News Coverage
Farm Bill Just Fine For State's Mega Farmers
Published May 22, 2008
The new farm bill headed for President Bush’s desk throws a couple of small bones to a few grassroots causes but mainly ensures that the big dogs will continue to run agriculture – courtesy of the U.S. Treasury.
Two long-contested – but small – grassroots issues did make it in the final farm bill: The U.S. Department of Agriculture will require country-of-origin labeling on beef and other meats; and state-inspected meat plants (which must meet federal standards) have been restored their right to sell those products in interstate commerce.
Those are about the only changes.
Huge federal subsidies to a few of the biggest producers of wheat, rice, corn and cotton are barely tweaked. In an election year of record prices for most field crops, Congress continued direct payments to farmers.
Competing producers of wheat and other crops have called “foul” against heavily subsidized U.S. crop production, saying farmers in developing countries can’t compete against government-induced cheap food, which makes some Third World nations as dependent on U.S. foodstuffs as America is on OPEC oil. Only we just risk running out of gas; they die.
President Bush had threatened to veto the bill because those direct payments weren’t reduced. He also didn’t like the added $10.4 billion to the federal food-stamp program for lower-income Americans. Possibly because it is an election year, the bill passed by veto-proof margins in both houses.
More than two thirds of the Agriculture Department’s budget goes for food stamps and subsidized nutrition programs under the WIC (Women, Infants, and Children), school lunches (all public-school lunches are subsidized) and even nutrition for day cares and nursing homes.
With food prices on the rise because of global shortages and inequities – and perhaps subsidies to grow corn for ethanol production rather than feed for livestock or food for humans – that increase in nutrition aid may prove inadequate.
Calling the bill a “pork-laden behemoth,” Mother Jones writer Jonathon Stein said the new five-year farm law “doesn’t do enough for the environment, subsidizes all the crops needed to prolong America’s obesity epidemic, and takes money out of the pockets of Third World countries.”
It certainly does put money into the pockets of big U.S. operators, however, and cuts in those payments are so penny-ante as to be laughable.
At a recent farm economics conference in Billings, Montana State University economist Vincent Smith told farmers and Extension agents of the minuscule reductions in farm payments.
Wheat direct payments will drop a whole penny per bushel, Dr. Smith said, which hardly will put a dent in the $103.1 million in direct payments sent to Montana last year. The figures were released last week by the Environmental Working Group, which for years has used the Freedom of Information Act to mine U.S. Department of Agriculture payment records and compile a database where anyone can look up ag subsidy recipients by state, county or person.
The direct payment scheme came out of the 1996 “Freedom to Farm” act, officially known as the Federal Agricultural Improvement Act and Reform Act pushed by bigger farmers and a newly elected Republican majority in Congress.
Prior farm laws were considered too restrictive, binding farmers to acreage quotas in certain crops in order to qualify for subsidies. Farmers, it was said, couldn’t risk losing that income security and thus didn’t respond to changing markets. So direct payments, based on past crop and yield histories, would be paid and farmers could plant anything they like on those lands without losing that government income.
This so-called “de-coupling” of payments from specific crops allows farmers to choose what crops to grow but pays according to past yields of staples such as wheat, barley, corn, soybeans, rice and cotton. Those payments bring more than $100 million annually into the Montana economy, although soils and climate – not the government – has most playing it close to the vest and growing traditional dryland crops such as wheat and barley.
Dr. Smith said the new farm bill’s traditional commodity target and loan prices may be irrelevant for the next few years in the face of record crop prices.
He said the real tragedy of the bill is the huge cuts in the agricultural research budget, from $850 million to $600 million.
“What’s cut is basic research in world crisis food crops – wheat, barley, corn, rice,” Dr. Smith said. There are new outlays of $78 million for organic research and Extension, $75 million for a beginning farmer and rancher program and $230 million for specialty crops.
But Dr. Smith said that’s not going to keep the wolf of hunger off the thresholds of billions of people who face hunger even in better times.
Study after study has shown the ever-increasing value of basic ag research with such practical goals as creating hardier crop varieties better able to combat drought, insects and disease, he said.
“If we cut out research, it will have ripple effects throughout the world,” said Dr. Smith.
The bill also boosted target prices. If commodity prices fall below certain levels, the government steps in with so-called “deficiency payments,” bridging the difference between the marketplace and the “target.” For example, if the target were $4 and the average price that year only $3, farmers would get a payment of a dollar a bushel.
No such “counter-cyclical” payments were made from 1995 until 2003. From 2003-2006, these payments totaled about $240 million in Montana. No payments were made in 2007, and none are expected for years as world grain prices are breaking price records regularly.
The bill raises the target for wheat from the current $3.92 per bushel to $4.15. Futures markets peg this fall’s wheat crop at $9.15 per bushel.
As a target price, he said, “$4.20 wheat might be a big deal two or three years from now” as global farmers increase production and supplies more easily match demand.
He described the bill’s lowering and restricting payments to individuals as meaningless. The new bill limits payments to farmers with adjusted gross incomes of $750,000 or more and cuts off all payments to non-farmers with adjusted gross incomes of half a million dollars or more.
“That affects no one in Montana,” Dr. Smith said.
