Bureaucracy & the Farm Bill: FRIENDS

During the summer of 2011, I worked on a policy project for my internship on the 2012 Farm Bill. But it’s now 2013, and that “2012” Farm Bill is still just a poor little bill sitting there on Capitol Hill.

Let’s take a blast into the past for context. This is an op-ed I wrote on the 2012 Farm Bill that was originally published in the Detroit News on August 16th, 2011.

Earlier this month, Michigan Senator Debbie Stabenow appeared before a Washington meeting of the American Soybean Association and lamented how ongoing budget negotiations were making it “incredibly difficult” to maintain a proper level of “risk management protection” for farmers.

Translation: Federal farm subsidies are for the first time in a long time on the chopping block.

From 1995-2010, Michigan farmers received $4.35 billion in subsidies. Though meant to support the incomes of farmers and promote rural economic growth, subsidies are making rich Michigan farmers richer because payments don’t usually end up where they are most needed. The top 10 percent of recipients receives 71 percent of the payments in the state of Michigan. Instead of helping those most in need, farm payments are just another failed government welfare program.

There is no doubt that farming is a difficult, volatile business filled with risk and uncertainty, but so are many other successful industries that do not receive any government hand outs. Farmers receiving payments should be careful not to view the government as a savior, who will reduce risk, create certainty and save the day if something bad happens. This is a dangerously dependent position to be in, and it is morally problematic when it comes at the expense of everyone else.

Stabenow, chairman of the U.S Senate Committee on Agriculture, Nutrition and Forestry, conceded to the soybean farmers that “it’s wonderful that farming is prosperous now.” But she pointed to droughts in the South and the floods in the Midwest as proof that “you still face the same risk that farmers have always to deal with. Some agribusiness get paid seven digits to not farm areas of their farm in the name of “risk management” but what entrepreneurs don’t take risks?

The glaring injustices built into farm subsidy policies explain why so many on both the political right and left routinely describe them as immoral. Subsidies reward large commercial enterprises — in good times and bad — and shut out small farmers. Subsidies also drive up the cost of food for the poor and working families domestically and across the globe. Now considered by some to be America’s largest corporate welfare program, it is obvious that the government has failed to meet its original goals.

Rural communities dependent on farming seem to have the long end of the stick, but this isn’t true. According to an Iowa State University study, the most highly subsidized areas in the United States are seeing little to no economic growth. In counties where farm payments are the biggest share of income, job creation is very weak. This can possibly be attributed to highly subsidized agribusiness buy outs of family farms. Because farm payments often encourage overproduction and consolidation of agribusinesses, the price of land is inflated, which makes it very difficult for would-be farmers to enter the market. Rather than giving them a fair opportunity, subsidies undermine the entrepreneurial spirit of young domestic farmers. It is ironic that farm payments are intended to foster growth but instead they appear to be linked with subpar economic performance.

Not only has U.S. farm policy failed to create growth at home, but its unintended consequences have rippled across the globe. Commodity price supports, export subsidies and tariffs drive commodity prices below the world price, which makes it difficult for foreign countries to compete. Surpluses of overproduced U.S. crops are dumped on the international market at prices well below the cost of production, creating even more price volatility. Iowa farmer Mark W. Leonard, in a 2006 Wall Street Journal interview, described how he brought a farmer from Mali to talk to local church gatherings about the adverse effects of subsidies. “From a Christian standpoint, what it is doing to Africa tugs at your heartstrings,” he said. Many poor nations have few other options outside of subsistence farming. Subsidies keep poor nations poor and dependent on developed countries. The bottom line is that the large, commercial farmers win and everyone else loses.

Agricultural subsidies make little economic sense and they display many of the problems that characterize other large welfare programs: injustice, dependency and a slew of unintended consequences. But, good news might be just around the corner. With debt and budget negotiations in gridlock in Washington, and a growing consensus that federal spending at current levels is unsustainable, political support for farm subsidies is waning fast. What’s more, high crop prices and clear injustices are building bipartisan support for significantly cutting agricultural subsidies in the 2012 Farm Bill. This is good news for Michigan, not a problem like Stabenow claims.

It’s been almost two years since I wrote this and still, no Farm Bill. But the bureaucracy of the legislative process that we love to hate so much will help us this time. Stalling for an extra year has allowed a few things to marinade in the minds of lawmakers and hill staffers:

1. Farmers have been doing pretty well for themselves. It turns out that 2011 was a great year for farmers. The ag industry recorded one of its highest profits ever amid the Great Recession. 2012 was also a relatively good year to be a farmer, despite the drought.

2. Something’s gotta give. The past two years in Washington have been defined by budget gridlocks, debt ceilings, fiscal cliffs, and sequestrations. Congress is desperate now more than ever to cut spending anywhere they can afford, without much backlash from their constituents.

It’s taken time, but it seems like lawmakers are finally realizing that throwing dollar bills at our farmers, who are already making big cash on their crops, might not be the best way to steward taxpayer money given the federal government’s current debt crisis. As a result, crop insurance and food stamps–two of the more popular forms of subsidies included in the Farm Bill–are projected to see huge cuts this cycle. I ne’er thought I’d see the day!

And these cuts are good for everyone, even the ag industry. But that’s another subject for another blog post, so I’ll defer to Joel Salatin on that one.

So, the past two years have definitely provided fertile ground for farm subsidy cuts, and legislators get this, but all progress is all relative on the Hill…

2002 Farm Bill: $588 billion
2008 Farm Bill: $913 billion
“2012” Farm Bill: probably over 1 trillion

Perhaps I’m counting my chickens before they’ve hatched.

The Senate is closing in on a final vote to end the debate this week (or maybe next week) so I guess we’ll find out what happens in the next few months (or year). In the meantime, a message to all my anti-subsidy politicos and thought leaders: let’s make hay while the sun shines.



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