Four Things to Consider Regarding the Farm Bill

By Sally Herrin

The farm bill is, as ever, a moving target. One version passed the House in August by a kind of bipartisan miracle. The version passed in the Senate will be different. Even if the two versions can be welded together in conference, and even if moderate Republicans continue to discover new willingness to move forward, a farm bill still may not pass this year. If it does, the president may well veto it.

Sure, the farm bill is big and confusing. You can pretend it doesn’t affect you, but unless you raise and process everything you and your family eat, you are a part of some kind of agricultural system. You know you can eat better and help the farmers and ranchers in your area by eating local and buying fresh. But the farm bill has 11 Titles and who knows how many pages. A lot of it was written by ag lobbyists and Congressional aides, many of whom went to law school.

Understanding this beast is just one more dilemma for a busy omnivore, and I feel your constituent pain. Can you trust your Con­gressional delegation to do the right thing? Or should Citizen You bite the bullet, read up and put in a call? Then, what to say?

Here’s my version of a farm bill primer, four issues which seem to me to be central to the farm bill debate, in ascending order of importance.

Environment

Generally, environmental sections of the farm bill encourage (incent is the buzzword and means to offer payments instead of mandates) ag landholders to rebuild the nation’s environmental capital, through returning so-called marginal lands (less suitable for agricultural activity) to grasslands, forest, or wetlands or through following best practices. That can’t be bad, right?

Three major USDA programs that target the environment are the Conservation Reserve Program (CRP), Environmental Quality Incentives Program (EQIP) and the Conservation Security Program (CSP).

CRP is the program people mean when they talk about “paying farmers NOT to plant.” Generally, CRP land ought never to have been plowed, due to slope, soil characteristics or other conditions that make for soil loss. Idling (that is, not cropping) these lands is good for soil conservation and increases habitat for wildlife, which in turn is good for the recreation and tourism economies. The House farm bill extends CRP at current acreage levels, with no new enrollment for the life of the bill, but it enables easier transfer of CRP lands to socially disadvantaged or beginning farmers.

EQIP provides matching funds for environmental improvements that landowners design in concert with conservation officers. The House farm bill extends EQIP and increases funding by $2 billion over five years. Sixty percent of EQIP’s matching funds will go to livestock producers for improvements that protect the land, soil and water (like cross-fencing which allows pasture rotation to prevent overgrazing). This percentage will be criticized by some as unfair, but in practice EQIP very often prioritizes projects that protect water quality in recreational areas that benefit everyone. The House version funds promotion of forest management and energy conservation, and new language offers greater access to EQIP funding for fruit and vegetable growers.

CSP rewards land stewardship. The House farm bill streamlines CSP by collapsing its tier system, and allows coordinated organic and CSP eligibility certification. In other words, organic and conservation-minded ag producers move to the head of the line for some payments.

Message for Congress: Go for it! Environmental dollars are win-win-win for taxpayers, ag producers and every living thing, especially as matching dollars. Environmental dollars multiply dramatically in local economies and are truly the gift that keeps on giving!

Energy

Energy farming is here, in case you haven’t been paying attention. Wind farming and biofuels production are experiencing explosive growth, in the U.S. as around the world. The House farm bill provides funding for a range of bioenergy research and development including biodiesel production, feasibility of a dedicated ethanol pipeline, capturing more of the energy of corn through improved dried distiller’s grain product for livestock feed, and expanding into other biofuels feedstocks like sweet sorghum and so-called low-grade renewables like wood waste.

Ethanol critics generally reference the high inputs required to grow corn for fuel, but greater national energy security in time of war is a powerful argument for growing our own. Serious renewable energy advocates know cellulosic fuels from low input dry land crops like switchgrass are the next step.

Message for Congress: Increase renewables funding to at least $1 billion (only 1 percent of farm bill spending). This is really a no-brainer and part of an absolutely indispensable return to sanity in our domestic and foreign energy policy.

