The 2007 or 2008 farm bill — if Congress doesn’t act next year — could be a far different animal from its predecessor if some non-farm groups are able to put their stamp on it.
For months, farmers have been telling anyone who listened that they want to keep the current law. But the Chicago Council on Global Affairs recently released a report that calls for what would amount to a complete makeover.
The report recommends ending “trade-distorting farm subsidies,” such as counter-cyclical payments, loan deficiency payments and marketing loans, and replacing them with less-costly programs to help weather the ups and downs of prices and yields.
“If the European Union and the United States don’t take the lead in ending trade-distorting subsidies, developing countries and the World Trade Organization legal system will do it for both of us,” said Gus Schumacher, task force co-chair and former USDA undersecretary for farm and foreign agricultural services.
“We’ll lose control of critical farm policies and miss the worldwide export expansion opportunities, particularly in emerging markets, that a successful Doha Round could bring. These emerging markets, such as India, China and competitors such as Brazil also need to step up and offer improved market access.”
Some critics would question how much market access the latter will offer no matter how liberal a new trade agreement the WTO passes. But few would challenge the report’s other major assertion: Congress will have less money to spend on farm programs in 2007.
“The farm bill budget will likely be a smaller, zero-sum game in 2007,” said Robert Thompson, another task force co-chair and professor of agricultural policy at the University of Illinois. “Now more than ever, spending decisions must be driven by investments in the future of agriculture and the needs of rural America, the national economy, public health and the environment.”
The report says current subsidies should be replaced with (1) revenue insurance covering all commodities that would protect against drops in price and production; (2) land stewardship rewards that pay producers according to the kind and amount of environmental benefits they provide; and (3) farmer savings accounts.
Direct payments consistent with WTO green box rules would continue to offset declines in land prices that might result from eliminating trade-distorting subsidies.
“Ending subsidies that conflict with our trade obligations doesn’t have to mean an end to the farm safety net,” says Thompson. “Traditional subsidies can be replaced by programs that help farmers cope with business risks while complying with trade obligations and advancing future trade objectives.”
Former Agriculture Secretary Mike Espy, a Jackson, Miss., attorney and task force member, also weighs in. “Our trade-distorting subsidies represent a grossly inefficient use of funds. A wiser use of our budget dollars would be for the recommendations in this report.”
The recommendations may have merit. But farmers and ranchers will have to be convinced they will truly help them compete in an increasingly cutthroat world before they will buy into them.