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10/31/2002
The Farm Bill, Part I
We are going to deviate from the normal fare the next few
weeks. Back in the spring, as debate raged over the new farm
legislation, I knew that I would be traveling in farm country this
fall. So I began to collect articles and notes on the topic,
especially since I personally know so little about it.
Now that I have been visiting with my friends, as well as meeting
new acquaintances in Oklahoma, Kansas, Wyoming, Montana
and the Dakotas, I want to discuss the recently passed bill that
could cost the American taxpayer anywhere from $170-$220
billion over the next ten years. The high range depends largely
on the price of various commodities in the future and the
subsidies that would then be doled out.
Most of what follows is in opposition, though yours truly will
save his own comments for next week. To my farmer friends,
don’t jump to any conclusions. I haven’t formed an opinion yet.
[The quotes were generally made between May and August of
this year.]
Senator Richard Lugar (R-IN) [New York Times]
“Ineffective agricultural policy has, over the years, led to a ritual
of overproduction in many crops and most certainly in the
heavily supported crops of corn, wheat, cotton, rice and soybeans
and the protected specialty products like milk, sugar and peanuts.
The government has provided essentially a guaranteed income to
producers of these crops. So those farmers keep producing more
crops than the market wants, which keeps the price low – so low
that these farmers continually ask the government for more
subsidies, which they get.”
Bronwen Maddox, Foreign Editor, Times of London
“It is as intricately fashioned a piece of political bribery as could
be devised, on behalf of farmers and their families, a population
which amounts to much less than that of New York City alone,
although the number of other workers indirectly dependent on
farming is always a fruitful source of wild claim and counter-
claim.
“The Bill protects cotton and rice growers in the southern states
where Republicans are strong; swinging north, its wheat and corn
provisions look after Senate Democrats in the Mid West and the
Great Plains. It is particularly generous to the wheat-growing
Dakotas, Minnesota, Nebraska and Montana, where Democrats
hold eight out of the ten Senate seats.”
Robert Samuelson [Washington Post]
“Farm subsidies are a splendid example of old-fashioned politics:
using public money to buy votes. It’s the quest for popularity
and power, and not campaign contributions, that matters. Under
the new bill, the subsidies are estimated to cost almost $200
billion over the next decade, or about $20 billion annually. If
farm prices (mainly for wheat, corn, soybeans and cotton) are
lower than expected, the subsidies will be higher. Similarly,
higher farm prices would mean lower subsidies.
“The point is to stabilize farm incomes – to prop them up in
periods of low prices and thereby save ‘family farming.’ The
subsidies have existed in one form or another for almost 70
years, and there’s no evidence that they work. Farmers and farm
workers accounted for 21 percent of the labor force in 1929,
before the New Deal’s first agriculture legislation. Their share
today is about 2 percent, even though the amount of land in
farming is almost the same (1 billion acres in 1931, 932 million
in 1997)…
“Indeed, the subsidies have perverse side effects. Higher
subsidies boost land values, because (like crops) they add to the
land’s cash-producing potential. In turn, higher land prices and
rentals mean higher costs for new farmers. Similarly, farm
subsidies stimulate production, which depresses prices. The
combination of higher costs and lower prices squeezes farm
incomes.
“The subsidies also hamper efforts to open foreign markets.
Precisely because American farmers are so productive, they need
exports to absorb their surpluses. But foreign markets are
heavily protected by subsidies and high tariffs, because farmers
almost everywhere are a politically favored group. According to
a recent U.S. Agriculture Department study, the average food
tariff around the world is now 62 percent. It’s hard to convince
other countries to cut their subsidies and tariffs if we won’t cut
our own.”
Editorial in the Wall Street Journal
“This $174 billion monstrosity is…a reverse Robin Hood
exercise that taxes the middle class living in cities and suburbs in
order to ladle subsidies on some of America’s most prosperous
companies and citizens.”
[Following were the farm subsidies that went to the top 10% of
farms for the period 1996-2000 (as cited by the Journal).]
Iowa…49%
Minnesota…54%
Missouri…64%
South Dakota…55%
Montana…55%
“Suffice it to say we’d love to spend a week on one of those
‘struggling family farms’ that Democrats keep talking about.”
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The Senate approved the farm legislation on May 8 of this year
by a 64-35 margin. Following is some of the debate, as compiled
by the Texas Plains Cotton Growers and High Plains Journal.
Tom Harkin (D-IA): “Those who propose to send this bill back
to conference are proposing to take the new stability and
predictability away from America’s farmers and ranchers and
rural communities and throw the entire situation into turmoil and
chaos.”
Richard Lugar (R-IN): “I will argue in due course that it is very
probable that crop prices will go lower still (under this bill),
(and) that the effect (will be) an inevitable vast oversupply of
agricultural commodities and lower prices.”
On the land issue, Lugar adds: “If you are one of the 42% of
farmers in this country who rent land as opposed to owning land,
you face a very tough set of circumstances. Your rents are very
likely to go up each year as the value of the land goes up. Worse
still, if you are a young farmer who hopes someday to own land,
then your prospects of getting the money to do that, and being
able to pay the price, of course, diminishes year by year. And
that has been occurring in America. As a result, there are young
farmers who are in farm families who are hopeful that with the
reduction or, hopefully, the repeal of federal estate taxes, that
they might inherit the land. Others who are not in such situations
are likely to be out of luck…So as a result, it is predictable that
the average age of farmers in this country will continue to
increase, as it has been increasing in recent decades. That
contributes, in part, to the consolidation in farm ownership.”
Kent Conrad (D-SD): “I wish we didn’t have to spend this kind
of money. Friends, our competitors are spending much, much
more. To spend less is to say to our people, ‘tough luck; you are
out of business.’ That would be a profound mistake.”
Conrad Burns (R-MT): “What has changed a little bit is that we
are into price-support protection of a commodity. We are not in
the business of guaranteeing the income of the farmer. This will
allow us to make a strong argument for a market-driven economy
on the global scene. It will have trade impacts. There is no
question in my mind…It is (also) my belief that we will drive up
the cost of land. When we do that, the bigger producers will buy
out the lower producers.”
John McCain (R-AZ): “I oppose this legislation because it is an
appalling breach of our federal spending responsibility and could
be damaging to our national integrity…What have we done? We
are costing the average American citizen, one who is not a
farmer, big or small, enormous amounts of money because we
will prop up a price, and because the agribusiness is by the small
farms, they will cultivate them and they will grow more
products, there will be more of a surplus, and we will, again, lift
the subsidy, costing the average citizen a lot more money. This
is a vicious cycle we are in.”
Don Nickles (R-OK): “If we pass legislation that is going to
greatly encourage production and have the government paying
for a lot of it, and then drive prices down, are we helping
agriculture in the long run? I am afraid maybe we will be hurting
agriculture in the long run.”
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Next week, part II.
Brian Trumbore
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