against Government Waste

Farm Bill Should Buy the Farm

The WasteWatcher

When is $24 billion not a lot of money? When it represents all the savings taxpayers can expect from the supposedly new-and-improved Farm Bill, formally known as S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012, which may reach the Senate floor by mid-June. The bill, which was co-authored by Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and Ranking Member Pat Roberts (R-Kan.), outlines what the Congressional Budget Office (CBO) estimates will amount to $969 billion in spending on commodity programs, rural development, farm credits, conservation, agricultural research, and nutrition programs, among others, from fiscal year (FY) 2013 to 2022.

If the CBO calculated correctly, the Senate’s bill will cost taxpayers $23.6 billion less than expected on the same programs under current law. But $23.6 billion is just a 2.4 percent annual savings, or $2.36 billion per year over the coming decade. While reductions in federal expenditures should be praised, it is hard not to feel like the Senate should go farther. After all, even President Obama, who once laughably called for senators to “stand up to the special interests, bring Republicans and Democrats together, and pass the farm bill,” asked Congress to cut at least $30 billion over 10 years from the Farm Bill in his FY 2013 budget.

The Farm Bill is a cornucopia of outdated, wasteful, and often silly programs, many of which should be allowed to die. For example, the United States has been paying $145 million each year to accommodate Brazilian cotton farmers, who alleged in that American cotton farmers had been receiving unfair subsidies. When the World Trade Organization ruled in favor of Brazil, the United States decided to pay off Brazilian farmers rather than end the subsidies.

Then there is the Market Access Program (MAP), which could more accurately go by the name Corporate Welfare Access Program. MAP hands taxpayer dollars in the form of advertising subsidies to successful agricultural firms like Butterball, Tyson, Monsanto, and Sunkist Growers, Inc. to help them sell their wares abroad. In 2011, MAP paid for a reality show in India called “Let’s Design” in order to promote U.S. cotton.

In other bad news, the sugar program, which has been criticized by Citizens Against Government Waste (CAGW) many times for inflating the price of sugar and benefiting the wealthiest one percent of sugar farmers at the expense of consumers, would remain untouched. The Farm Bill is littered with New Deal-era supply restrictions and price supports that have largely come to be seen as backward in the twenty-first century, and the sugar program is among the worst offenders. Any Farm Bill that claims to attempt serious agriculture policy reform while leaving the sugar program intact should be dismissed as unserious.

On the dairy front, the existing system, described by CAGW in 2011 as a “labyrinthine system of subsidies, price floors, import barriers, and regulations that … cost taxpayers dearly” will be replaced by a margin protection program against losses when input prices rise or milk prices fall, along with a market stabilization program that would make farmers cut supply whenever prices threaten to fall.

For peanuts, the Stabenow-Roberts bill would establish a new revenue crop insurance program that the CBO estimates will cost $239 million over 10 years. Neither “reform” seems likely to herald a new dawn of free market pricing in these two commodities, both of which have always been on CAGW’s chopping block.

To its credit, the Stabenow-Roberts bill would not leave other absurd subsidy programs entirely untouched. 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, they would be terminated in the bill. To fill the void, however, the shallow-loss program, which guarantees that farmers receive 90 percent of current revenues when prices fall, would be expanded.

Prices for many of the goods farmers produce, and rents for the farmland they use, are currently at near-record levels. When they come down, an expanded shallow-loss system is likely to yield big losses for taxpayers. As economists Vincent Smith and Barry Goodwin of the American Enterprise Institute pointed out in an op-ed explaining their shallow-loss study, expanding such a program would be like guaranteeing all homeowners full payment for the value of their house “at the peak of the housing bubble in 2006.”

In June 2011, the Environmental Working Group published its latest database of farm subsidy recipients. It showed that 60 percent of farmers receive no subsidies, and that those farmers who do get subsidized are overwhelmingly large, wealthy farming concerns. Worse yet, many were found to live in urban areas where there are no farms, such as the 290 residents of New York City who received a total of nearly $900,000 in FY 2010, or the 734 Chicagoans who managed to rake in $2.1 million that same year.

While the dollar amounts in each city may amount to a rounding error in the federal budget, they help to demonstrate just how broken the Farm Bill really is. Small family farms, which were the target recipients of the now-arcane price controls, supply quotas, and subsidies when they were first implemented decades ago, receive almost none of the benefits of modern agriculture supports. Deep, structural reform through a return to market pricing is the only way to fix what ails U.S. agricultural policy, and fiddling at the margins with a meager $24 billion reduction will ultimately fall far short of an acceptable solution. Congress must be sent back to the drawing board, for there is much more work to be done.

Luke Gelber

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