Competitive Markets

Everyone except the meatpackers, the National Cattlemen’s Beef Association (NCBA), the National Pork Producers Council (NPPC), their state affiliates, and the USDA (which employs what many feel are way too many past employees of NCBA and NPCC) — I say, everyone else wants competitive markets for the nation’s livestock producers.

And why not? It is the law of the land, and has been ever since the Packers and Stockyards Act of 1921, 86 years old and still underenforced. Lack of enforcement is one big reason corporate concentration in U.S. agriculture has reached record levels: today, the top four beef packers control 83.9 percent of slaughter and the top four pork packers control 66 percent of slaughter. Mandatory country-of-origin labeling (COOL) was voted into law in 2002, but the administration has refused funding and COOL has languished.

There is broad consumer as well as producer support for country-of-origin-labeling. Called “protectionist” by critics, COOL very simply lets consumers vote with their grocery dollars for the food production system they choose. Supporters are betting that Americans who get the choice will choose the safest food, produced with the highest labor and environmental standards in the world — that is, food actually raised and processed in the United States.

Critics of market reform—the packers and their lobbyists—are betting that our nation’s consumers want to buy U.S. product, too, which is why they have done all they can to derail COOL. Without COOL, the packers can buy inferior product from China, Brazil, Mexico or wherever, mix it in with U.S. product, and sell at a premium. COOL is included in the Mis­cellaneous Title of the House Farm bill, but some would like to see a Competition Title as well.

Senate Ag Chairman Tom Harkin has introduced a strong livestock competition package that has serious support with rank-and-file producers. Harkin has also co­spon­sored a bill to prohibit packer ownership of livestock. Sen. Mike Enzi filed a captive supply reform bill to eliminate so-called “unpriced” livestock under contract that must be delivered in the future (“priced” contracts name a price; “unpriced” contracts commit to future delivery without a price until later). Both prohibitions cut to the heart of captive supply, livestock controlled one way or another by packers, who use this captive supply to manipulate the market and drive prices to independent producers down.

Captive supply makes any authentic “free market” impossible, as any truly free market today depends on packers actually bidding for livestock. In most rural communities, livestock producers have only one market into which they can sell (just like commodity farmers). However, cattle bids by packers are often only available for a few minutes a week. Livestock producers cannot control the price of what they sell by stockpiling, as livestock — like produce — ripens and must go to market when ready.

Other reforms possible this time include protection for contract growers from mandatory arbitration (often accused of bias) in disputes with corporate bosses, and also an update and clarification of Packers and Stockyards. This last is needed because USDA has refused to modernize and enforce the law, and packers often act on the principle that what is not explicitly forbidden is permitted.

Message for Congress: Do the right thing. If we all believe so deeply in the hallowed free market, let’s make public policy that actually creates fair markets for U.S. ag producers and provides food safety in these uncertain times to Americans and their families.

Commodities

Subsidies, income assurances or price floors? Price floors are better in every way, and here’s why.

Unlike almost every other industry, farmers and ranchers cannot set the price for what they produce. That is because ag markets have many, many sellers and only a very few buyers (a handful of multinational corporate packers and processors). In fact, there are fewer buyers all the time, with more economic and political power. That’s corporate concentration for you.

Price is for ag producers as wages are for other workers. A federal price floor, set at or near the cost of production of a commodity like soybeans or corn, gives farmers the ability to get their profit in the market.

Every farm bill season somebody offers up income-insurance plans, but nobody can ever make it pencil out and it goes nowhere. Ask your own insurance agent.

Ah, subsidies. Everybody hates them, at least when they go to poor women or to farmers, in which case subsidies become “welfare.” When they go to some of the richest, most powerful folks on earth, we call them “incentives.” The House farm bill brings payment caps down by about 60 percent relative to the last farm bill.

