Tag: agriculture

RSC Silent on Farm Subsidies

Confirming my ongoing skepticism about the committment of self-identified fiscal conservatives, especially when it comes to cuts to programs that benefit their constituencies, Politico last night posted an excellent story about the Republican Study Committee’s silence on farm subsidies:

Net cash farm income for 2010 is projected to finish near $92.5 billion — a 41 percent increase even after subtracting payments from the government. Yet conservatives are almost tongue-tied, as seen last week with the Republican Study Committee’s proposal to eliminate relatively modest subsidies for an organic food growers program without mentioning the nearly $5 billion in much larger government direct payments to farm country — including to the home districts of many of the RSC’s members.

Indeed, 24 of the RSC’s estimated 165 members hail from the House Agriculture Committee, and total annual direct payments to their districts run more than $1.09 billion a year, according to a POLITICO review of data compiled by the Environmental Working Group.

Farm groups aren’t exactly in a rage to offer up their programs for reform, but the National Association of Wheat Growers at their winter board meeting last week gave us plenty of evidence, as if more were needed, that support for the status quo is solid. An interesting nuance is their argument that, if they do “contribute” to deficit reduction, they won’t be “giving” more than anyone else, thank you very much:

NAWG supports the policy that if federal agriculture programs are subject to budget cuts to achieve deficit reduction, then the same percentage of cut should apply to all federal government programs.

While I might think that almost all areas of the federal budget need be cut, I just don’t buy the argument that farm subsidies are no more damaging, and therefore shouldn’t be cut more, than any other areas of government intervention. The federal government, in my opinion, has a role to play in limited and defined areas of public life.  I strongly disagree with the NAWG’s implication that farm subsidies are just as important/necessary as, say, public funding for national defense or for the control of infectious disease.

Surprise, Surprise

Last year I wrote about the intriguing proposal by the North Dakota Farm Bureau to do away with federal farm subsidies. I expressed at the time my doubt that the proposal would find much traction with the national American Farm Bureau Federation and, indeed, the group voted yesterday (at their annual conference in Atlanta) against the milder proposition to cut direct payments – the approximately $5.2 billion per year of your money that flows to farmers regardless of what, or even whether, they farm. Those payments are becoming increasingly politically contentious at a time of growing unease about record deficits, and some farm groups had said defending (let alone receiving) them was a threat to farmers’ broader interests.

Well, despite some discord among the group, the AFBF – you’ll be shocked, shocked to hear – voted largely for the status quo. From Brownfield (in an article that contains interesting analysis of how support for various programs breaks down on state/regional lines):

By a comfortable margin, the delegates passed a resolution calling for ‘a strong and effective safety net that consists of direct payments, crop insurance and a simplified Average Crop Revenue Election (ACRE) program.

Hopefully Congress can prove me wrong and cut farm subsidies when the farm bill comes up for renewal in 2012.

Post-Election Outlook: Agriculture Edition

My colleagues have done a thorough job of analyzing the policy implications of Tuesday’s federal election outcome as it affects trade policy, health care, immigration, education, and the scope and size of government generally (more here on federal spending). Most of them are cautiously optimistic that a Republican-controlled House is good news for liberty-minded folk. Let’s hope so.

Unfortunately, there are fewer obvious reasons for optimism that Tuesday’s result will mean big changes in agricultural policy, a depressingly bipartisan area of federal intervention. Even Rand Paul, the poster child for the Tea Party, expressed “moderate” views on farm subsidies during his campaign.

On the positive side of the ledger, our friends at the Environmental Working Group make the excellent point that being a friend of Big Farming was not enough to shield many Democrats from defeat. Earl Pomeroy (D, ND) represents the congressional district that ranks Number One in farm subsidy receipts (now there’s a source of pride!) and even he got the boot. As did Senator Blanche Lincoln, chairperson of the Senate Agriculture Committee and shameless architect of a bailout package for farmers that was funded we-don’t-exactly-know-how. At least 15 (possibly 16 if Rep. Jim Costa (D., CA) loses his too-close-to-call race) Dem members of the House Agriculture Committee — friends of the farmer all — are now looking for work. In other words, support for Big Ag is not a sufficient shield.

On the other hand, it’s not clear that their replacements are an improvement as far as agriculture policy is concerned. With a new farm bill due to be written in 2012 (although soon-to-be-former House Agriculture Committee chairman Collin Peterson (D., MN) was trying to get that ball rolling earlier), it is not certain that the fiscal conservatism exhibited during most Republicans’ campaigns extends to farm policy. Indeed, probable new House Agriculture Committee chairman Frank Lucas (R., OK) has said he disagrees with getting rid of the fiscally offensive (but less trade-distorting) direct payments that flow to farmers regardless of what, or even whether, they farm.  That was an area of reform that Collin Peterson was at least willing to look at. (More on the implications for direct payments here).

Chuck Abbott, agriculture reporter for Reuters, has more analysis on the outlook for farm policy. His is a more optimistic take, and I hope he’s correct. For my part, my skepticism is based on statements such as those by the CEO of the Renewable Fuels Association, speaking on a conference call yesterday:

[F]or the most part those that may have been defeated were replaced with equally strong advocates for value added agriculture and ethanol. Does anyone believe that Kristy Noem (R-SD) will not be a strong voice for ethanol?

Exactly. The fight’s not over yet, folks.

Good Time to End Farm Subsidies

The Wall Street Journal reports that the agricultural sector is recovering nicely from the recent recession while the rest of the private sector continues to struggle. The counter-cyclical nature of some farm subsidy programs means that the taxpayer bill for the year could be cut in half to only about $12 billion.

