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Farm Bill 2007: Policy Matters
November 8, 2007 | 8 Comments
This post has been “in waiting” for more than two months. When I first started writing, the 2007 Farm Bill had not passed Congress! It’s making its rounds in on the floor of the US Senate as we speak. So if I miss this opportunity, I’ll have to wait until 2012. 
There has been a lot written about the subject to date, however I would like to focus on why it is important for us as global citizens.
The economics of free markets work best when there are no subsidies, tariffs, barriers etc in place. However, in our complex world this is almost an impossibility, since it will involve tremendous political will among nations and unprecedented tolerance among people. The effect of the presence of these artificial walls is exemplified best in the agriculture sector.
Why is this the case? When the US government subsidizes soy beans farmers in Argentina supplying to China lose a chunk of income. Other heavily subsidized crops are wheat, cotton, rice, and corn. Some poor farmer in India is committing suicide and we can attribute some part of it to subsidies. The ability of peoples to utilize their land to produce food is the best expression of self determination and we are undermining this by continuing down this path.
In a high stakes political game, big corporations (who insidiously are beneficiaries of heavy subsidies) in conjunction with WTO, IMF, and narrow special interests end up steering legislation for profits. I am not suggesting a big conspiracy theory here, entities respond to incentives and this is just how self interest is playing out.
The farm bill authorizes activities in USDA’s Commodity program support, Conservation and Forestry, Renewable Energy, Research, Trade, Food stamps and other nutrition assistance, and Rural Development.
With so many constituencies battling for the almighty dollar, it is no wonder that a lot of horse trading goes on. In my mind, Commodity Program Support is at loggerheads with all other programs as every unwanted dollar spent here could be diverted to other programs. Currently, this program spends $8-10 billion per year in different types of subsidies.
In most cases, these subsidies are tied to total sales which puts the big farms at an advantage in comparison to the small farms. Commercial (read BIG) farms represent just 7 percent of U.S. farms but contribute about 70 percent of farm sales. These farms have Adjusted Gross Income (AGI) in excess of $250,000.
As a percentage of the entire US population, this income bracket represents a mere 2.3%. Do they really need subsidies? That too at the cost of a global farmer who makes a choice between the interest to pay on their loan and food (yes food) on their table.
Farms with less than $250,000 in production value (2003$) received 63 percent of commodity payments in 1989 and those with at least $500,000 of production received 13 percent. But by 2003, these figures read 43% and 32% respectively. Some provisions in this farm bill are aimed at reversing this alarming trend. It seems like it is falling short – nevertheless it is a step in the right direction.
Pricing is only one aspect of subsidies, the other is that there is overproduction of subsidized crops. In the long run, this is a lot of food wasted. A completely free market will auto-correct supply to meet demand.
In addition, this oversupply forces small farmers to convert to cash crops often in crops where they don’t have experience. Sometimes they even dip in and out of these crops due to short term survival which causes them to produce less staples for local market consumption.
This aggravates the situation in the developing world where there is food shortage to meet basic caloric needs, making the developing world net importers of grains or food staples which in turn makes the poor amongst them most vulnerable.
These issues will not be resolved overnight. However, together we can influence decision making in the long run if we are aware of the global impacts of our policies by the time the 2012 bill comes around! We urge our non-US readers to understand their local farm provisions.
Hopefully I have piqued your interest. I will leave you with a few links for further reading:
USDA
Gristmill
Tigers and Strawberries
Mike Pollan in NYT
Environmental Working Group
Ramblin’ Gal
blogcritics.org
- Jai
Filed Under: agriculture, Farm-Bill, MUSINGS, policy, Politics, vegetarian recipes
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8 Comments
Happy Diwali to you Bee and Jai!
Happy Diwali Bee and Jai.
Till I read the Omnivore’s Dilemma, I was quite unware of the details of the farm bill and the downstream effects were. Though fascinating to read, it is truely shocking to know of the far reaching effects the farm bill.
A free-market will lead to an auto-correction….but it remains a pipe dream, huh?
The overproduction and the subsequent disposal of food makes me sick, angry, helpless all at the same time.
Love posts like these! Should have more of this kind in our food blogosphere.
Thanks for the overview. That’s so sickening to hear of this waste when there are people starving, and let me tell ya, from a local perspective, the past several years have seen a lot of changes in Wisconsin’s landscape: I hear of many small farmers who folded because they couldn’t make ends meet and ended up selling land that had been in the family for generations to corporate farms. So…there are groups now that tour vintage barns that remain, and photograph those that are slated for demolishment as the land is sucked into the BIG farms. The countryside is much less pretty, but hopefully small farms can return, hopefully organic farming stays on an incline. Hopefully things get better instead of worse.
Through post agrarian history, there has been no food shortage. By that I mean, total calories produced as compared to total calories demanded is much greater than average daily requirement of all people. So there has been waste. The true issue is distribution. Increasingly, in the past few decades we are making this worse by giving subsidies for a few crops. If we are to stamp out starvation, our focus should indeed be distribution. In many cases, that means better local self sufficiency. We need to reverse the trend of small farms folding. -j
thansk jay for highlighting this… my heart really weeps when i hear a farmer in india has commited suicide because they are frustrated…..
After you posted this, I went and read more about the bill.
This is a very good article I found to clear up my ideas
http://blogcritics.org/archives/2007/11/04/020709.php
Thanks J & B for enlightening on Diwlai. Light up your Diwali and have a Happy One
thanks for the link will add it to the article as well – j
Happy Diwali Bee and Jai. Have a great day!