Attempts to shield farmers may cause unintentional harm

By TIM HEARDEN

Capital Press

Many of today's farm bill programs have their basis in New Deal initiatives passed in the first 100 days of President Franklin Roosevelt's administration in 1933.

Enacted to stabilize prices in the depths of the Great Depression, the Agricultural Adjustment Act was changed to pass constitutional muster, made permanent in the late 1940s and has been amended about a dozen times since.

With the Dust Bowl and with family farmers struggling to survive, farm programs addressed a tangible fear of the collapse of the nation's agricultural sector, said David DeGennaro, legislative analyst for the Environmental Working Group.

Long policy history

Agriculture policy dates back to attempts in colonial times to regulate markets for export goods and set up colony-sponsored cartels to improve prices paid to farmers, said Dan Sumner, an author and agricultural economist at the University of California-Davis.

In the country's early days, protectionist trade policies and westward expansion were aimed at growing the then-ag-centered domestic economy, Sumner stated in a 2007 essay, "Farm Subsidy Tradition and Modern Agricultural Realities."

In the late 19th and early 20th centuries land grant universities and the U.S. Department of Agriculture were created, and food safety regulations were passed, Sumner said. In the 1920s, congressional Republicans tried unsuccessfully to pass some commodity subsidy programs to address a depression in agriculture as the rest of the economy was booming.

But the New Deal made those programs a reality, creating supply controls and price and income supports to try to prevent the collapse of farm incomes. Later in the decade came price supports for selected crops and creation of federal crop insurance programs.

"Those of us who work on farm policy could tell you page after page and line after line," Sumner said. "But when I talk to people who don't do farm policy all the time -- and some of those are the tomato grower or average schoolteacher -- they say, 'Gee, we've had these since 1933?' Yes, we have."

Programs evolve

Farm programs have gone through numerous twists, turns and changes in focus. Among the milestones:

* The 1949 Agricultural Act remains the "permanent" farm legislation that is amended every few years with a new farm bill. It requires frequent changes because it contains "a bunch of very specific numbers" that "don't apply a half-century later," Sumner said.

"If they pass nothing, we'll revert back to permanent legislation that nobody thinks makes any sense," he said. "Yet Congress has chosen to do that (pass amendments to the original legislation). That applies to about half of the commodity programs."

* In the 1970s, then-Agriculture Secretary Earl Butz shepherded a change in focus to increasing production rather than maintaining prices. His "fencerow to fencerow" policy incentivized production, which kept market prices low and pushed down prices for consumers.

Butz argued that his cheap-food policy made agriculture more efficient, freed up consumer resources for other uses and increased the labor, intellectual and capital resources that could be devoted to other industries. But grain farms had to get bigger to remain profitable, leading to the consolidation of farms.

"He's kind of famous for saying, 'Get big or get out,' partially due to the Cold War," DeGennaro said. "We really wanted to compete with the Soviet Union and export to other countries, and prevent Russia from doing that."

* In 1985, in the midst of a farm crisis, the Food Security Act moved emphasis away from price supports and toward direct payments to farmers, including marketing loans for rice and cotton. Some environmental programs were introduced, and some land that had environmental problems was taken out of production, Sumner said.

* The so-called "Freedom to Farm Act" in 1996 attempted to bring more free-market influences to some commodities, prompting critics to charge that the Republican-led Congress was "phasing out" farm programs. But the government ended up spending more money on farms in the late 1990s as a result of crop failures and disaster assistance, DeGennaro said.

The last decade has seen expansions in farm programs, including extended direct and countercyclical payments to additional crops, including soybeans and other oilseeds, and new spending on ethanol and food stamps.

Unintended harm

Through the years, farm subsidies have sometimes been seen as doing more harm than good. For example, the New Deal programs for agriculture didn't solve low-price problems, as agriculture remained depressed until World War II shifted demand and curtailed supply, Sumner wrote in his essay.

Butz' focus on productivity in the '70s led to a surplus of rice in the '80s as Thailand went from the world's largest importer of rice to the world's largest exporter -- and a chief competitor for the U.S., said grower Frank Rehermann, who works on farm bill issues for the California Rice Commission.

"We had an attitude with Earl Butz that we can't grow enough of this stuff, and the Ford Foundation and others decided we needed to help other countries and they would become good trading partners," Rehermann said. "That's a partially true statement, but they just may not become good trading partners for agricultural products."

As time goes by, a challenge that farm interests have is to convince people that a set of programs that started in 1933 are still relevant and appropriate, Sumner said. That becomes even more difficult during tight fiscal times.

"The typical farmer has literally millions of dollars of wealth," Sumner said. "That's a fact that's awkward when we're talking about the need to write checks to these people."

Online

Farm Subsidy Tradition and Modern Agricultural Realities: http://aic.ucdavis.edu/research/farmbill07/aeibriefs/20070515_sumnerRationalesfinal.pdf