The farm bill: Let’s pat ourselves on the back for trading one bad subsidy for another

posted at 4:01 pm on January 3, 2014 by Erika Johnsen

While Congress once again didn’t manage to pass the latest iteration of a farm bill — the stubbornly opaque legislative behemoth that includes both that most shameless of subsidization rackets we call “agricultural policy” and the ever-expanding federal food stamp program — the conferees in both the House and Senate have for the past few months been working on a passable version that they hope will be able to avoid a repeat of the dramatic Congressional episode of last summer and quietly re-implement some of the United States’ most broken and free-market distorting policies without any real attempts at reform. If there is more headlining legislative drama, it’s likely to be over the food stamp program that consumes the lion’s share of the Department of Agriculture’s budget and the accompanying demagoguery from the Democrats, but let us not forget the hundreds of millions of dollars that are doled out to corporate agribusinesses based on antiquated and misguided notions about industries that somehow merit special government “help.”

One aspect of U.S. “agricultural policy” that receives plenty of negative attention are the direct payments that go to farmers of ten major crops to the tune of at least several billion dollars a year — and plenty of lawmakers will likely be congratulating themselves on the fact that the latest farm bill will finally put a stop to the wasteful and fraud-riddled direct payment program. As the WSJ points out, however, it looks an awful lot like the bill is just trading one horrible type of subsidy for another:

But the emerging compromise, which would replace direct payments with beefed-up crop insurance and other protections for farmers, has already triggered criticism from outside groups who say it won’t radically reduce the amount of risk the federal government assumes in the agriculture industry.

“It’s moonshine by another name,” said Scott Faber, vice president of government affairs at the Environmental Working Group, an organization that opposes the subsidies because of environmental and other concerns. “We’re replacing a discredited subsidy with a soon-to-be discredited subsidy.” …

Mr. Faber and others question whether the new suite of programs will transfer enough risk to farmers and say it could end up being more expensive if more farmers than expected enroll in the new crop-insurance programs or prices fall for a sustained period.

Under the current crop-insurance program, which is projected to cost taxpayers $84 billion over 10 years, the federal government subsidized nearly 63% of the average premium in 2012. With the new supplemental crop insurance, which would help cover out-of-pocket losses, the U.S. would subsidize 65% of premiums.

Direct payments, by the way, were originally intended to only be a temporary form of support for the farming industry that would be reduced over time; kind of funny how subsidies once attained are reliably resistant to dissolution, huh? I wonder how this whole “this new crop insurance program could turn out to be more expensive than expected” thing will turn out.


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At one time the Congress had effectively written the end of Ag subsidies, but the ag lobby is very strong and farm state Republicans wavered under withering Democratic attacks.

The best solution is to leave all the subsidies in place but ONLY for “family farms” earning less than $200,000 adjusted gross per year. That will eliminate 95% of the subsidies and the ability of billion-dollar businesses to hide their own gravy behind the tears for “family farmers,” a pretty much extinct group in commercial agriculture these days.

Of course, we should also cut off food stamps completely and offer the hungry surplus bread and milk and cheese, but if they want Wagyu steak or Absolut vodka or crack cocaine, let them pay cash.

Adjoran on January 3, 2014 at 4:17 PM

GOPe Donor Class fully supports this latest iteration, don’t they, Erika?

PolAgnostic on January 3, 2014 at 4:17 PM

While Congress once again didn’t manage to pass the latest iteration of a farm bill — the stubbornly opaque legislative behemoth that includes both that most shameless of subsidization rackets we call “agricultural policy” and the ever-expanding federal food stamp program — the conferees in both the House and Senate have for the past few months been working on a passable version that they hope will be able to avoid a repeat of the dramatic Congressional episode of last summer and quietly re-implement some of the United States’ most broken and free-market distorting policies without any real attempts at reform.

One sentence, 101 words long?

bgoldman on January 3, 2014 at 4:17 PM

Direct payments, by the way, were originally intended to only be a temporary form of support for the farming industry that would be reduced over time; kind of funny how subsidies once attained are reliably resistant to dissolution, huh?

What was it that Reagan said wrt immortality?

MJBrutus on January 3, 2014 at 4:20 PM

Proof once again that the GOP is nearly as interested in big government spending as Dems.

Clark1 on January 3, 2014 at 4:39 PM

As long as you’ve got all of the Republican governors, representatives, and senators out there trying to convince the rest of the country that we should have a higher Renewable Fuel Standard and more wind subsidies we’re basically screwed. They’d rather pander for votes than stick to conservative principles. Or in short: they suck. You hear me Grassley, Branstad, King et al.??

Free Indeed on January 3, 2014 at 4:46 PM

Proof once again that the GOP is nearly as interested in big government spending as Dems.

