The Senate has now passed its version of a new farm bill–$45 billion in new spending over the next five years, a 26 percent increase over what is already being spent. The House has already approved a $38 billion increase in farm spending over that period.
Now the two sides will have to get together and hash out the differences over the coming weeks and months. There are significant differences. The Senate version, for example, proposes to limit the amount any single farm can receive in a year to a maximum $275,000–although it boosts subsidy rates for grain and cotton farmers and creates new payment programs for wool, mohair, honey and lentil farmers.
But the one thing absolutely, positively guaranteed not to come up in the House-Senate conference committee negotiations is why Congress is prepared to spend tens of billions of dollars more on ineffective agricultural programs when tax money is so tight.
To understand why, you need only know that the essential numbers in the congressional jockeying over a new farm bill are 11, 5 and 02. If you don’t know that that’s the date of this fall’s pivotal mid-term election, then you don’t know the first thing about agriculture politics.
Shoring up support in key farm states that could go either way this fall has Republicans and Democrats throwing money at farmers.
Republicans tried in 1996 to end Depression-era subsidies that have tied U.S. farm fortunes for decades to government payments. The goal was to make farmers more responsive to market forces. But a plunge in commodity prices in the late 1990s brought howls from the farm belt.
The result: Over the last four years, Congress has spent some $30 billion for “emergency” agricultural aid.
Now the GOP has given up any pretense of weaning farmers from government handouts and instead is vying with Democrats to increase the size of those handouts. This was merely depressing when there was still a budget surplus. It is deeply disturbing now that the nation’s back in the red.
Can farmers survive without government payments? Most do.
Sixty percent of American farmers get nothing from the government–no price supports, no subsidies, nada. Most subsidies go to farmers of corn, soybean, wheat, rice, cotton and dairy products. Other producers are on their own.
Just 10 percent of the farmers collect two-thirds of the farm subsidies. Trust us, that 10 percent isn’t where you’re going to find the “family farmers” everyone is so eager to protect.
Here’s why crop subsidies are so insidious. Say the price of corn drops. Corn farmers get federal dollars to make up for the money they would have earned if the price were higher. They make money, so they plant more corn. That supply keeps the price down. So corn farmers turn to Washington for more help . . . and on and on. Doesn’t anyone see the futility of such a policy?
U.S. Sen. Richard Lugar of Indiana does. A corn, soybean and tree farmer, he has been a loud and consistent voice in the wilderness on the folly that is U.S. agriculture policy.
“American agricultural policy distorts food prices, frustrates innovation, limits product diversity and subsidizes a select group of farmers at enormous public cost,” Lugar wrote in The New York Times in January. “Its inherent protectionist qualities confound American efforts to reduce protectionism abroad and gain access to new markets.”
That about sums it up. But Congress is preparing to argue not over whether this policy makes sense but how many more billions of dollars that farmers–a few farmers, that is–should get over the next five years.
The Bush administration has criticized this run-up in farm subsidies in the past. President Bush said last week the Senate bill “doesn’t get the job done.” But he also told cattlemen this month that “it’s in our national security interests that we be able to feed ourselves.”
Really? Think about that for a minute.
If that’s true for America, couldn’t China and Brazil, Canada, France, New Zealand and all the rest argue the same? How does that help American farmers trying to open up new overseas markets for their goods?
Bush talks about the importance of free trade to provide new markets for the U.S. Is that “the job” that needs doing? Or is it to protect some farmers at the expense of everyone else?