Actually, converting farm income supported by price floors (cheap and effective) to leveraged farm operations supported by welfare payments (expensive and difficult to defend politically) is exactly what the Committee for Economic Development (CED) intended in the late 1940s when they set the course for farm policy which (mostly) Republicans have pressed ever since—forcing price down, forcing “excess” rural population off the land and into the cities to provide labor for business and industry. The CED (captains of industry and University of Chicago economists, mostly) meant to break the farm/labor political coalition by breaking farmers, and then pitting families forced from the land against urban workers for jobs. It worked, too.

The CED wanted to undo the successful farm programs put in place by President Franklin Roosevelt. Today much maligned as “the failed farm programs of the past,” those farm polices created unparalleled food security for the U.S. (and our troops abroad) in war time and beyond. Based on, yes, price floors, FDR’s programs cost taxpayers little or nothing each year, gave farmers the tools to get their profit from the market, and supported six million farm families, who in turn supported thriving small towns across the nation.

Part of the CED plan was to decouple production from farm income. Score two. For more than a decade, the average U.S. farming family has received about 10–15 percent (and declining) of its income from farming activities. That’s because price is to ag producers (and their families) what wages are to other workers.

Today, farm subsidies are mostly subsidies to the ag processors, allowing them to pay producers less, and in many cases much less, than the cost of production. Farm subsidies are in fact replacement income, substantially below the aggregate income lost to U.S. producers under the failed export-oriented farm policies of the past quarter century.

The supporters of export-oriented farm policy argued that driving prices down would increase U.S. ag exports, but exports have remained flat, while unfavorable trade treaties have opened U.S. markets to cheap imports, with which U.S. producers are hard pressed to compete. Evidently, it’s more expensive to make pet food that’s not poisonous. Who knew?

Subsidies are easy, as I said, to portray as welfare. Some exceptionally well-meaning folks often claim that subsidies to U.S. farmers make indigenous farmers around the world poor, when the U.S. government buys U.S. grain, gives it to foreign governments and aid agencies abroad, where it is “dumped” to fund charities, driving down prices to local farmers.

Actually, this confuses dumping with monetization.
Monetization is stoutly defended as harmless to third-world farmers by the folks at the Alliance for Food Aid (AFA). They say a commodity is not sold into markets when local farmers are bringing that same crop to markets. AFA members include the Adventist Development & Relief Agency International, Feed the Children Inc., the United Methodist Committee on Relief and the American Red Cross.

Dumping is selling below the cost of production, which is unavoidable where farmers cannot set the price for what they produce — in the United States and just about everywhere. Some activist critics of the farm bill safety net have embraced the same low price philosophy as the processors, but on the grounds that high prices make farmers rich enough to consolidate landholdings. USDA records, however, indicate that low prices have in fact forced consolidation of farms, as farmers have tried to make up their losses through increased volume.

Really, you can’t have it both ways. If “dumping” (selling at below cost of production) is bad, how can selling at anything like a profit also be wrong? In fact, making U.S. farmers poorer will NOT make third-world farmers richer. The world price of most commodities is set by U.S. price, which tends to uphold higher prices around the world rather than otherwise. So if you insist on low prices to U.S. farmers, you just drive price down everywhere. Then it’s all dumping, isn’t it, when everyone everywhere is selling below cost of production?

Message to Congress: Everybody can’t farm for a niche market (that’s why small market opportunities are called niches). Most U.S. farmers raise commodities, and it would be insane to let more of them go broke. Price is to ag producers what wages are to other workers.

We live and we eat in a perilous world, and we don’t want our children’s food future at the mercy of a broken, distorted system. Price floors let farmers get their income in the marketplace. At a minimum, payments should be tied to production, with target prices at or near cost of production.

Conclusion

Good government only happens when people of decency muscle the extremists aside, find the other sane adults in the room and work together. Good government can make our country prosperous, principled and proud, again as it has before. In politics, silence is taken for acceptance. You want a better world, pick up your phone.

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