Eliminating agricultural subsidies in the 2012 farm Bill could save taxpayers more than $100 billion over the next decade while having little impact on the country’s food supply or our national agricultural viability.
Really? Absolutely, at least according to the American Enterprise Institute. The conservative think tank proclaims in a recent white paper that federal programs supporting production ofcorn, wheat, cotton and other “program crops,” as well as subsidies paid todairy farmers sand sugar producers should be cut, along with subsidies for crop insurance and disaster aid.
“Today, farm policy consists of an array of subsidies, regulations, spending programs and land-use restrictions that are widely blamed for the increased cost of food, environmental degradation, fiscal burdens, and the failure of global trade negotiations,” AEI’s report declared. “These inefficient and outdated policies [were] subsidized by taxpayers in the 2008 farm bill at a cost of $307 billion.”
Here is their game plan for “fixing” the farm bill:
Severely reduce commodity programs. Direct payments will cost about $5 billion in 2012, AEI projected, and they’re unnecessary.But because market prices for crops eligible for price supports are likelyto remain well above trigger levels, there is no need to continue loan rate programs. Countercyclicalpayments should also be eliminated because they’re irrelevant and create barriers tointernational market access. The Average Crop Revenue Election program has further increased farmsubsidies for grains, rice, and soybean producers and will continue to do so if reauthorized; it, too,should be abolished.
Eliminate crop insurance subsidies. AEI’s number crunching claimed that the crop insuranceprogram is one of the most expensive ways of transferincome to farmers whilesupplying products that, absent subsidies, most farmers would never buy if they weren’t subsidized. The program has averaged$5.6 billion annually since 2007, one-third of total USDA expenditures on income transfers.
End disasteraid. The Supplemental Revenue Assistance Payments program cost $2.1 billion in 2008—almostfive times the projected cost. Such a program, according to AEI, encourages inefficient farming and livestock production and should be eliminated.
Conservation programs should be converted to “polluter pays.”That change would achieve the same conservation benefits and improve the signals about the real cost of agricultural production, AEI’s report stated. The various conservation programs USDA administers should be integrated, reducing competition among programs for the same land, and farmsshould be evaluated for program participation based on the whole farm or conservation program.
Getting it right
Overall, AEI’s assessment of farm programs is harsh and arbitrary. The group is notoriously anti-big government, and their slash-and-burn approach to remedying the acknowledged excesses that have been built into the farm bill over time represents overreach at best. There is a valid argument to be made about better targeting the billions we invest in agriculture—particularly diverting funding away from a handful of commodity crops and into support for specialty crop development that would allow more smaller farmers and producers to stay in business.
But simply wiping out the programs that support much of our food production system is il-advised.
However, AEI’s withering critique of farm bill spending does get it right in one aspect: Their white paper proposed that public R&D funding for agricultural research and development should be increased. “Privateincentives for investment are inefficient, and returns on public investment are extremely high,” the AEI report noted.
There is a strong possibility that the 2012 farm bill will spark a bitterly debate in Congress over the next year. The pressure to slash spending remains intense, and the multi-billions in ag subsidies are sure to provide a tempting target.
But the entire food production community—farmers, producers, processors, foodservice and retail operators—needs to rally around the notion of food security. We have become complacent about the sources and availability of our food supply, even as resource limits, energy issues and population growth threatens to trigger changes that could radically alter the production and distribution systems on which we currently depend.
Federal spending on farm productivity is less of a giveaway to farmers, although program reform and restructuring is clearly indicated, and more of an investment in a critical aspect of national security. Before we torch that funding, it would be appropriate to consider not just the economic but the nutritional and even psychic impact of turning the United States toward a path of dependency on other countries for the most basic of our needs.
We already face the sobering reality that many of the primary weapons requiredfor national defense can no longer be manufactured without the involvement of countries overseas who aren’t always thrilled with our foreign policies.
Let’s not wake up one morning and realize we can’t even make breakfast without a similar contribution.
Dan Murphy is a veteran food-industry journalist and commentator