By Dr. Mark Edelman and Dr. Barry Flinchbaugh
© Copyright Agri-Pulse Communications, Inc.
BF: Every farm bill debate that I recall going back to 1968 I heard the hue and cry that we need to eliminate farm programs. It is especially vehement now given the budget and debt mess. Farm bills are evolutionary not revolutionary. The next farm bill will tweak the 2008 law. In fact we might reach gridlock, given the severe partisanship, and just extend the current law four or five years.
ME: There you go again, old professor. With net farm income at record levels, livestock and grain prices at profitable levels, ever increasing population and higher incomes around the world, now is the time to overhaul farm policy, ratchet down spending on the farm safety net, or at least save it for when the poor income years come. There is not enough of money in the congressional budget baseline to simply extend current law.
BF: I have seen at least three so called “new” plateaus in farm prices and income in my professional life. Many have drunk the Kool Aid once again. Good weather, abundant crops, a stronger dollar, a new conflict around the globe, rising interest rates and energy costs to name a few, and net farm income will be in the tank once again.
ME: You are over-reacting. Commodity programs have steadily decreased as a percentage of farm income. Why not work with the EU, Canada, and Australia and begin a multi-lateral phase down of commodity program spending? In 2000, we spent $32 billon on commodity programs. This year we will spend $10 to $11 billion. We can say the phase out has begun. Farmers in those countries get roughly half as much of their income from government programs as they did two decades ago.
BF: For every dollar we spend on farm programs, the EU spends $2.40 according to the OECD. We cannot afford to put U.S. farmers in a less competitive situation then they are now. We have too damn many policies and regulations that decrease our competitiveness. Your idea will make it worse.
ME: The American farmer can compete. Given U.S. technology, land resources, and farm management skills, you simply cannot make the argument that U.S. farmers need government programs to compete. Most governments around the world have spending issues, so we are entering a global period where a global coalition needs to focus its scarce resources on creating safety nets for when they are needed.
BF: You do not understand the purpose of farm programs. They do provide a safety net. Many Kansas and Iowa farm families have periodically depended on program payments just to provide living expenses. We have not reached a point where that will never happen again.
ME: Certainly given record net farm income you will not try to defend the decoupled fixed payment. It cannot be justified economically and certainly not politically.
BF: It will be very difficult, but I would remind you the decoupled fixed payment is the only program in the WTO green box and therefore has no limit on it like amber box countercyclical programs. The father of the decoupled fixed payment is now the ranking member of the Senate Ag Committee, Sen. Pat Roberts, R-Kan., and the chair of the House Ag Committee, Rep. Frank Lucas, R-Okla., is from wheat country and a strong supporter of the fixed payment.
ME: You are forgetting Democrats control the Senate and the President has a veto pen. The President has proposed to means test farm programs, reducing the maximum gross income for eligibility from $750,000 to $500,000 of farm income and from $500,000 to $250,000 of off farm income. It is difficult to defend larger farm payments politically to our non-farm cousins, particularly during a slow recovery with high unemployment. They understand providing a safety net for when it is needed. Small and medium size farms would receive full benefits. Larger farms would receive the same up to the cap, but no greater amounts.
BF: Farm programs are based on production. Medium size and small farms get more payments than they contribute in actual food and fiber production. It is the large commercial farms which feed America and increasingly the world, that get less than they contribute.
ME: Sounds like you are supporting New Deal era programs. With the current anemic economy and record farm income, it will be food programs, renewable energy, rural development, and conservation that will be seen as more vital parts of the farm bill. Most farmers rely more on off farm jobs and income now then ever before. American farmers will never totally feed the world, because no one is prepared to pay the transportation-energy bill which doubles the cost of getting food to the malnourished poor around the world.
BF: I agree on renewable energy, but on the CRP you need a lesson on where little babies come from in politics. Our ag secretary and your former governor had what I suspect was his largest audience when he addressed the Pheasants Forever meeting recently in Omaha. Wildlife supporters and the environmental community will not support reducing the CRP. Conservation is politically correct. End of story.
ME: Secretary Vilsack also received a “standing O” at the Commodity Classic. He understands that it will take coalition of food, farm, environment, and rural development interests in Congress to pass a farm bill. When the 2008 law expires at the end of 2012, Congress must act or farm policy reverts back to the 1938 Agricultural Adjustment Act with permanent amendments made in 1949. The permanent law won't work in today's economy where America's farmers depend on exporting almost 30% of production. So, I agree, we are not going to eliminate the farm bill, but now is exactly the right economic and political atmosphere to overhaul it and bring it into the 21st century.
BF: Time will tell, but I am betting on tweaking it once again.
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