Protecting Prairies, Avoiding Trade Distortions
By Bruce Knight
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This is a tale of two bills and two problems that need to be addressed when the Senate and House conferees meet to reconcile their versions of the farm bill. For those who care about agricultural conservation and the environment, both problems lie in the House bill.
If the problematic provisions are adopted, our new farm policy will be promoting putting the plow to the prairie and also inviting our trading partners and competitors to take us to court for failing to meet our obligations under World Trade Organization (WTO) agreements. We can't let that happen.
Most conservationists are aware that the Senate bill re-links crop insurance subsidies to conservation compliance. No new requirements-farmers would just need to continue to protect highly erodible land and wetlands as required under Sodbuster and Swampbuster provisions since 1985. Under the current law, farmers who want to participate in direct payments must agree to protect the land, but with the 2013 legislation, direct payments will be history. As I have stated many times, I believe linking conservation and crop subsidies is a good deal for farmers and a reasonable quid pro quo for the taxpayers' investment in helping farmers manage risk."
On September 23, The Washington Post reported that a study included in Proceedings of the National Academy of Sciences found that the U.S. lost 1.3 million acres of grasslands between 2006 and 2011-and that's with the current policies that discourage plowing up the prairies. How many tens of thousands of acres of native grasses and wildlife habitat could we lose with policies that declare open season not for ducks or pheasant but for the prairies that support them? Linking minimal conservation requirements with crop insurance subsidies is an approach that benefits everyone, and it should be part of the 2013 farm bill.
The other issue-countercyclical payments in Title 1, Commodity Programs-should also concern conservationists and environmentalists. The link to conservation may not be quite as obvious, but these payments could have a significant effect on the environment as well.
The Senate version of the farm bill calls its counter-cyclical payment replacement program Adverse Market Payments (AMP). It limits payments to 85 percent of historical plantings or base acres in an effort to minimize the program's effect on planting decisions. On the other hand, the House program, called Price Loss Coverage (PLC), limits payments to 85 percent of planted acreage. Farm policy has carefully evolved over the last 20 years to minimize linkages between planting decisions and farm support, and for good reason.
There are two problems with the House approach of payments based on actual plantings. First, this would encourage farmers to plant fencerow to fencerow-whatever you want to plant and however much you want to plant, if prices are low, the government will help you out. Second, tying payments to current rather than historical plantings can be seen as trade distorting and subject to question by other nations under WTO rules.
Many interest groups and farmers have criticized direct payments based on historical plantings, and direct payments are being eliminated in the 2013 bill. However, to avoid potential trade distortions that could run afoul of WTO agreements, it is essential to separate counter-cyclical protection from planting decisions. Planting decisions were fully decoupled in the 1996 farm bill to ensure that income supports would neither distort trade nor planting decisions. The commodity target price provisions in the House farm bill would re-link support payments and planting decisions at levels that could lead to distortions.
In essence, for conservationists, the House bill offers a double whammy. It lacks the provision to re-link crop insurance with protecting highly erodible land and wetlands on the one hand. And on the other hand it encourages farmers to plow up and plant every acre on their farms and ranches through the PLC counter-cyclical payments program.
We need the conferees to recognize the potential damage to the environment that these provisions could promote and choose the more reasonable approach in the Senate bill-linking crop insurance subsidies to minimal environmental protection and providing counter-cyclical support through a system that doesn't distort trade or promote poor land use decisions.
About the author: Bruce I. Knight, Principal, Strategic Conservation Solutions, was the Under Secretary for Marketing and Regulatory Programs at the U.S. Department of Agriculture (USDA) from 2006 to 2009. From 2002 to 2006, Knight served as Chief of Natural Resources Conservation Service. The South Dakota native worked on Capitol Hill for Senate Majority Leader Bob Dole, Rep. Fred Grandy, Iowa, and Sen. James Abdnor, South Dakota. In addition, Knight served as vice president for public policy for the National Corn Growers Association and also worked for the National Association of Wheat Growers. A third-generation rancher and farmer and lifelong conservationist, Knight operates a diversified grain and cattle operation using no-till and rest rotation grazing systems.
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