On this Summer’s Menu: A New Farm Bill

Olympic Games and U.S. presidential elections happen every four years. The Census is taken every ten. Farm Bills roll around every three to seven years, and it appears the next Farm Bill is in gestation right now.

So what is a Farm Bill? First, it’s about more than farms. It’s about farms and food, which is why IFT members should pay attention. The Farm Bill is a wide-ranging piece of legislation that bears on everything from the price of beans to the availability of food stamps to the funding for agricultural and food science research.

The fancy word for such bills is “omnibus.” When you know exactly where you want to go, you can hop in a taxi and direct the driver. You and your friends speed to your destination, not stopping for anybody else, but you pay a hefty fare. Alternatively, you can take another vehicle, an omnibus, often known as a “bus” in the vernacular. An omnibus takes a posted route, stopping at designated places along the way. Many people can get on the bus. It costs less than a taxi, takes longer, and may not take you exactly where you had in mind, but it gets you and your companions close to your final destination.

How omni is omnibus? The 1990 Farm Bill had 25 different sections or “titles.” The 1996 Farm Bill had nine titles, including the Agricultural Market Transition Act, agricultural trade, conservation, nutrition assistance, agriculture promotion, credit, rural development, and research, extension, and education. Farmers, bankers, environmentalists, child welfare advocates, food processors, international traders, and researchers all have a stake in this bill of fare.

Why combine all these different sections into one big bill? One reason is the clout of coalition. “The omnibus nature of the farm bill,” writes the Congressional Research Service (CRS), “creates a broad coalition of support among conflicting interests for policies that, individually, might not survive the legislative process.” For example, combining in one bill support for commodity prices and support for food stamps results in a bill that rural and urban representatives can stomach.

Another reason is deadlines. Americans often put sunset provisions in their laws, and, since the 1950s, every Farm Bill mandates its own demise. But for every sunset, there must be a sunrise. If the Farm Bill is not revisited, revised, and renewed on time (the current 1996 Farm Bill expires in fall 2002), then the regulation of agriculture will largely revert to the terms of the permanent Agriculture Law of 1949. Because of the outdated terms of that bill, legislators work to avoid what would be a very costly reversion.

The federal farm support policy is a two-sided coin. One side includes the livestock producers and the fruit and vegetable growers who traditionally have not received direct payments or price supports. These farmers produce about half of the entire value of U.S. farm production. The other side includes farmers who produce certain commodities, including most grains, oilseeds, cotton, sugar, and peanuts. For seven decades, these farmers have received various supports to maintain farm income.

One major point of focus will be the successor to the Agricultural Market Transition Act (AMTA), which is Title I of the 1996 bill. AMTA was passed in a year of historically high demand and high prices for commodities and was originally designed to wean farmers away from farm-support programs and to encourage farmers to make decisions based on market conditions. It ended “deficiency payments” to farmers that make up the difference between government-set target prices and the lower market price for their crops. It also freed farmers to decide what crops to plant, and it ended mandatory “set-asides” of crop land as a way to reduce supply. For these reasons, the 1996 Farm Bill earned the nickname “Freedom to Farm.”

To ease the transition to a market-driven economy, AMTA included a series of annually declining payments to farmers that are independent of market prices. This “decoupling” of payments from production worked satisfactorily as long as crop prices stayed high, largely on the strength of overseas demand. But when yields here and abroad hit new records and the Asian economy slowed in the late 1990s, crop prices fell, and so did farm income. To support farm income, the federal government has provided in each of the last three fiscal years emergency payments of $1.6 billion, $4.8 billion, and $9.8 billion, respectively, according to CRS. The projection for fiscal year 2001 is $6.6 billion. These are in addition to the regularly scheduled AMTA payments.

The uncertainty for farmers and the cost to the taxpayer of the annual “emergency” payments are two of the reasons behind the revamping of the Farm Bill. The biggest carrot, however, is the $79-billion budget increase over the next 10 years contained in the current Congressional budget resolution for agriculture programs, including farm income support. In the absence of a new Farm Bill, that money may be claimed by other federal programs, giving farm-state lawmakers the “use it or lose it” impetus for completing a Farm Bill this summer.

by THOMAS M. ZINNEN
2000–01 IFT Congressional Science Fellow