Clark1 on January 3, 2014 at 4:39 PM

Yep, they both want more money – they’ll just spend it on different things.

Free Indeed on January 3, 2014 at 4:47 PM

Um…..

Off topic, but can we get rid of the pop up ad when I open Hot Air that says that Phil what’s-his-name was fired from Duck Dynasty?

He wasn’t even fired. Last I heard, he’s going to be back on the show after a brief suspension.

TIA.

UltimateBob on January 3, 2014 at 4:48 PM

Nothing is more permanent than a “temporary” government program.

Another Drew on January 3, 2014 at 4:53 PM

If you like your crop insurance plan, you can keep your crop insurance plan.

At least it’s the truth?

Kafir on January 3, 2014 at 4:56 PM

When we lived out in the country in Warren County, Ohio in 1952, our farmer neighbor did not grow any crops because he was receiving money from the Feds.

I am sure that his grandchildren are receiving the same payments now.

Farmers getting paid by taxpayers for not growing anything in their empty fields.

slp on January 3, 2014 at 5:31 PM

Lubbock Co. is a very farm-heavy area. Any pol brave enough to speak out against the farm bill-is likely to lose during the primaries.
Personally-I’m against the farm bill.
I’m tired of every industry needing a subsidy in order to stay in the red.

annoyinglittletwerp on January 3, 2014 at 6:28 PM

Yep, they both want more money – they’ll just spend it on different things.

Free Indeed on January 3, 2014 at 4:47 PM

Or when it comes to No Child Left Behind or the costs imposed by mass immigration they’ll spend it on the same things.

David Blue on January 3, 2014 at 7:29 PM

Erika, you need to file a provocative evolution thread. Whr should AP get all the action?

davidk on January 3, 2014 at 7:31 PM

…crop hookers!

KOOLAID2 on January 3, 2014 at 8:15 PM

Getting rid of the DoA is looking better and better all the time.

Count to 10 on January 3, 2014 at 8:35 PM

Farmers getting paid by taxpayers for not growing anything in their empty fields.

slp on January 3, 2014 at 5:31 PM

I’ve got some farmland like this that I purchased from a family member’s estate. The land was enrolled in “the program” thru 2014 and even after volunteering to opt out of the program 3 years ago and even pay any administration fees too help out, the govt. refused my request. Instead, the taxpayers have been paying me to do nothing with the land when in fact, I’d love to put the land back into production.

Even with the past few drought years, I was not allowed to even DONATE the grass hay from the land to ranchers that desperately needed the feed.

Your government at work.

JetBlast on January 4, 2014 at 8:50 AM

Let me ask a bold question here. Are there any family farmers reading this? Family farm meaning a FAMILY owns it and I don’t care if it is 10 acres, 100, 10,000 acres, etc. That is still a family farm that I’m sure generations of that same family have worked to acquire. Anyone? Has anyone here put their neck on the line, borrowed money to put out a crop, literally prayed for rain? Work nearly round the clock during planting and harvesting time? Anyone?

Not talking a farm owned by Smithfield, Tyson, etc.

I come from a long line of farmers. Nothing big at all, but farmers all the same. Many of you speak as though farmers are pariah. Stop it. Farmers may participate in “government programs,” but I don’t know a single farmer who sits their a$$ on the front porch and waits for some government check to come in.

Oink on January 4, 2014 at 4:58 PM

I guess we would qualify as a family farm, though the government would rank us as a “Very Large Farm” based on sales. The reality is that while the number of “farms” is about 2 million, about 70% of everything is produced by just a bit over 100,000 farms. It is very high risk, in terms of actually harvesting a crop, since a couple of minutes of hail can wipe out a season of work. Farmers don’t set the prices of what they sell when they produce commodities, nor do they have much control over the input costs. If you were not born into a farm family, then it’s difficult to understand building an operation that may be over a century old, started by people that hung on walls of your grandparents home.

It sounds like the CRP (farmers paid to not grow crops) is not understood too well. If a farmer agrees to put a field to a natural state (grasses and weeds) he gets a payment, usually less than what he could make on the land actively farming it. This is for wildlife, and tends to improve rivers and streams. We don’t do it, though we do have grassy waterways and a few wild areas here and there.

I especially enjoy articles how the American corn farmer is making us fat, or costing too much to produce meat or milk due to ethanol production. We were carrying the cattle industry for years when corn sold for less than the cost of production, only the farm bill kept us in production. When our corn is cheap, we are putting farmers around the world out of work, when our corn is expensive we are starving the world. Get a grip and a perspective.

And if you think farming is so easy, please apply to rent our farm for a year. Bring your lifetime savings, and it might be enough.

Highplains on January 4, 2014 at 6:38 PM