It’s Time to Put the Farm Bill Out to Pasture

February 1, 2018

Some Americans may be surprised to learn that agriculture in their country is in large part based on a five-year plan. Most commonly referred to as the farm bill, it is up for renewal this year and—just like in years past—is likely to produce a legislative morass in which the primary beneficiaries are lobbyists and the business interests they serve. The following excerpt from a recent article in The New Yorker helps to illustrate the madness:

When milk prices bottomed out in the summer of 2016, Robin and David Fitch didn’t know how they could continue. Their four-hundred-and-seventy-acre dairy farm, in West Winfield, New York—a four-hour drive north of Manhattan—supported about a hundred and seventy milk cows. Sixteen years earlier, when they had married and started farming together, a herd that size would have been more than enough to keep them afloat. But milk prices kept falling that summer, eventually hitting fourteen dollars per hundredweight, down from twenty-five in 2014. The Fitches’ income took a nearly fifty-per-cent hit, while the debt they incurred from fuel costs, rising interest rates, and other expenses grew. The day came when they had to tell their two children that they might be forced to sell the farm. “My fourteen-year-old was in tears,” Robin recalled. “For the farmer, it means losing everything they have worked for their entire life—their land, their home, everything. It’s gone.”

The Fitches were not alone in their struggles. The U.S. Department of Agriculture estimates that, between 2013 and 2016, net farm income fell by half, the largest three-year drop since the Great Depression. Some forty-two thousand farmsfolded during the downturn, and small and medium-sized operations, such as the Fitches’, proved particularly vulnerable. Now, with commodity prices still low and farm debt predicted to reach record highs, the nonprofit organization Farm Aid has warned that, if the market doesn’t recover soon, the country could see its highest rate of farm closures since the nineteen-eighties. Newsweek estimatesthat, at the peak of that crisis, two hundred and fifty farms closed every hour.

Many American farmers are looking to Donald Trump for relief. He was, after all, their preferred candidate for President, winning sixty-two per cent of the rural vote in 2016. “Farmers built this country, and I was hopeful that he was going to see that and step up to the plate for us,” Robin Fitch told me. The President will soon have the chance to do just that, as Congress readies the next version of the farm bill, the single most important piece of legislation for the nation’s food growers. First conceived during the Depression, the bill has since become a fixture of American policy-making, updated and renewed and haggled over every five years or so. The 2018 bill, which is due in the coming months and is expected to cost around nine hundred billion dollars over a decade, promises to be one of the most consequential ever. This year, even more than in the past, farmers such as the Fitches face an existential question: Will Washington come to their rescue, or will it let them disappear?

The farm bill’s unassuming name fails to capture its effect on American life. Besides providing crop subsidies, establishing pricing structures, and regulating farming practices, it allocates funds for disaster relief, school-lunch programs, and wildlife conservation. Some eighty per cent of the bill’s budget goes to the Supplemental Nutrition Assistance Program (snap), formerly known as food stamps. “At one point, I started to catalogue the number of programs that were covered in the farm bill, and I gave up after a hundred,” Marion Nestle, a professor of nutrition, food studies, and public health at New York University, told me recently. “And every single one of those programs has a lobbying force behind it or it wouldn’t be there. And that’s just the farm programs!”

As the Fitches’ experience suggests, past farm bills have tended to benefit large operations over small and medium-size ones, which still account for ninety-seven per cent of all working farms in the United States. According to the Environmental Working Group, a D.C.-based nonprofit, the top ten per cent of wealthiest farms received seventy-seven per cent of commodity subsidies between 1995 and 2016. Roughly the same is true of crop insurance, currently the largest component of the farm bill behind snap. That’s where the real money is, Nestle told me. “What the insurance programs do is provide an incentive to grow as much food as you possibly can, because you know that the price is going to be guaranteed,” she said. The certainty of payment, backed by U.S. taxpayers, encourages big farms to get bigger, take risks, and then claim the insurance payouts if the crops fail to yield.

