Tag: farm subsidies

More Dairy Shenanigans — and It’s Not Over Yet

Dairy farmers were allocated $350 million in extra assistance recently (as if the billions we artificially funnel to them every year are not enough) because of plummeting prices. The assistance will come mostly in the form of cash, although the federal government will also buy more dairy products for nutrition programs, and at increased prices. (Not to be outdone, hog farmers are asking for the same.) An article from Wednesday’s edition of the Wall Street Journal Online has the details.

In a rare fit of candor, one dairy farmer group admits that the emergency money, and the decades-old programs, are not enough:

The National Family Farm Coalition, a Washington-based farm-advocacy group, is asking for an overhaul of the milk-pricing system, which is based on a complex Depression-era regime administered by the federal government.

So far I’m with them, but then they lose me with this:

The coalition supports an idea that would keep prices stable by creating an oversight entity to manage the amount of milk a farmer can produce.

“While we appreciate this money, it won’t be enough though to keep farms from going broke,” the coalition said in a statement.

Ah, milk quotas. Good idea. And we can learn from the Europeans about how to pull that trick off. 

Seriously? We need a new “oversight entity” to actually “manage the amount of milk a farmer can produce”? Talk about fatal conceit. That’s fatal insanity to think that a centralized agency can manage milk production on a farm-level basis.

New Senate Agriculture Committee Head Received Farm Subsidies

In his blog post yesterday — appropriately entitled “Congressional Conflict of Interest“ — my colleague Chris Edwards questioned the selection of Sen. Blanche Lincoln (D-Ark.) to head the Senate Agriculture Committee:

Lincoln has been “a tireless advocate for the Arkansas rice industry’ and a ‘champion for agriculture.” You can see what 20 or so other agriculture lobby groups say about Lincoln here. These are very laudatory remarks, but what about the taxpayers? What do taxpayers think about her support for the $20 billion or so in annual giveaways to farmers?

I wonder what taxpayers think about the fact that Senator Lincoln and her family have received hundreds of thousands of dollars in farm subsidies?

From a 2007 USA Today article:

Members of Congress must report sources of income totaling more than $200, but most get payments through partnerships or other entities, so it can be difficult to learn which ones receive the subsidies. Recipients are searchable by name on www.ewg.org, but, for example, payments to Sen. Blanche Lincoln, D-Ark., are listed under her maiden name, Lambert, at a Virginia address near Washington.  Records show Lincoln and her family members collected $715,000 from 1995-2005, the most recent year complete data are available. She said she personally received less than $10,000 a year, and the subsidies ended in 2005 when her land was sold.

Let’s say I force a stranger under threat of imprisonment or violence to part with part of his or her paycheck, and proceed to give that money to a friend.  I would rightly be labeled a thief or worse.  Suppose I not only gave the money to my friend, but kept a cut for me and my family.  That would be even worse.

But when politicians do it we call them “public servants”?

Congressional Conflict of Interest

lincolnIt looks like farm subsidy reform is unlikely for another few years. Senator Blanche Lincoln has been selected the new head of the Senate Agriculture Committee. Dow Jones notes: “Lincoln is a two-term moderate Democrat who described herself Wednesday as a ‘farmer’s daughter.’”

Lincoln has been “a tireless advocate for the Arkansas rice industry” and a “champion for agriculture.” You can see what 20 or so other agriculture lobby groups say about Lincoln here. These are very laudatory remarks, but what about the taxpayers? What do taxpayers think about her support for the $20 billion or so in annual giveaways to farmers?

I’m guessing that Lincoln will put the interests of subsidy-receiving farmers in her state ahead of the interests of the nation’s taxpayers, given that Arkansas ranks seventh out of the 50 states in terms of farm subsidies received yet has a small population.

This sort of pro-spending bias on committees is common across Congress of course. I’ve argued that one step toward getting the House and Senate to make to more rational and frugal trade-offs on spending would be mandatory random committee assignments every two years. It’s absurd that generally the only people overseeing farm programs are people who are in the bag for farmers. It’s an obvious conflict of interest.

It would be much better if we had one of the senators from, say, Rhode Island chairing the Agriculture Committee, because that state receives less farm subsidies than any other. A Rhode Island senator would be more likely to dispassionately balance the trade-offs of the $20 billion or so of pain imposed by taxes to support farm subsidies with the benefits of farm subsidies (if any).

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.

Feds Pay Farmers to Till the Desert

No, this headline and story is not brought to you by The Onion.

The latest proof that there’s nothing more permanent than a temporary federal program:

As drought forces families in the West to shorten their showers and let their lawns turn brown, two Depression-era government programs have been paying some of the nation’s biggest farms hundreds of millions of dollars to grow water-thirsty crops in what was once desert.

My sympathy for this farmer lies somewhere between that which I have for Bernie Madoff and Ted Stevens:

Jim Hansen, a 69-year-old cotton grower in California’s Central Valley, said his family business would crumble if the government took away low-cost water and the nearly $1.7 million in crop payments he received in 2007 and 2008.

For more on the insanity that is federal farm policy and why the USDA needs to be downsized and/or done away with, click here.

A Government That “Works,” but for Whom?

In his inaugural address yesterday, President Obama tried to step around the central question of whether the federal government has grown too big and powerful:

The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

Even in skirting the question, President Obama has in effect come down on the side of bigger government. His statement assumes that government programs will be central to creating jobs and providing health care and retirement security. For every problem confronting American families, it is just a question of finding the right program that “works.” He leaves off the table the very real possibility that government intervention has made each of those problems more difficult for Americans to solve, and that the answer really is a smaller role for government.

The other open question is who decides if a government program “works.” President Obama has wrapped himself in the mantle of change, yet as a candidate he endorsed the 2008 farm bill. The existing U.S. policy of production subsidies and import tariffs, a policy that has remained essentially unchanged for 75 years, arguably “works” for a small number of relatively well-off sugar, dairy, corn, rice, and cotton farmers. But for the vast majority of Americans, the farm bill delivers higher and more volatile prices at the store, billions of dollars a year in additional government spending, higher cost for U.S. businesses, a degraded environment, and a harder slog out of poverty for millions of farmers in less developed countries. [You can go here to find Cato research on how farm programs have failed to work in our national interest.]

If Senator and candidate Obama could not see the need to end our failed farm policies, it is hard to imagine many if any other programs that will come to an end under his administration.

For more on how scrapping farm subsidies would be a good first step toward removing failed government programs, watch this video: