This is unacceptable. It's time for lawmakers to
make reforms that reflect the reality of modern-day agriculture.
Even calling it the "farm bill" doesn't
reflect reality. Both the Senate and House versions are projected to cost close
to $1 trillion over 10 years. Nearly 80 percent of this cost is attributed to
food stamps and nutrition programs. The bill should be called the "food
stamp" bill.
Congress undermines both the food stamp and farm
programs by packaging them into one massive bill. It does a disservice to all
Americans who want careful consideration of these critical issues.
There's no legitimate policy reason to combine these
distinct programs. Food stamps continue to be included in the farm bill
"purely from a political perspective," Sen. Thad Cochran, R-Miss.,
ranking member of the Senate Agriculture, Nutrition and Forestry Committee,
recently explained. "It helps get the farm bill passed."
One of the most important reforms would be to
separate these programs into two different bills. This would make it more
likely to get reform of agriculture policy, instead of politicians using these
different issues with their different interest groups to maintain the status
quo.
The farm programs are often thought of as a safety
net for small farmers. This also isn't reality. About 75 percent of larger
farms with incomes of $250,000 to $999,999 receive government subsidies. Only
24 percent of small farms with incomes from $10,000 to $249,999 get them.
The programs are also less about providing safety
nets and more about maintaining high-levels of prosperity. Agriculture is a
high-tech and innovative sector of the economy. Unlike most sectors, it's a
booming industry. Net farm income (what farmers earn after expenses) is at its
highest levels in 40 years. Commodity prices are also at record highs. Congress
shouldn't ignore the condition of agriculture as it develops a new farm bill.
Farm programs have often been the butt of many
jokes, for good cause. The direct-payment program literally pays farmers to not
grow crops. Fortunately, Congress has recognized the absurdity of this program;
both the House and Senate farm bills would eliminate the program.
However, instead of finding additional savings for
taxpayers, the House and Senate bills would continue to play a joke on
taxpayers and consumers. The costliest farm program is crop insurance, yet
Congress does little to address these costs.
When farmers buy insurance, 62 percent of their
premiums are paid for courtesy of the American taxpayers. Unlike other farm
programs, there's no limit on the total subsidy received by farmers. According
to the nonpartisan Government Accountability Office (GAO), a $40,000 limit on
premium subsidies would have saved taxpayers $1 billion in 2011.
If the premium subsidy level were set at 52 percent
rather than 62 percent, GAO found that taxpayers would have saved $1.2 billion
in 2011. There's bipartisan recognition that the crop insurance needs real
reform. President Barack Obama is also advocating for a reduction in this
premium subsidy, yet Congress is only piling on.
Worse, the House and Senate bills would add new
programs that could prove even costlier than the direct-payment program. One
such program is called "shallow loss." Farmers would be able to enjoy
a revenue guarantee program to cover even minor losses. Such programs only
encourage more risk-taking by farmers, because the costs are being paid by
taxpayers.
Congress should stop supporting subsidies and other
market-distorting policies that restrict farmers from competing in an open
manner. Even modest reforms such as a limit on crop insurance subsidies,
though, will be an uphill battle without the political will to promote sound
agriculture policy.
Lawmakers need to keep the needs of both farmers and
the American people in mind. The tax bill and the food bill shouldn't be
ignored anymore.
About the author: Daren Bakst is a research fellow
in agricultural policy at The Heritage Foundation.
This article was published by The Heritage
Foundation.
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