From the article:

For many crops, prices are climbing even as big harvests pile up, a rare combination. Farmland values are up while those for some other kinds of real estate languish. Debt on the farm is manageable. Incomes are rising.

And trade, of which many Americans are growing wary, is for agriculture a boon. Asia’s economic vigor and appetites make the farm sector’s reliance on exports—once thought a vulnerability in some quarters—a plus today.

“The farm economy is coming out of the recession far faster than the general economy,” said Don Carson, a senior analyst.

The WSJ article also notes that farmers will still receive direct payments of about $5 billion for basically just being farmers. This subsidy is particularly insulting to taxpayers as the program was created in 1996 to help wean farmers off of subsidies. Instead, these “temporary” payments were turned into a permanent hand-out in 2002.

Better news for taxpayers would be the abolition of farm subsidies. While they obviously remain popular with the beneficiaries and their patrons in Washington, the general public seems to be increasingly aware that the subsidies amount to little more than legalized theft.

Of course, farm subsidy apologists will respond that the programs must be kept in place in order to cushion farm incomes when times aren’t so good. As a Cato essay on farm subsidies points out, this is nonsense:

Another point to consider is that farm households are much more diversified today and better able to deal with market fluctuations. Many farm households these days earn the bulk of their income from nonfarm sources, which creates financial stability. USDA figures show that only 38 percent of farm households consider farming their primary occupation.

Some USDA programs provide useful commercial services such as insurance. The USDA says that its insurance services are “market-based,” but if that were true, there would be no need for subsidies and the services ought to be privatized. After all, most U.S. industries pay for their own commercial services. Also, financial markets offer a wide range of tools, such as hedging and forward contracting, which can help farmers survive cycles in markets without government subsidies.

A $1.1 Billion Re-Election Campaign. For the Senate.

When Rep. Collin Peterson (D- Minn. and Chairman of the House Agriculture Committee) pronounces that a farm program is too generous, you know you’ve crossed a line.

But that’s what happened recently after Sen. Blanche Lincoln (D-Ark), Senate Agriculture Committee Chairwoman and – oh, hey, how about that? – facing a tough re-election battle in November proposed an extra $1.1 billion in emergency farm aid be added to a jobs/tax/unemployment/kitchen sink bill going through the Senate this week. These extra handouts would flow despite the fact that the 2008 farm bill contained ”reforms” (the so-called ”permanent disaster” program) ostensibly to put an end to politically-motivated ad hoc emergency aid of just the type that Senator Lincoln is pushing now.

For those who can stomach it, this excellent article by Dan Morgan, one of the nation’s best agriculture journalists, contains plenty of background information.

Agricultural Exceptionalism

House Agriculture Committee Chairman Colin Peterson (D, Sugarbeet Farmers) announced yesterday [$] that he would begin hearings on the 2012 Farm Bill this spring. I’m still recovering from the traumatizing 2008 Farm Bill fight, so I heard this news with some trepidation.

But wait! Put those red pens away, folks, because Chairman Peterson plans to keep on spending on agricultural programs. Heaven forbid that agriculture should take any of those “cuts” we’ve been hearing so much about :

House Agriculture Committee Chairman Collin Peterson, D-Minn., said… he is determined to write a bipartisan bill that is within the funding baseline that exists in 2012.

The funding baseline is the amount of money that the Congressional Budget Office determines would be spent on all programs in the farm bill if the same programs were to continue after 2012. CBO projects the funding levels based on spending in programs in past years.

Peterson said at least initially he expects each major farm bill section — the farm program, conservation and nutrition — to stay within its 2012 baseline.

He also specifically pledged to fight off any attempts to lower direct payments, which flow to current or past farmers of certain crops year-in-year-out, regardless of whether they still farm or not.

Some further details on his plans for the next farm bill can be found in this National Journal article [$ again, sorry] but the gist of it is that Chairman Peterson doesn’t want reformers interfering the way they did last time, even if farmers were left practically unscathed from the battle.

In a speech to the National Association of Wheat Growers and U.S. Wheat Associates, Peterson said that reformers “who don’t understand how this works … defined what reform is” in 2008. Peterson said there should be changes to the farm bill, but he ridiculed one of the reformers’ biggest goals: limitations on payments to big farmers.

The campaign to lower payment limits “is not reform. It’s an ideology,” he said. Reformers want Congress to decide what size farms should get subsidies, a notion that Peterson rejects. “We are not smart enough in government to decide what farm size is,” he said.

(Sidebar: Isn’t it cute how Chairman Peterson couches his opposition to farm payment limits in libertarianish terms about how government “isn’t smart enough.” His support for a 80+-year-old suite of government interventions suggests he is not as skeptical about government’s smarts as he indicates in this little political aside. But I digress.)

And in a charming dismissal of the importance of free trade (he’s an old-hand at dismissing international obligations in this area), Chairman Peterson offered this:

Peterson said he did not think pressures to comply with trade agreements would be too much of a problem in the farm bill because “the trade situation is dead in the water,” and negotiators realize they cannot get approval from Congress if agriculture is not satisfied. “We’ve got some power over that system,” he said.

“I am not going to turn myself into a pretzel to accommodate this latest trade agreement,” he said.

A disappointing start to the 2012 Farm Bill fight, to be sure, but my hope is not dashed. With any luck, the recent signs of voters’ disgust with Washington will translate into some extra political support for those of us working for real reform. (see examples here and here.)