Farm Policy Important to Growers, Consumers

Published online: Oct 12, 2021 News Gene Lucht
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Source: KMALand

When it comes to farm policy, nothing is bigger than the farm bill. But the farm bill is so big it can be difficult for farmers and consumers alike to really understand. And that has led to more than a few debates about government subsidies.

So what can farmers do to explain such a giant piece of legislation to their non-farm cousins?

First, it helps to know the history. Patrick Westhoff, an agricultural economist and director of the Food & Policy Research Institute (FAPRI) at the University of Missouri says farm programs are about as old as the United States Department of Agriculture.

During the 1930s farm programs expanded under President Franklin Roosevelt and his Secretary of Agriculture Henry Wallace. The Agricultural Adjustment Act of 1933 set a goal of what became known as “parity,” which was the idea that prices should be equal to what they were from 1909 to 1914, adjusted for increases in cost.

The Agricultural Act of 1949 is often referred to as the “permanent legislation,” according to Gary Schnitkey, an agricultural economist at the University of Illinois. That bill really set a baseline for what became the farm bill debates of the last 70 years, he says. One of the biggest reasons there is always a push to pass the farm bill is that subsequent bills are in essence pieces of continuing legislation.

In the real world, that means if a farm bill is not passed and the old one is allowed to expire, the law says things would return to the 1949 language, which includes parity. That may sound arcane, Schnitkey says, but it provides a very big incentive to pass new farm bills, because very few people want to return to the 1949 law.

“That would be something that no one wants to see,” he says.

Once you get past the history and the pressure to pass a bill, there is the question of just what is included in the farm bill and why it is so important. The answer is that just about everything but the proverbial kitchen sink can end up in the farm bill, Westhoff says.

Nutrition spending for programs such as SNAP (often referred to as food stamps) generally makes up more than 60% of farm bill spending. The estimate for 2018 to 2028 is for those programs to make up as much as 77% of the farm bill spending.

Farmers, of course, say that money isn’t going to farmers and they shouldn’t be attacked for a bloated farm bill budget. But Westhoff says there is a good reason nutrition programs are part of the farm bill: They give urban lawmakers a reason to vote for the legislation. Without that urban support it would likely be very difficult to pass a farm bill.

The reverse is also true: Without rural support for the agricultural legislation, it might be more difficult to approve the nutrition programs.

The rest of the farm bill is aimed more at farmers and includes a number of programs. There are commodity support programs, crop insurance provisions (although some of that falls under other legislation), conservation programs and agricultural research programs. Most of the large programs included, however, are aimed more at commodity crop production and not livestock or specialty crop production.

For farmers today, the primary government support mechanism is federally- subsidized crop insurance. While the levels of insurance vary, the average subsidy is about 53%, Westhoff says.

There are a couple of other things worth noting about the farm bill and the way it has evolved, Schnitkey says.

In 1985, conservation compliance and the Conservation Reserve Program were added, making conservation more of a priority in the bill. Before 1996, farm support programs generally were centered around some type of supply-control mechanism, offering farmers money not to plant crops on a percentage of their land. But as the agricultural markets became more international reducing production here did not have the same impact on prices as before.

In 1996 the so-called “Freedom to Farm” legislation was passed and included a direct payment that was supposed to be phased out. But when prices nose-dived a few years later, the decision was made to push more counter-cyclical payments. Programs such as ACRE were introduced. Crop insurance became more of a tool.

The last farm bill was passed in 2018. Debate may begin soon on a new farm bill with the target of passing legislation by 2023. Two changes since 2018 that could potentially impact that debate are the huge payments made to farmers through the Market Facilitation Program (MFP) aimed at offsetting the negative impacts of the trade war with China, and the change in Congressional and presidential leadership that may lead to some emphasis on climate.

Whether those will mean big changes in the next farm bill are yet to be seen, Schnitkey says.