(April 17, 2011) - Sure, Rep. Paul Ryan, the chairman of the House Budget Committee, has a 10-year plan to take this country back from the poor, the uninsured, the elderly, the hungry and all the unemployed that threaten to make America a warmer Iceland.
But, I ask, does Mr. Ryan’s plan go far enough in reining in this earmarked, Pell-granted and almost Food-Stamped-out nation?
Nay, I say. Neigh.
For example, Ryan’s plan cuts only $127 billion—a measly 20 percent—of the Food Stamp program over the coming decade.
Giddy-up, partner; the best you can do is cut all the food assistance received by 30 American states and territories in the next 10 years?
Yanking 8 million weakened-by-hunger, mostly poor people who don’t vote from the national bread line won’t pay for the $700 billion tax cut Congress and the President gave the richest two percent of Americans last December.
So saddle up and yank all 44 million from the line! Let ‘em pull themselves up by their bare toes and, when they get boots, by their bootstraps. After all, Speaker John Boehner said he did it and he’s been getting a government paycheck only since 1984.
Besides, three years of crushing recession has surely given community food pantries enough time to gear up to feed the hungriest of one in nine Americans.
(January 21, 2011) - The current concern over the US federal budget deficit will be a major factor in the formulation of the 2012 Farm Bill. An editorial in the Sunday, January 16, 2011 New York Times titled, “Here’s an easy one,” said “here is one big-ticket saving that all members of Congress should get behind: cutting the billions of dollars in farm subsidies that distort food prices, encourage overfarming and inflate the price of land.”
It is tempting to view the position advocated in the editorial as an aberration, but we fear that it is merely a high profile example of the general media’s lack of understanding when it comes to the unique nature of crop agriculture. At the same time, there are elements of the current farm program that are hard to defend.
And, the Times editorial board quickly hits the most vulnerable element: “$5 billion in direct payments that are delivered regardless of what or even whether farmers plant.” What they don’t say is that the direct payments were established under the 1996 Farm Bill, known by its supporters as “Freedom to Farm” and its detractors as “Freedom to Fail.” As originally conceived, direct payments—which were originally called “Agricultural Market Transition Act (AMTA) Payments” in 1996 Farm Bill—were, as the name suggests, supposed to transition down to zero.
(November 24, 2010) - What a difference an election makes when it comes to writing a new farm bill. Before November 2, 2010, House Agriculture Committee Chair Colin Peterson (D-MN) wanted to write the new farm bill in 2011. In the new Congress, he will be the Ranking member and Frank Lucas (R-OK), who will be the new Agriculture Committee Chair, has indicated that he prefers 2012.
The Senate Agriculture Committee will have a new chair, as a result of Arkansas Democrat Blanche Lincoln’s loss in her bid for re-election. Because the Democrats retained control of the Senate, albeit by a smaller margin, they will have to appoint a new chair.
In addition to Lucas’ desire to move slowly on writing a new farm bill, as a result of the election, at least 20 of the 46 members of the House Ag Committee will be new, both to the House and the Committee. The new members will face a steep learning curve in order to become conversant in the arcane details of the farm bill and the many programs it encompasses. If for no other reason than that, it would be unrealistic to expect to see legislation move quickly through the committee.
(September 10, 2010) - As the 2010 crop is being harvested, farmers and their organizations are already beginning to look at the policies that they would like to see in the 2012 Farm Bill. Depending on what happens in the fall elections, hearings on the next farm bill could start up again as early as this coming February.
The issues that will affect this discussion include, the federal deficit, direct payments, crop insurance, and the role of the federal government in the agricultural sector. The discussion is also shaped by the assumptions about the future that people hold. This column will take a look at a common assumption that underlies some of the policy changes being proposed for the 2012 Farm Bill.
Given the concern about deficits in Congress and the current high prices, the money available for the 2012 Farm Bill will probably be more constrained than it has been in the past. Concern about deficits may result in attempts in Congress to reduce the money available for many programs, the farm bill included.
(June 12, 2009) - In this series of columns we examine the impact of the rapid run-up and subsequent decline of crop prices on various groups, including crop farmers; livestock, dairy and poultry producers; importing countries; and consumers and whether or not a properly managed grain reserve program could have mitigated the problems faced by each of these groups. In this column we look at the ethanol industry as an important cause and casualty of the price bubble.
To some extent the increased use of corn in the production of ethanol can be attributed to changes in agricultural policy in 1996 and the growing scientific consensus on the role of human activity on global warming. The 1996 Farm Bill effectively eliminated the floor on crop prices and, when the universally anticipated structural increases in corn exports did not materialize, allowed grain prices to fall well below the cost of production.
