Tag: agriculture policy

Farm Pig-Out Moves Forward in the Senate

Republicans and Democrats have reached a deal that substantially increases the prospects for passage of a massive farm bill in the Senate. The Senate will vote on 73 amendments and then vote on passage. According to Senate Agriculture Committee chairwoman Debbie Stabenow (D-MI), the deal “is really an example of the Senate coming together to agree to get things done.”

It’s also an example of Republicans and Democrats coming together to fleece taxpayers. Chris Edwards and I noted this in an op-ed we penned yesterday for The Hill:

Pundits claim that partisanship is creating gridlock in Washington. But in the Senate, the two parties still know how to make bipartisan deals on big government subsidy legislation. That chamber may move ahead with a massive agriculture bill that would spend almost $1 trillion over the next decade. Supporters are calling it a “reform” bill because it would trim a measly two percent from projected spending over the period.

Sen. Stabenow crowed that “We are now closer than ever to achieving real reform in America’s agriculture policy.” Here’s our response to that claim:

This year, Farm Bill supporters are claiming that their bill represents major a “reform.” It is true that the Senate bill would end some types of subsidies, such as “direct payments.” However, it would replace them with new subsidies, such as a “shallow loss” program to deliver more aid if farm revenues fell below the high levels of recent years. This new program could end up costing as much or more than direct payments, and may cause more distortions to agricultural markets…Real reform would entail abolishing farm subsidy programs and not replacing them with anything—except with the natural entrepreneurial skills of farm businesses.

Assuming that Stabenow & Co. have to votes for passage, attention is going to turn to the Republican-controlled House. Edwards and I note that thus far Speaker John Boehner (R-OH) and his lieutenants have been silent on the Senate version of the farm bill, which is curious because the House leadership has made its intentions clear on other major bills that the Senate wants to pass before the November elections:

Perhaps the House leadership is hoping that the Senate bill goes down in flames before they have to make any decisions on it. After all, House Republicans that favor major cuts to farm subsidies will face internal opposition. The House Agriculture Committee chairman, for example, is Rep. Frank Lucas of Oklahoma, who is a National Association of Wheat Growers “Wheat Champion.” For the passage of the last major Farm Bill in 2008, 100 House Republicans helped the Democrats override President Bush’s veto of that spending monstrosity.

Now that it appears that the Senate bill won’t be going down in flames, here’s the big question:  Will the more conservative House go along with the taxpayer-funded farm pig out?

Agriculture Is Doing So Well (ergo We Must Subsidize It)

Farmer-friendly members of Congress are such a target-rich environment for ridicule when it comes to poor agriculture policy that it would be a full-time job just blogging about their utterances. So I try to spare you, most of the time. (You’re welcome.) But occasionally a quote passes my desk that is so ridiculous that I just have to share.

Senator Debbie Stabenow, chairwoman of the Senate Agriculture Committee and a Democrat (not that that matters) from Michican, yesterday made a statement that contains a pretty obvious logical fallacy:

“American agriculture represents a bright spot in our economy,” Chairwoman Stabenow said. “Agricultural exports are reaching record highs and American farmers and ranchers are continuing to outpace the rest of the world in productivity and efficiency. Sixteen million American jobs are supported by American agriculture, so it’s critical we pass the Farm Bill this year. We must provide farmers and small businesses the certainty they need to continue growing and helping the country’s economy recover.” [emphasis mine]

Which of course raises the question: If U.S. agriculture is doing so well, why do we need to subsidize it? To maintain those sixteen million jobs the Senator claims are supported by U.S. agriculture? Please. Research has shown a negative link between farm subsidies and rural development, including jobs creation (more here, including on rural subsidies more broadly). And the money for farm programs is extracted from the productive sector of the economy, at ensuing cost.

In the meantime, a non-subsidized sector of the U.S. farm sector is faring very well indeed. The popcorn industry is booming thanks to sales to Colombia following the U.S.-Colombia Free Trade Agreement, which came into effect last month. That hasn’t stopped Nebraska’s senators from asking for hand-outs on behalf of the industry, of course, but the lesson to me seems clear: freer trade, fewer subsidies. [HT: Andy Roth at the Club for Growth]

For more on Cato’s work on agriculture subsidies see here, here, here, here and here. And a whole lot more here.

The USDA: Your One-Stop Shop

Politico yesterday reported that Agriculture Secretary Tom Vilsack is upset. According to him, the USDA just don’t get no respect:

Agriculture Secretary Tom Vilsack wants to spread the message to anyone who’ll listen: The U.S. Department of Agriculture isn’t just about farming anymore.

