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The Farm Bill Rollercoaster Gets Ready to Roll

Credit: National Archives no. 514376 44-PA-871

This week, the Senate began debating the “Agriculture Reform, Food and Jobs Act of 2012,”the latest name for the Farm Bill. This legislation comes up for renewal every five years, and the back-and-forth always been larger than life and somewhat crazy.  If you follow the coverage closely this year, you’ll learn about Southern peanut and rice farmers as well as Midwestern popcorn producers.

The last time around, it felt like every newspaper in the country editorialized against the bill’s subsidies, yet the Democratic-controlled Congress embraced the status quo and left reform-minded liberals hoping for a veto from then-President George W. Bush. In a rare moment, Bush satisfied the liberals, vetoing the version of the legislation that appeared on his desk.  Yet that version was missing an entire section on trade policy that had been in the version passed by both the House and Senate (despite questions of propriety, the House and Senate overrode the veto).

Lawmakers this year seem to have forgotten the lessons of the dust bowl and the Great Depression.  In the Midwest, farmers planted the same crops year after year and didn’t value the grass and trees that held the topsoil in place.  When drought struck in the 1930s, huge windstorms blew much of the remaining topsoil into big black clouds, devastating the farms in our nation’s breadbasket. The first farm bill, the Agriculture Adjustment Act, was passed in 1933 to provide incentives for farmers to take their land out of circulation so that the topsoil could recover.

These incentives evolved into “direct subsidies” that continued despite the economic and environmental recovery since the Great Depression.  Ending these subsidies has been a primary target of past debates; they pretty much disappeared from this year’s version without half as much hoopla (or editorials) as in the past. But critics charge that the money has instead been channeled into crop insurance subsidies that benefit the largest farms and leave out the smaller farmers who grow numerous and often organic crops on smaller plots.

The crop insurance covers times when the crop revenues fall below the market average. While this seems like a prudent switch—direct payment subsidies were provided in the past regardless of whether or not crops were planted—one outcome will be an incentive to plant as much as possible as any resulting losses will be minimized.

The current version of the Senate Bill, which the Senate Agriculture, Nutrition and Forestry Committee passed at the end of April, would also remove $6 billion from the Conservation Reserve Program. Subsidies from this program reward farmers for taking their land out of production and instead planting grass cover and trees, which help stabilize the land and prevent precipitation from washing off fertilizers and pesticides from the fields into rivers and streams. So while the largest farms grow increasingly secure from risk, the incentive to keep land out of production and minimize environmental impact shrinks further.

Much of the debate around the Farm Bill has focused on food stamps, or the Supplemental Nutrition Assistance Program. Roughly 80 percent of the Farm Bill funding goes towards food stamps and other nutrition initiatives; the current version of the Senate bill would cut $4.5 billion from this program, which helps feed 46 million people.  Conservatives, however, would cut the program further despite increased need for the program because of the economic downturn.

The cuts in food stamps results from the current trend in Federal deficit reduction.  From that perspective, the bill is successful; the Congressional Budget Office estimates that it will cost taxpayers $23.6 billion less than if the Farm Bill programs were continued as prescribed in the previous bill. How Congress should answer the record demand for food stamps, expected to surge well into 2014, has not been determined yet.

The one thing that cannot be cut, however, is the propensity to debate this bill. The last Farm Bill debate lasted more than a year and a half. Given the presidential election this year—and that the House version has yet to be introduced—it should be quite a show. All interested parties should grab a bag of popcorn—with or without subsidies—and see what happens next.