The explanation for the low prices was "over production" even though the year-ending stock-to-use ratio for the years beginning with 1998 was well below historic levels. With significant fixed costs, crop farmers continued to plant their fields to minimize their losses, hoping that a random crop failure somewhere would lift prices to profitable levels.
(April 1, 2009) - Former General Motors boss Rick Wagoner evidently did not understand the meaning of the Biblical admonition of those who live by the sword often die by it.
It's easy to see why. Detroit has owned Washington, D.C. for, well, forever: no increase in car mileage standards since the Pinto; no new fuel technologies since Henry Ford poured ethanol into his Model A; gazillions for interstates, peanuts for public transportation.
Now, however, the roles are reversed and Washington owns most of Detroit. As such, the auto oligarchs are shaking in their wood paneled offices and crying in their parked private jets.
And they should.
Golly, would you expect to keep your job if, as in the case of Wagoner since 2004, the company you ran lost $82 billion, had its marketshare hacksawed from 33 percent to 18 and its stock price from over $70 to $4 while the biggest brainstorm you had to quell the growing calamity was the Hummer?
Hey, only Wall Street bankers and Capitol Hill lawmakers can sport such a sorry record and still keep their jobs. You, me-and now, Wagoner-couldn't.
(March 31, 2009) - No matter what one thinks about the proposal of the Obama administration to eliminate direct payments to farms with gross sales in excess of $500,000, it is becoming clear that they want to put their own imprint on farm policy. That can be seen in the argument that farmers could make up their loss of direct payments with payments for environmental benefits and carbon sequestration.
The issue of improving the environment through carbon sequestration fits in with the emphasis Obama has given to green energy investments, the reduction of atmospheric emissions of fossil-fuel-based carbon dioxide, and reducing the dependence of the US on imported oil.
Farmers have made significant investments in biofuels as a means of both increasing farm income and reducing the number of barrels of oil that are imported by the US every day. Public support is conditioned on the ongoing acceptance of these goals as important elements of public policy.
(March 17, 2009 ) - Secretary of Agriculture Tom Vilsack wants to ship a portion of the money promised to farmers in the 2008 farm bill to child nutrition programs. Pitting identified farmers with gross sales over $500,000 against children participating in nutrition programs puts farmers at a definite public relations disadvantage. No one is against feeding children, least of all food producers.
The mere positing of such a "choice" suggests that agricultural policy is quickly approaching a crossroad-a crossroad that agricultural commodity policy has been moving toward for a couple of decades.
Navigation of agricultural policy's crossroad may be as significant for agriculture as the policy decisions to address the current financial crisis is for the economy as a whole.
In the case of policy for program crops, the crossroad decision is: Will agricultural policy toward commercial, program-crop agriculture continue its recent focus on transfer payments, many of which are politically tricky to defend. Or will agricultural policy be reformed to moderate extreme variations in crop prices and free farmers' from reliance on politically uncertain payments.
In some ways, the recent journey toward agriculture's crossroad parallels the happenings that led to the financial crisis.
(March 9, 2009) - In his February 24, 2009 speech before Congress, President Obama said, "In this budget, we will...end direct payments to large agribusinesses that don't need them." We were listening to the speech and when he said that we did a double take.
What did he mean?
Large agribusinesses like Monsanto, Cargill, ADM, AGCO, and Pioneer Seed don't receive direct payments. Direct payments are the current iteration of the AMTA (Agricultural Market Transition Act) payments that were made a part of the 1996 Farm Bill in order to entice farmers to support a radical reordering of farm programs. These payments are made to growers of the major crops (corn, soybeans, cotton, wheat, rice, etc.) so Obama wasn't talking about many large livestock producers, orchardists, and fruit and vegetable producers.
To our ears the wording was strange because, in most cases, we do not think of crop farmers, even the large ones, as "large agribusinesses." They may be incorporated to simplify tax and inheritance issues, but for the most part, they are family operations-hardly what comes to mind when the President talks about "large agribusinesses."
(February 17, 2009) - Major changes in crop programs are usually accompanied by uncertainty on the part of farmers. The late passage of the 1996 Farm Bill and its radically new provisions had farmers scratching their heads as they struggled to understand AMTA payments (Agricultural Market Transition Act) and the Marketing Loan Program with its Loan Deficiency Payments and Marketing Loan Gain provisions.
By way of contrast, farm bills, like the 2002 legislation, that make only incremental changes are taken in stride. Farmers, along with their bankers and CPAs, know what to expect and the uncertainty is low.
The 2008 Farm Bill included a new program ACRE (Average Crop Revenue Election) that would reduce Direct Payments (by 20%), replace the Counter-Cyclical Payment program, and lower the rate for marketing loan payments (by 30%). Farmers must decide whether to switch to the ACRE program or continue to use the current set of payment programs.