“This department is not appreciated,” the former Iowa governor told POLITICO in a recent interview. “We are engaged in virtually every issue and always can provide some support and some meaningful solution to a problem that is vexing folks.”

To prove the point, he challenges anyone to name an issue that doesn’t touch the department’s portfolio, from bolstering national security by helping wean Afghan farmers from growing opium — a cash crop that funds Islamic insurgents fighting U.S. troops — to providing USDA-backed home loans as a way to repopulate the sparse countryside. [emphasis added, with disgust]

Not bad for an agency that shouldn’t even exist.

About That Vision Thing…

Does the world need a “shared vision on food and agricultural trade policy”? So says World Trade Organization Director General Pascal Lamy:

Let me start by saying that food and agricultural trade policy does not operate in a vacuum. In other words, no matter how sophisticated our trade policies may be, if domestic policies do not themselves incentivize agriculture, and internalize negative social and environmental externalities, then we will always have a problem.

Here I question what exactly Lamy means by “incentivize”.  Does he mean “make sure we get incentives right”, or does he mean “provide positive incentives to agriculture”? The former probably is harmless if it means simply allowing market forces to work, the latter a potential opening for the types of subsidies and price supports that have done so much damage to agricultural trade policy. Ditto with his wish to “internalize negative social and environmental externalities”: on the face of it, this is a fairly inoffensive goal, and a positively noble one if he is referring to, say, the effects on poor farmers abroad stemming from rich country farm subsidies. But I can see all sorts of nefarious social policies flowing from that prescription if it gets into the wrong hands.

Lamy goes on to make sensible points about the effects of tax policy on agriculture, and makes this statement about the importance of free trade for food security:

To my mind, global integration allows us to think of efficiency beyond national boundaries. It allows us to score efficiency gains on a global scale by shifting agricultural production to where it can best take place. As I often say, if a country such as Egypt were to aim for self-sufficiency in agriculture, it would soon need more than one River Nile. Which basically means that global integration must also allow food, feed, and fibre to travel from countries where they are efficiently produced to countries where there is demand.

All necessary, if not sufficient, conditions for global food security, to be sure. But Lamy then turns to exactly what a global vision for agriculture might involve:

I believe that we could all agree on what the basic objectives are that we seek from our agricultural systems. We all want sufficient food, feed, fibre and some even want fuel. We want nutritious food and feed. We want safe food and feed. We want a decent and rising living standard for our farmers. We want food to be available and affordable for the consumer. We want agricultural production systems that are in tune with local culture and customs, and that respect the environment throughout a product’s entire life-cycle.

Hmm. I’m not sure about all that. For one thing, some of those goals seem potentially in conflict. United States sugar policy, for example, has shown us the results when consumers’ desire for “affordable” food conflicts with sugar farmers’ desire for a “decent and rising living standard” (hint: it’s not the consumers who make out like bandits). Similarly, it is at least conceivable that food grown “in tune with local culture and customs” might be more expensive, or make food less abundant, or even less safe. And if those goals can be in conflict within a country’s borders, I shudder to think what such an overburdened agenda could do to the already-struggling global trading system. At the extreme, a call for a “global vision” of agricultural trade policy could see the return of international commodity agreements and other supranational management nightmares of the mid-late 20th century.

On balance, the WTO has been a force for good in freeing agricultural trade. For sure, commodity markets are still very distorted, and the whole mercantilist basis of the WTO must be questioned. But by trying to harness the desire of exporters for more customers to counteract the pressure on governments to protect domestic industries, the WTO has done much good in the world. Pascal Lamy is right to encourage countries to stay on course with the Doha round of trade negotiations. I just hope that encouraging a “global vision” for agriculture, and pointing to vague notions of “social externalities,” doesn’t run against his stated purpose of freeing farm trade.

More on Cato’s work on agricultural trade policy here.

Amusing, but Tragically Accurate, Video on Ag Subsidies from the U.K.’s Taxpayers Alliance

It is unclear whether European Union agriculture policy is more absurd or less absurd than American agriculture policy. Both systems reward special interests. Both systems distort markets. Both systems deprive people in the developing world. Both systems are bad news for taxpayers. The real issue is whether it is possible to reverse these terrible policies. Maybe a bit of satire will do the trick. Our friends at the Taxpayers Alliance in England have put together a video which uses humor to explain the absurdity of Europe’s so-called common agricultural policy.

After watching this video, I’m feeling a bit envious. My mini-documentaries on economic issues (see examples here, here, and here) have received some good feedback, but perhaps we could change more minds in America by using mockery instead of wonkery.