July 6, 2011
Farming isn’t what it used to be, following breakthroughs in technology and production practices that promise greater efficiency, healthier foodstuffs, less dependence on chemicals and increased markets overseas. Yet many policy makers in Washington are oblivious to these developments as they are preoccupied with the federal deficit.
Not since the New Deal has agriculture played such a central role in Washington politics —but rather than food security, the focus is squarely on spending cuts. Democratic and Republican budget negotiators are considering cuts in commodity payments and crop insurance totaling $34 billion over 10 years – which if approved would be more than a 50 percent reduction in the $63 billion currently projected to be spent on government commodity price and income supports in the coming decade.
Lost in this narrow, green-eye-shade focus on the bottom line is any discussion of new federal policies that might lock in agriculture’s key role in the U.S. economy for the rest of the century by making it more sustainable, energy efficient and environmentally friendly. “U.S. farm policy seems to be driven by one objective at the moment: how to reduce costs,” David Blandford, professor of agricultural economics at Pennsylvania State, told The Fiscal Times.
This absence of “the vision thing” among Washington agriculture policy makers is especially a problem because – technological breakthroughs aside -- American agriculture is nonetheless facing “daunting” challenges. An exhaustive 570-page report by the National Research Council has detailed growing stress on soil, water and air from large scale commercial farming and concentrated animal production. These factors are contributing to declining water tables and aquifers, soil erosion, greenhouse gas emissions, loss of biodiversity, chemical runoff, and compromised animal welfare and food safety.
“There is growing recognition and evidence of the unintended consequences of agriculture,” stated the 2010 report. Since half the land mass of the United States is in farms and ranches, the environmental implications are vast.
Ironically, while Congress and the White House are paying scant attention to the long-term challenges of agriculture, many producers in the $400 billion a year farm industry have taken matters into their own hands. Many commercial farmers and ranchers have introduced new practices such as conservation tillage, crop rotation, grazing patterns that keep more carbon in the soil, and “closed loop” systems that turn farm animal wastes into energy.
An organic foods industry that has been doubling in size every year has demonstrated that farming with fewer chemicals can be good business. Thanks to a growing demand for local produce, the number of small farmers has begun increasing.
At the same time, according to research by Purdue University’s Department of Agricultural Economics, “farming is in the midst of a major transformation – not only in technology and production practices, but also in size of business, resource control and operation, business model and linkages with buyers and suppliers.” Successful farming businesses are charging premiums for products that are low in fat or were raised without chemicals or antibiotics and this “branding” is sure to gain steam, according to the report.
Some experts see farms becoming platforms for a range of profitable activities, producing energy crops (“grassoline”) or specialized fruits and vegetables alongside traditional staples such as corn, wheat, soybeans and cotton; selling power to the grid from solar arrays and wind turbines; marketing the carbon they store in the soil to polluters who need carbon credits.
Federal policies urgently need updating to get behind these changes, according to many agricultural scholars, scientists, economists and farmers themselves. Instead, the intense focus on cutting subsidies has left the impression among many people outside farm country that agriculture is a kind of struggling welfare sector, obsessed mainly with getting and protecting federal handouts.
Over the decades, farm support has morphed into a web of overlapping, duplicative and just plain bewildering programs, some dating to the Great Depression. A public system benefiting mainly major crops such as corn and wheat provides income support, compensates for low prices, and guarantees relief in case of floods or droughts. Alongside that is a privately run, but federally subsidized crop insurance system covering more than 100 crops, including the major ones, grown on 255 million acres. Periodically Congress enacts special “disaster” relief on top of that.
Less known is the fact that U.S. agriculture’s dependence on government has been declining, mainly because commodity prices have stayed well above support levels.
This year, USDA predicts that farmers will pocket profits of $94.7 billion on sales of more than $400 billion, making it one of the most recession-proof parts of the economy. Direct government aid, in the form of income support, conservation grants, disaster relief and the dairy program is projected to shrink to $10.7 billion— the lowest amount in a decade and a rounding error in the overall federal budget. And taxpayer costs of the crop insurance program also declined to $3.7 billion in 2010 from $7.3 billion the previous year.
Congress provides $6 billion a year in subsidies to prop up the domestic ethanol industry, even while the price of competing gasoline is at near record highs and the price of corn to manufacture ethanol is extremely low. The Senate voted 73 to 27 last month to eliminate the subsidies, but that provision is unlikely to go any further this year.
Another prime target of deficit reduction negotiators is a program that shells out $5 billion a year in income support to farmers (and some wealthy landowners in big cities) even when prices and profits are high.
But the helter-skelter search for cuts is occurring without any overarching strategic vision. The House earlier this year approved a fiscal 2012 spending bill that makes deep reductions in agricultural research, overseas food assistance, and incentives for sustainable farming practices. Blandford, the Penn State agricultural economics professor, cautioned that “A ‘slash and burn’ approach is not likely to meet future needs given the substantial challenges that the U.S. farm sector is likely to face in coming years.”
The initial battleground for a shift to a new federal approach will be the debate over a five-year farm bill, due to begin next year. Supporters of current farm programs have already made clear that in a tight budget situation, their top priority will be protecting traditional programs, not extending innovative ones approved in the current farm legislation. These include such things as federally-funded research into ways to reestablish a large-scale fresh fruit and vegetable industry in rain-fed parts of the eastern United States.
As the process begins, there appears to be an appetite for new ideas among farmers and ranchers themselves.
“We must move beyond ‘us vs. them’ and ‘either-or’ conversations,” said Dan Glickman, a former U.S. agriculture secretary who is a co-chairman of the group with the hopeful acronym of AGree.
More on agriculture spending from The Fiscal Times:
Farm Subsidies Are on the Chopping Block
Russian Wheat Embargo Likely to Raise Global Food Costs
Obama Presses Ethanol Industry