Each one of these paragraphs helps highlight at least one flaw with the farm bill or perceptions of the agriculture sector.

Among them:

Low prices of milk or any other agricultural commodity are not a problem to be ameliorated by public policy. Food is essential for human survival and we would all be better served if its price was, like sunlight and air, zero. The benefits of cheaper food and reduced hunger easily outweigh any losses borne by the farm sector.

The financial state of the agricultural sector is less than dire. While it is true that net farm income has dipped in recent years, this was preceded by a notable increase and currently is not particularly low by recent historical standards:

Net farm income and net cash farm income

Similarly, the observation that farm debt is projected to reach record highs is presented without needed context. Left unsaid is that the sector’s assets are projected to reach $3 trillion, resulting in solvency ratios that are near historical lows:

Farm sector solvency ratios

It isn’t the job of politicians in Washington to save farmers—or members of any other industry. The task of lawmakers is not to dispense favors to particular constituencies but rather to create a policy environment in which market participants thrive or fail based on their own merits. Instead of pressing their thumbs on the economic scales, members of Congress should get out of the way and let the market—that is to say the collective judgment of consumers—render its verdict on which businesses continue and which ones cease. Smaller, more inefficient farms that cannot compete with larger agricultural concerns should be allowed to go out of business. Indeed, the replacement of less efficient farms with more efficient ones has been the story of agriculture for decades, with the resulting productivity surge leading to cheaper food and freeing up labor to participate in other sectors of the economy

Distribution of the labor force by sector

The farm bill is an unfocused mess. Legislation which covers everything from subsidies to food stamps to wildlife conservation and contains so many programs that even experts cannot keep track is, by any measure, an unwieldy mess. Such legislative stuffing is best explained as an exercise in log-rolling, in which politicians from agricultural states and districts obtain support for farm subsidies by incorporating unrelated measures such as food stamps that have broader legislative appeal. This is no way to conduct business.

Ultimately the lobbyists win. As the article accurately notes, the legislation’s big winners are not family farms but rather large agricultural concerns who don’t need the help. While the federal government should not be handing out largesse to smaller farms, neither should it be funding their larger competitors. Losers from the farm bill, meanwhile, are not merely small and medium-sized farms, but the taxpayers who are forced to pay for this agricultural extravagance.

The article goes on to note that while it is “difficult to say what a small farmer’s ideal version of the bill would look like” that “there is no doubt that it would require radical revamping.” Such language implies that legislation meant to direct government assistance to particular actors within a large sector of the economy can become something other than what it is: an overgrown monstrosity written by lobbyists and ridden with corporate welfare. The only true reform of such a bill is to end the thicket of subsidies and price supports, and to break the legislation into smaller parts where its non-agricultural aspects such as food stamps can be addressed separately.

This is not to say that the government is without options should it seek to assist the agricultural sector. Rather than dispensing taxpayer-funded goodies, however, the Trump administration—assisted by pro-trade forces in Congress—should press ahead with efforts to open foreign agricultural markets. One of the richest and most protected such markets is Japan, and access by U.S. farmers to the country would have been notably expanded had President Trump not opted to withdraw from the Trans-Pacific Partnership. Fortunately, there is every indication the United States would be welcomed back should it seek to rejoin.

Similarly, European agricultural markets are shot through with subsidies and barriers to imports. An existing trade negotiation between the U.S. and European Union, the Transatlantic Trade and Investment Partnership, could yield positive results for the agriculture sector should this dormant initiative be reinvigorated. Let us also hope that administration rhetoric expressing a willingness to withdraw from the North American Free Trade Agreement, which would be particularly harmful to the agricultural sector, is simply a misguided negotiating tactic and not heartfelt sentiment.

Rather than conjuring up new economic distortions or tinkering with existing ones, Washington should seek ways to tear down barriers which prevent market forces from working their magic. The best farm bill is none at all.


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