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With the current
farm bill set to
expire this
year, Congress
has an excellent
opportunity to
improve our
federal farm
policy.
In 1996,
Congress passed
the Freedom to
Farm Act, which
put U.S. farm
policy on a
fiscally
responsible
course oriented
toward the free
market.
Unfortunately,
it only took
Congress a
couple of years
to veer off
course and
institute record
spending on farm
programs. By
2002, Congress
had replaced the
Freedom to Farm
Act with the
Farm Security
Act. Without an
emphasis on
reform, the next
farm bill
reauthorization
will continue
the spending
trend and push
us even further
off course from
market reforms.
The best place
to begin reforms
is with farm
payments. Over
the last decade,
the U.S. has
spent about $160
billion on farm
subsidies. In
2005 alone,
while farmers
nationwide were
seeing three
years of record
incomes, the
federal
government spent
more than $20
billion on
subsidies. As
U.S. Department
of Agriculture
Secretary Mike
Johanns pointed
out in recent
comments to the
Farm Bureau, the
economic
situation that
surrounded the
expensive
rewrite of the
farm bill in
2002 has all but
evaporated. The
value of farm
exports and farm
cash receipts
has been
consistently
high, relative
to 2002 levels.
In addition,
according to
Secretary
Johanns, farmers
saw a
historically low
debt-to-asset
ratio in 2006.
These factors,
combined with
the possibility
of smaller farm
payments due to
higher commodity
prices, make
2007 a perfect
opportunity for
reform. Congress
should refuse to
pass any farm
bill that
doesn’t
transition the
agriculture
payments
programs to a
more fiscally
responsible
footing.
Aside from the
cost, there are
well-known
implementation
problems
associated with
the subsidies
program. Simply
put, the current
program provides
disproportionate
benefits to a
few, some of
whom are not
even farmers, at
the expense of
many. The
Congressional
Research Service
reported that
only about a
third of farmers
receive subsidy
payments. The
commodity crops
have received
the lion’s share
of federal
payments, while
non-commodity
crops have
received little
or nothing. The
USDA reported
that the largest
7.5% of farms
received more
than half of all
federal payments
in 2004. In
addition, the
act of farming
is not even
required to
receive farm
payments.
According to the
recent
Washington Post
series on farm
subsidies, the
federal
government has
paid more than a
$1 billion in
direct payments
since 2000 for
rice and other
crops to
individuals who
do no farming
whatsoever.
These reasons,
as well as
reports of farm
payment
recipients like
CNN founder Ted
Turner and
former NBA star
Scottie Pippen,
demonstrate that
the farm
subsidies
program’s
problems run
deeper than its
cost.
In addition to
the extreme cost
of the program
and its
problematic
implementation,
the farm policy
detailed in the
Farm Security
and Rural
Investment Act
of 2002 is
incompatible
with our
international
trade
obligations.
Without reform,
U.S. farm policy
will continue to
be a hurdle to
future free
trade
agreements.
The U.S. sugar
program and its
supporters
nearly sidelined
the Central
American Free
Trade Agreement
(CAFTA). The
sugar industry
in the U.S.
represents a
sliver of our
economy, yet the
protectionist
program was
front and center
during CAFTA
negotiations.
The
Administration
bent over
backwards to
accommodate the
sugar industry,
proposing to
allow these
developing
countries to
supply only an
additional one
percent of our
domestic market
supply. Yet the
U.S. sugar lobby
responded with
furious
opposition to
CAFTA, claiming
it would doom
family farms.
This opposition
put billions of
dollars in
additional
exports for U.S.
agriculture and
other industries
at risk.
With the outcome
of the Doha
Round of World
Trade
Organization
negotiations up
in the air, it
is likely that
the emphasis
will need to be
on bilateral and
regional free
trade agreements
as a means to
open markets.
Without
significant
reform to our
protected
agriculture
markets, it is
likely that they
will continue to
be a hurdle to
negotiating free
trade
agreements.
It is worth
noting how other
countries have
tackled this
problem. In the
late 1980s, New
Zealand
voluntarily and
unilaterally rid
itself of most
of its subsidies
for farmers and
opened its
markets to
foreign
competition by
dismantling most
import barriers.
While the
transition was
difficult for
farmers, New
Zealand reports
that the
benefits of
reforms have led
to an increase
in efficiency
and exports. In
addition, the
estimates of
farmers exiting
the market due
to these reforms
were widely
overestimated.
I have no
illusions that
making
significant and
meaningful cuts
in the subsidies
program won’t be
an uphill
battle. So many
different crops
receive
subsidies that
nearly every
Member of
Congress has
some
constituency
that will
pressure them to
maintain, or
even increase,
subsidies.
However, I hope
that Congress
will look beyond
the short-term
political
anxiety that the
farm bill
reauthorization
may cause and
put the
long-term fiscal
and economic
health of the
country first.
RF
Jeff Flake
represents the
6th District of
Arizona in the
U.S. House of
Representatives.
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