D. Dowd Muska

 

The Farm Bill’s Harvest of Shame

January 16, 2014

Behold, the blessings of “gridlock.”

The Senate and House of Representatives have yet to reach agreement on a “farm bill.” Informed taxpayers are grateful for the impasse.

Policy wonks rightly note that the latest five-year plan for U.S. “agriculture” is mostly about welfare. According to the American Enterprise Institute, “nutrition” assistance --  e.g., food stamps, WIC, and school lunches -- constitutes “the largest means-tested federal poverty programs outside Medicare.”

But let’s save the dole for another day. Whatever its final form, if passed, 2014’s farm bill will redistribute hundreds of billions of dollars to landowners and agricultural firms, meddle with commodity markets at home and abroad, and incentivize unwise land-use decisions. Liberal, conservative, and libertarian think tanks and activist organizations realize the legislation’s folly.

While every farm in America gets treats from government -- state perks are more numerous than federal largesse -- some enjoy special status. Wheat, corn, soybeans, rice, and cotton gobble up nearly all of the U.S. Department of Agriculture’s subsidies. The generosity takes many forms, from crop insurance to counter-cyclical payments, conservation grants to research projects.

The programs can be traced back to the 1930s, when the Dust Bowl and Great Depression laid waste to the rural heartland. Back then, farm families were generally poorer than their urbanized, factory-working counterparts. Mechanization hadn’t fully taken hold. Pesticides and fertilizers weren’t affordable and ubiquitous.

Today’s farmers live in a world that would be unrecognizable to Tom Joad. Agriculture is safer, more efficient, and far more lucrative. The Mercatus Center’s Veronique de Rugy wrote that in 2010, “the average farm household earned $84,400, … about 25 percent more than the average household income nationwide.” Net worth is higher, too, and nonfarm income accounts for a sizable chunk of earnings. “Agritainment” and “agritourism” are now key components of many business models.

The Department of Agriculture put 2013’s net farm income at $131 billion, “up 15.1 percent from 2012’s estimate of $113.8 billion.” After adjustment for inflation, the figure “is expected to be the highest since 1973.” A few weeks ago The Financial Times reported that the value of farmland “in states such as Illinois and Iowa have increased 77 per cent in the past four years.”

Given the economic, fiscal, and environmental reasons to halt freebies to agriculture, a coalition is mounting fierce, if ultimately doomed, opposition. In December, the National Taxpayers Union and the U.S. Public Interest Research Group published a common-ground list of expenditures ripe for the chopping block. Using Congressional Budget Office assumptions, their tally for the ten-year savings from elimination of agriculture’s two costliest subsidy programs tops $129 billion.

Denouncing “crony cropitalism,” Citizens Against Government Waste charged that both chambers’ versions of the farm bill “expand crop insurance subsidies, leave intact the market-distorting sugar and dairy programs, and fail to repeal the corporate-welfare stalwart, Market Access Program.” The Heritage Foundation lamented that Congress “continues to treat agriculture as if it were 1933.” Earlier this month, the Environmental Working Group’s vice president of government affairs told The Wall Street Journal that switching direct payments to farmers for enhanced crop insurance was “moonshine by another name” that would replace “a discredited subsidy with a soon-to-be discredited subsidy.”

A betting man would wager that resistance is futile. Farm-state fedpols from both parties know what it takes to get reelected. They’re experts at cutting deals with their urban colleagues. And a poll-conscious Barack Obama won’t take a principled stand for spending restraint. After more than a year of delay, it appears that a farm-bill compromise will be reached in February.

One day, real austerity is headed to Washington. (A weak economy, aging population, $17.3 trillion in debt, and possibly as much as $200 trillion in unfunded liabilities assures it.) When fiscal can-kicking is no longer an option, and their goodies vanish, will commodity farmers survive? Probably, but even if times get tough, there are alternatives. The fruit, vegetable, nut, and shrubbery industries aren’t wards of Washington, yet “specialty” crops thrive in America, and contribute much to the agricultural sector’s dynamism. Driven by what the Los Angeles Times called “robust foreign demand,” California growers are harvesting three times as many almonds as they did a decade and a half ago. Last summer, the Mushroom Council’s president predicted that in 2013, his industry would achieve “the greatest annual shipment increment in history.” And kale’s sales are skyrocketing.

The nation’s politically sheltered farmers can’t rely on New Deal-style “support” much longer. So sad that they can’t see the red ink on the wall.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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