Though Some Cuts Made, Farm Bill is still Flush with Waste | Citizens Against Government Waste

Though Some Cuts Made, Farm Bill is still Flush with Waste

The WasteWatcher

On June 21, 2012, the Senate voted 64-35 in favor of S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012, which would cut the deficit by $23.6 billion over a ten year period. At first glance this seems like a lot of money, until you realize that the bill authorizes a total of $969 billion in spending for fiscal years (FY) 2013 to 2022, and that the $23.6 billion reduction represents just 2.4 percent annual savings or $2.36 billion per year over the coming decade. The legislation does eliminate some wasteful programs, such as the Average Crop Revenue Election program, direct payments, and counter-cyclical payments, but many profligate programs are left largely unreformed and new ones have been created.

The United States Department of Agriculture’s Direct Payments program delivers $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. That massive giveaway has rightly come under fire in recent years from lawmakers and policy groups on both ends of the political spectrum, and as a result, S.3240 terminated this program. However, the Senate replaced it with a more generous shallow-loss program, which guarantees that farmers receive 88 to 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 highs. When they inevitably come down, as they will in a cyclical industry like farming, 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.”

Beyond the expansion of the shallow-loss program, S. 3240 contains no serious reform to sugar and dairy programs. The sugar program, which has been criticized in the past by the Council for Citizens Against Government Waste (CCAGW) for inflating the price of sugar and benefiting the wealthiest one percent of sugar farmers, so far remains unscathed. Additionally, the bill would replace the current arrangement of wasteful and unnecessary dairy subsidies, price floors, and regulations with a dairy margin protection program and a market stabilization program that would force farmers to cut supply when milk prices threaten to fall.

The bill also leaves intact the seemingly immortal corporate welfare stalwart Market Access Program (MAP), which delivers advertising subsidies to successful agricultural firms, like Butterball, Tyson, and Sunkist Growers, Inc. to market their goods abroad. Over the past decade, MAP has provided nearly $2 billion in taxpayer money to agriculture trade associations and farmer cooperatives. In 2011, MAP paid for a reality television show in India called “Let’s Design” in order to promote U.S. cotton. MAP is a textbook example of corporate welfare and its termination is recommended in CAGW’s Prime Cuts database, a compendium of 691 waste-cutting suggestions that would save taxpayers $391.9 billion in the first year and $1.8 trillion over five years. According to Prime Cuts, the elimination of MAP would save taxpayers $200 million in the first year and $1 billion over 5 years.

Although CCAGW opposed S. 3240 as a whole, positive progress was made through the successful inclusion of certain waste-cutting amendments. Notably, Sen. Kelly Ayotte’s (R-N.H.) amendment, which will require the Government Accountability Office to issue a report on crop insurance fraud and Sen. Charles Grassley’s (R-Iowa) amendment to limit marketing loan gains and loan deficiency payments to individuals or entities to under $75,000.

The main headwinds to eliminating waste in the Farm Bill are more regional in nature than partisan. A June 16, 2012 article in The Economist notes that “southern peanut and rice farmers are cross that Midwestern wheat and corn growers will do better than they will from the switch to direct payments to revenue guarantees. Growers of popcorn maize are fighting to get the same support as field corn.” These fissures make the Farm Bill unique, but unfortunately no less divisive than other pieces of legislation, and possibly even more treacherous for waste cutters and taxpayers.

House Agriculture Committee Chairman Frank Lucas (R-Okla.) has said that he will move “hell or high water” on the House version of the Farm Bill once Congress returns from recess on July 11, though Majority Leader Eric Cantor (R-Va.) has been non-committal on when he will bring the bill up for consideration. Members of the House of Representatives should build upon the very meager progress made by the fiscal conservatives in the Senate and use the reauthorization of the Farm Bill as an opportunity to address duplication, cut wasteful spending, and make reforms to allow the free market to function efficiently in the agriculture industry. As is evident from the above details on S. 3240, they have plenty of places to start.

-PJ Austin

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