Thinking through the farm bill more carefully.
Every five years, Capitol Hill authorizes funding for American agricultural policy through a concoction of tax credits, regulation, and developmental programs. Most recently, in 2008 Congress passed a 700 page farm bill, whose contents impacted food prices paid by American consumers and global commodities markets. Though originally narrow in scope, the bill evolved into a monolith encompassing everything from food stamps and school lunches to direct subsidies and conservation initiatives. While contentious, farm bills have historically benefited many American farmers and stabilized food prices. Nevertheless, the farm bill has potentially negative international consequences, something the United States must consider as changing global demographics strain our agricultural system.
The 2008 Farm Bill
The modern farm bill dates back to 1933, when Congress passed the Agricultural Adjustment Act amidst the Great Depression and Dust Bowl. Corn prices plummeted and demand became almost non-existent, leading President Franklin Roosevelt to implement farm assistance “to rescue American agriculture.” The bill reduced crop surpluses by paying farmers to leave their fields fallow and destroy crops and livestock to raise prices. Since then, the Farm Bill has evolved into a complex legislative item and provides the basis for America’s agricultural dominance.
Its most recent edition, the Food, Conservation, and Energy Act of 2008, allocated $288 billion over a five-year period. Over 70 percent of funding was directed towards nutritional programs like food stamps and school lunches, and more than half of remaining funds were subsidies for commodities.
Yet, because farmers have high amounts of capital invested in every growing season, crop insurance has become the most vital program of the farm bill. Before the advent of federally subsidized crop insurance, farmers’ livelihoods were subject to the whims of nature. Fluctuating weather patterns could render a farmer’s entire yearlong effort useless. According to Food Fight: The Citizen’s Guide to a Food and Farm Bill, many farmers “can’t buy enough insurance” because private insurers are often unwilling to take on such risk, leading the federal government last year to spend $5.2 billion on crop insurance.
However, the future of federal spending on agriculture programs is far from certain in the midst of deficit reduction efforts. The new Republican majority in the House has sought to cut government spending across many programs. The current farm bill will expire this September and some farm interest groups are even worried Congress will not renew the bill and that programs will see automatic funding cuts. According to a statement given exclusively to the HPR, Congressman Collin Peterson (D-Minn.), the ranking member of the House Agriculture Committee, said “it’s going to be a tough year” to pass the farm bill. Peterson and other committee leaders already proposed $23 billion in farm bill cuts to the failed debt Super Committee, but there is still a lingering concern that election year politics will prevent renewal. Peterson acknowledges, “we’ve passed a farm bill in an election before, but it is difficult.”
The Modern Farmer
Tracing the evolution of the American farmer reveals much about the parallel development of American agricultural policy. In 1950, there were 5.38 million farms in the United States, and the average farm was 213 acres. Since then, the number of farms has been slashed to around two million, while the average size has doubled. Today, truly profitable farms are generally larger than 2,000 acres, capital which most Americans cannot afford.
According to the Department of Agriculture, “fewer than two percent of Americans farm for a living today, and only 17 percent of Americans live in rural areas.” This statistic is indeed a far cry from Jefferson’s ideal of a republic where the yeoman farmer constituted the bedrock of American society. Many economists attribute this trend to technological growth and increased productivity with scale.
Some denounce this trend. Hilde Steffey, program director for Farm Aid, a group dedicated to supporting family farms, tells the HPR that Farm Aid’s mission is to, “keep every farmer we can.” Farm Aid issued a report to Congress stating that, “far from Wall Street, family farms are creating real wealth, producing real value, [and] growing from seeds and sunlight a product that nourishes us both psychically and economically.” They argue that supporting decentralized family farms is essential to vibrant rural communities.
However, the modern agricultural system has transformed the perspective farmers take on their livelihood. To compete in an increasingly complex domestic and global market, the contemporary farmer has become a technocratic businessman that stays abreast of recent advances in farming technologies. Jonathan Piekarski runs a 1,600 acre family farm in Fergus Falls, Minnesota, and his encyclopedic knowledge of global commodity prices and agricultural news underscores this development. For example, Piekarski observes how the current drought in Argentina, a large corn producer, has raised the global price of his crop.
He explained to the HPR how agricultural policies from Washington affect his daily life. When Piekarski was involved with Future Farmers of America during high school, the farm bill’s programs were touted as keeping, “rural America vital.” Since then, the farm bill has done little but slow the consolidation of America’s family farms. Yet he remains an advocate for a strong farm bill, acknowledging the stabilizing effect on prices and supply, and highlighting the benefits of the crop insurance program. He notes, “U.S. farmers feed the world… [and] the goal is global food security.”
The International Take
However, farmers from other countries rarely commend U.S. agricultural policy, viewing subsidies as anti-competitive. Indeed, some argue that subsidies have allowed American farmers to pursue dumping policies where they flood developing countries with cheap crops in a monopolistic fashion. In 2002, some of these issues came to the forefront when Brazil charged the United States with violating World Trade Organization guidelines and other multilateral trade agreements with its cotton subsidies.
A recent rise in global commodity prices has tempered these disputes, but also created problems of another kind. Randy Schnepf, an economist and specialist in agricultural policy for the Congressional Research Service, told the HPR that, “third world countries are facing high prices because a lot of them are importers of food.” Moreover, he added that many governments “don’t allow global prices in rural areas, so farmers can’t benefit from the high prices.” This mismatching of supply and demand creates an imperfect pricing system, and even slight changes in prices are calamitous for people living on mere dollars per day.
Possible Reforms: A Food Bill?
Many different proposals have arisen to reform the farm bill. Subsidies have generally declined over recent years, but the government still protects niche industries like sugar and rice. Furthermore, because some food policy items may violate international trade agreements, policymakers have additional incentive to make reforms. Direct payments, sums of money paid to farms regardless of the year’s profits, are among the most controversial programs in the farm bill, and cost the federal government $4.9 billion last year. According to Congressman Peterson, “Direct payments are tough to defend, especially now when the agricultural economy is doing so well…[they] will be gone” in the next farm bill.
Some have argued for progressive subsidies, which would involve subsidizing poorer and smaller farmers instead of agribusiness. This aligns more closely with the goals of the original farm bill, but would also face challenges. Overall, many agriculture policymakers and farmers agree that an adequate safety net must exist for farmers, which stabilizes agricultural supply for the American public.
Policy recommendations put forth by Farm Aid emphasize, “Family Farm-Centered Food Systems,” postulating that food should be grown and consumed locally. Steffey claims that beef cattle are often transported from Maine to Colorado for slaughter and processing before being sent back to Maine for consumption. By enforcing stricter anti-trust laws against large meat-packers and providing funds to rebuild local granaries and processing facilities, the farm bill could help communities eat more of what they grow. Another step in the right direction would be amending federal farm loan programs that prevent organic farmers from accessing credit because they are classified as “risky.” These reforms would perhaps enable large-scale and local agricultural production to successfully coexist.
Domestically, the farm bill has many positive consequences, providing a safety net for America’s farm communities, nutritional programs for the hungry, and a steady food supply for consumers. However, the farm bill hearkens back to what we eat, and writer Daniel Imhoff argues, the farm bill is really a “food bill.” America’s farmers are the most productive, innovative agricultural specialists in the world. We place our food orders to them through the farm bill, which will shape the future of farming, and the food and prices we find at local grocers.