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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

The Monocrop Cliff



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Recently, there has been some discussion of Congress’s failure to reauthorize various agricultural programs. This is not a trivial matter, particularly for the large number of U.S. households that receive SNAP benefits. SNAP is exempt from sequestration, but the debate over the Farm Bill has revolved in part around the fact that some legislators are concerned about the dramatic increase in the SNAP rolls. But there are many other aspects of the Farm Bill that also merit attention, including the so-called “milk cliff” (failure to reauthorize the current milk price support program will exhume a 1949 dairy price support law that will be a bonanza for milk producers while sharply raising prices for milk consumers) and the expansion of crop insurance, the latter of which is in my view a really big deal.

Back in September, Mark Hertsgaard of the New America Foundation wrote an op-ed on the dueling farm bills backed by Senate Democrats and House Republicans respectively:

The proposed farm bill — Senate- or House-style, take your pick — would make American agriculture’s climate problem worse, in two ways. Not only would the bill accelerate global warming by encouraging more greenhouse gas emissions, it would make the nation’s farms more vulnerable to the impacts of those emissions.

Indeed, instead of helping farmers take common-sense measures to limit their land’s vulnerability to extreme weather, the legislation would simply spend billions more on crop insurance — sticking taxpayers with the bill. “It’s like giving a homeowner cut-rate fire insurance but not requiring fire extinguishers,” Jim Kleinschmit of the Institute for Agriculture and Trade Policy told me in an interview. [Emphasis added]

Note that this is also the approach the federal government takes to housing finance (instead of requiring larger down payments, shift risk to taxpayers), student loans (instead of mitigating the pricing power of incumbent higher education providers, shift risk to taxpayers), disaster preparedness (instead of enforcing more rigorous building codes and discouraging construction in flood-prone areas, shift risk to taxpayers), and much else. But federal agricultural policy is particularly egregious because it poses a serious environmental threat. U.S. agricultural subsidies are directed towards a small number of commodity crops and they encourage intensive cultivation that can damage soil and increase vulnerability to droughts, as the geographer William Moseley of Macalester College observed in August:

We have become dangerously focused on corn in the Midwest (and soybeans, with which it is cultivated in rotation). This limited diversity of crops restricts our diets, degrades our soils and increases our vulnerability to droughts. Farmers in the central plains used to grow a greater diversity of food and forage crops, including oats, hay, alfalfa and sorghum. But they gradually opted to grow more and more corn thanks to federal agricultural subsidies and expanding markets for corn in animal feed, corn syrup and ethanol.

And as drought conditions grow more frequent, the fact that corn is particularly vulnerable to drought has become salient to all Americans, not just those living in the farm belt. Moseley suggests reforming agricultural subsidies, e.g.:

The better approach would be to offer somewhat lower floor-price supports to a much broader range of crops and to incentivize mixed crop and livestock farms by offering direct payments linked to fodder production that is used on the farm. We also need a crop insurance program that is sensitive to climate change. Insurance should be for the occasional hazard, not one that is occurring with increasing regularity. For example, as Minnesota’s climate becomes more like that of Kansas (as some climate change models predict), insurance schemes should encourage more drought-tolerant planting strategies.

The editors of Scientific American have also called for leveling the playing field between the main commodity crops and “specialty crops” like fruits and vegetables that do not receive direct payments.

A more elegant solution might be to follow New Zealand’s lead and abolish agricultural subsidies, as Mark Ross of the Federated Farmers of New Zealand and Chris Edwards of the libertarian Cato Institute argued in July:

With the removal of subsidies in New Zealand, agricultural practices are driven by the demands of consumers, not by efforts to maximize the receipt of subsidies. At the same time, the whole agricultural supply chain has improved its efficiency and food safety has become paramount. Businesses that deliver inputs to farming have had to reduce their costs because farmers have insisted on greater value for money.

More efficient agricultural production in New Zealand has also spurred better environmental management. Cutting farm subsidies, for example, has reduced the previous overuse of fertilizer. And cutting subsidies has broadened farm operations to encompass activities such as rural tourism that bring management of the rural environment to the fore. [Emphasis added]

One potential challenge, however, is that while New Zealand farm leaders led the drive to abolish subsidies in the mid-1980s, large U.S. agribusiness interests are the driving force behind the expansion of crop insurance, etc., which means that the task of calling for reform has to fall to others. 



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