Monday, March 24, 2008

Farm Bill Anger in Editorials

Congress is stalled over the cost of a new permanent disaster bill for farmers.

While in many ways, a permanent disaster bill may be more sensible than the annual emergency disaster bills that Congress has passed to supplement past farm bill support, consumers and non-farm policymakers are scratching their heads about the trio of support provided to farmers: there are the subsidies (many of which continue to be paid, even when prices are high); there is the heavily subsidized crop insurance program; and there is the new push for a standing disaster assistance program.

For some time now, critics have questioned why we need to provide so much financial support to those who are already at the top of the income scale. But, now that food costs are rising dramatically, the anger is also rising.

On March 21, the LA Times published an editorial, Farm Bill Feeds Greed, with the headline, "As the very poor struggle just to eat, the farm bill before Congress boosts corporate welfare." The editorial argues that “Soaring prices for corn, wheat and other agricultural commodities aren't just contributing to inflation, they're increasing hunger and misery among the poor. Confronted with a chance to help, Congress is instead on a path to boost corporate welfare for wealthy farmers."

Last March 13, the Wall Street Journal published a Review and Outlook editorial entitled Amber Waves of Green that provides a scathing criticism of the farm bill, in particular its large subsidies for traditional program crops. The article concludes with the following:
The only good news is that President Bush is threatening to veto this budget buster over its taxes, trade distortions and subsidies for the rich. The veto threat is at least causing the Members to think twice, and may actually improve the bill. But the best outcome would be if this monster died of its own, greedy weight.
In a rebuttal to the Wall Street Journal article, Senators Conrad and Chambliss submitted a letter to the editor, alleging that the farm bill “reforms farm programs, invests in national priorities and does not raise taxes.” But is there enough reform, and how many budgetary tricks will be required to fund it?

There are many good aspects to the farm bill - new conservation efforts, nutrition programs, and help for organic producers to name a few. But these efforts are at risk because of the overall largess of the bill and its support to wealthy farmers. And, all of agriculture takes a hit when a major newspaper makes the following claim -

“The cost of eating at home has risen more than 5% so far this year, the fastest rate since 1990. Food banks across the country are reporting an increase in demand as the very poor are pushed closer toward starvation. For Congress to take food out of their mouths in order to shovel more money at farmers -- who are enjoying huge profits thanks to the same high food prices that are hurting the poor -- would be a disgrace.” (from the LA Times editorial)


Blogger Anthony Schutz said...

The anger is a bit puzzling, if high food prices are the problem. Subsidies try to encourage overproduction (by eliminating some risks inherent in production and the market). That, in turn, was historically grounded on a cheap food policy (as well as others). The desire for cheap food seems to remain, but the tool used to achieve it is somewhat ineffective with increased demand. Assuming at some point that supply will catch up to demand at the current price (query if that is possible), then one way to decrease the price will be over-production. That will, in turn, be aided by subsidies.

So I guess my puzzlement asks whether the subsidies must remain if the objection is high food prices.

Of course, one could say that the market should be let to operate free of farm-bill subsidies. But that is not a cheap-food argument. Indeed, energy subsidies, to the extent they are increasing demand for agricultural products, are a likely bigger culprit. If anything, the farm bill subsidies are keeping food prices lower than they might otherwise be (though that may be a bit of a stretch given current profit margins).

Now, if equity in payments is the real concern ("I don't get subsidies for making widgets, but farmers get it for making corn"), that is a different argument. Some problems with it may be the subsidies in many widget-production areas. And the answer to the quit-paying-when-prices-and-income-are-hight quandary is a bit problematic. If they can be hear to argue for payments that are made when prices, production, or income are low, international obligations restrict the ability to structure payments in that way. We can't subsidize too much based on production and price. And there may be limits on our ability to subsidize based on price (regardless of production; i.e., CCP). That in turn, makes income supports problematic as well, when the trigger for payment is tied to market price. Given those limits, decoupled payments are used. Those, of course, have the tendency to inspire outrage on an equitable level in high times.

Very interesting, and, I think, more complicated than most of the editorials that I have seen let on.

3/25/2008 12:10 PM  
Blogger Tom said...

Anger in Farm Bill Editorials?---You betcha!!!!

Many of the subsidies and just plain bad law regarding payments to farmers has taken the place of what is really going on. These subsidies were just a big smokescreen to allow the special interests to hijack the farm bill. The provisions that would undo the special interest gains through the corrupt courts are slowly being eroded. News (and it is being made right now, so it is developing) is that the special counsel designed to correct the incompetence and corruption in the Grain Inspection Packers and Stockyards Administration (GIPSA)has been taken out of the farm bill. Back to the selling out of farmer's market interests by the monopolists/oligopolists. JoAnn Waterfield left the administration in disgrace after an inspection by the OIG (Office of Inspector General's Office) of the USDA showed gross mismanagement and lying to Congress. It is still going on right now only the names have changed.

The prohibition on packer ownership, which allowed for large manipulation of cattle prices as proven in the Picket Case to the jury (which was overthrown by incompetent or corrupt judges) has been taken out of the farm bill (as current news). No telling what the provisions in the original Senate passed bill Title IX have been taken out of the farm bill also.

So the big issue over the outrageous farm bill give away provisions have given enough time for the special interests to hijack the farm bill once again and big ag to protect themselves from government oversight while they dismantle the farm producer's markets.

Academicians should wake up to what is really happening instead of being puzzled.

I wonder if Lou Dobbs is right that they are too worried about their personal incomes and job security to see what is happening.

Let us start discussing the real issues instead of the ones made up by politicians who are trying to pull one over the farm community. Until then, academicians should be seen as what they are---nothing more than puppets with their strings being pulled and enough assets to put up blogs like this that do not hit at the heart of the matter.

5/04/2008 6:36 PM  
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