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In general, farm programs authorized by the 2014 Farm Bill channel federal funds to households whose incomes and wealth are well above those of the average US household. Many of those programs also create incentives for farm businesses to operate in ways that waste economic resources, and the owners and managers of those businesses respond accordingly. For example, the federal crop insurance program creates incentives for moral hazard behaviors that expand crop production on highly erodible land and affect the allocation of land between alternative crops. The US sugar program encourages beet and cane operations to expand production in ways that waste resources and increase the prices consumers pay for many food products.
These and other programs—such as the price and income support initiatives introduced in the 2014 Farm Bill for major crops such as corn, soybeans, wheat, peanuts, and rice—also hurt world prices, creating challenges for the United States in its trade relations with other countries. Two of these programs, Price Loss Coverage and Agricultural Risk Coverage, cost US taxpayers more than $8 billion in fiscal year 2017. Marketing orders for other commodities—including milk, fruits, and some vegetables—also distort production incentives, wasting land, labor, water, and other scarce resources. In addition, many conservation programs that pay farmers to adopt or continue conservation practices are poorly targeted and add little to the quality of the environment but in total cost taxpayers more than $5 billion a year. As Congress considers a new farm bill, members should seriously pay attention to proposals that terminate farm subsidy, marketing order, trade, and conservation programs, which waste scarce economic resources, raise food prices, and channel taxpayer monies to wealthy farmers, with few benefits for consumers or the environment, and which make no observable contributions to alleviating rural poverty.
Policymakers have pursued many objectives in successive farm bills over the past 80 years, and as a result, US agricultural policy has evolved into a complex swath of programs and regulations. The 2014 Agricultural Act—the 2014 Farm Bill—has 11 titles, more than 350 pages, and a multitude of rules and regulations. Given its breadth and complexity, the farm bill contains multiple programs that simply do not serve a useful public purpose. It is ineffective, wasteful, and often works at cross-purposes with other farm bill programs.
Much of the legislation in the current farm bill provides transfers from taxpayers and consumers to farm and agribusiness interests with little or no broader public purpose. More than 50 percent of the approximately $7 billion spent annually on the new direct farm subsidy programs introduced in the 2014 Farm Bill also flows to the largest 10 percent of all farm businesses. Mandates for US sourcing and shipping food aid funnel almost a third of the total US emergency food aid budget to domestic and foreign corporations that own US-flagged vessels instead of to millions of the poorest people in the world suffering from famine.1 In addition, conservation programs target payments to specific kinds of agricultural operations with little regard for environmental benefits.2
The farm bill and related legislation also authorizes numerous programs directed toward conflicting objectives. For example, the federal crop insurance program that accounts for about a third of all farm subsidies encourages farmers to plant crops on highly erodible soils, while the Conservation Reserve Program (CRP) pays farmers to take such land out of production.
The farm policy component of the farm bill is in no sense a poverty program. A recent American Enterprise Institute report showed clearly that current US farm subsidy programs provide no measurable economic benefits for the rural poor, either in higher incomes for low-income households reliant on farm revenues (those farms generally receive nothing) or improved employment opportunities for hired workers.3 Nor do farm subsidy programs lower overall food purchasing costs for consumers.4 Some policies raise food prices quite substantially; others lower them to some extent. In the farm bill, policies that raise food prices include the US sugar program and federal marketing orders for milk. Beyond the farm bill, import barriers5 and the Renewable Fuels Standards increase the price of not only corn and oilseed crops such as soybeans but also crops in linked markets such as wheat.6
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