farm subsidies

Stop Feeding Farm Bill with Taxpayer Money

There are still some folks in Washington doing painstaking investigative journalism.  Two Bloomberg reporters uncover what the farm bill has truly become over the decades and why it should be heavily reformed:

A Depression-era program intended to save American farmers from ruin has grown into a 21st-century crutch enabling affluent growers and financial institutions to thrive at taxpayer expense.

Federal crop insurance encourages farmers to gamble on risky plantings in a program that has been marred by fraud and that illustrates why government spending is so difficult to control.

The article notes that last year alone, the U.S. Department of Agriculture spent about $14 billion insuring farmers against the loss of crops or income.  Costly crop insurance is just one of many flaws in farm policy that need to change.  It’s time for America to stop subsidizing wealthy farmers.  And trust us, they’rewealthy:

Taxpayers are helping farmers pay their bills even as farm income this year is expected to top $120 billion, its highest inflation-adjusted mark since 1973, according to the USDA’s Economic Research Service. Farm income has doubled over the past four years thanks to rising land values and surging exports.

The article characterizes the farm bill as “a good deal for everyone but taxpayers.”  It’s true that taxpayers are big losers in this deal, but consumers lose a great deal too.  Thanks to terribly flawed farm policies, consumers have to pay much higher prices for common kitchen items like sugar.  We noted in July:

The sugar program, for example, has been and may continue to be a massive win for domestic sugar producers. It is characterized by unnecessary trade restrictions, high price supports, domestic supply restrictions, and outdated quotas.  It’s central planning at its finest, and it hurts Americans!  We pay two to four times more for sugar than consumers in other countries thanks to these policies.

To be clear, nothing has changed since then, as the L.A. Times notes:

Like the rest of the agriculture industry, beet and cane growers enjoy considerable protection from the federal government that’s not contingent on their incomes. But while other farmers are typically offered subsidized crop insurance (taxpayers cover roughly 60% of the cost) and guarantees against steep reductions in revenue, beet and cane farmers are also protected by import and production quotas that limit supply, deter competition and inflate prices.

Their trade associations argue that the sugar program offsets foreign governments’ sugar subsidies, which trump American farmers’ superior productivity. They also say it doesn’t cost taxpayers a dime, ignoring the effect that artificially high sugar prices have on taxpayers’ cost of living. 

Why does Congress perpetuate this injustice to taxpayers and consumers?  Bloomberg explains powerful lobbyists are largely to blame:

Yet the president and the Republicans’ chief budget expert are no match for the farm and insurance lobbies, which spent at least $52 million influencing lawmakers in the 2012 election cycle. Rather than thin the most expensive strand in the nation’s farm safety net, Congress is poised to funnel billions of dollars more to individuals who already are more prosperous than the typical American.

But, with such bad policies so entrenched, how will the necessary change come about?  Will the situation simply get worse with the Housepassed and Senatepassed farm bills, which contain even more flaws than current policy?

Heritage explains the best chance consumers and taxpayers have for real reform will come by Congress passing a one-year extension of current policy, not by pushing forward the flawed House and Senate bills or a combination thereof resulting from a conference committee:

An extension would give Members of Congress the time to identify the best ways to keep the food stamp program and farm programs separated from each other. Practically, the phrase “farm bill” is a misnomer: Close to 80 percent of the costs consists of food stamps.[2] Congress has for decades combined these disparate programs into one bill, enabling it to avoid addressing the merits of the programs.

Separation is a prerequisite for reform. The House, unlike the Senate, took the critical step of separating the farm programs from the food stamp program. The House recognized the need to take this procedural step but missed the purpose of separation, which is to reform the law once separation has occurred.

This separation can be preserved only if a conference committee is not used as a means to put the agriculture-only farm bill back together with the food stamp bill. An extension should be staggered with two different timelines for the farm programs and the food stamp program. This would help ensure that separation will not be undone by Congress putting the programs back together again at the same time.

Congress has the tools to make the appropriate change, but they have been reluctant to act.  They should act prudently and not go to a conference committee that would ensure even worse policy would be put in place.  Lawmakers owe it to taxpayers and consumers to truly reform farm policy in America.

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