Economy & Business

Tear Up the Farm Bill and Start Over

Farmer Lucas Richard harvests a crop of soybeans at a farm in Hickory, N.C., November 29, 2018. (Charles Mostoller/Reuters )
The last-minute ‘compromise’ eliminates every semblance of reform.

As usual, things are behind schedule in Washington. After months of wrangling, Congress is trying to push a compromise farm bill over the finish line at the eleventh hour by larding it up with goodies and killing any semblance of reform. For example, despite efforts to close a loophole that allows family members of farmers to receive subsidies even if they do not live or work on a farm, the final version of the bill expands that loophole to allow distant relatives such as cousins, nieces, and nephews to qualify for subsidies.

That subsidy is worth up to $125,000 a year, about twice 2017’s national median household income. It’s nice work if you can get it. And you don’t even have to bother with the actual work part. So long as you fill out the paperwork and claim some sort of management responsibility, which could mean as little as joining a conference call once a month, you can be eligible for subsidies, as can your spouse and all your family members.

Farm policy should focus limited benefits on farmers who truly need them as a result of real, unforeseen economic challenges — it should provide a true safety net. It should prioritize the needs of both farmers and taxpayers. Making farm owners’ cousins, nieces, nephews, and spouses eligible for farm subsidies takes “safety net” to a whole new level. It’s more of a “friends and family” benefit plan.

And that’s far from the only problem with this bill. Instead of forcing the legislation through at the last possible second, Congress should tear it up and start over next year.

Farm bills are often touted as a way to nurture small businesses, protect “the little guy,” and save family farms, but the reality is quite different. A 2017 Congressional Research Service report found that “farms with market revenue equal to or greater than $250,000 accounted for 12 percent of farm households, but received 60 percent of federal farm program payments.” Other research by Vincent Smith at the American Enterprise Institute found that the smallest 80 percent of farms received just 10 percent of all subsidies.

This year’s bill, like its predecessors, is a huge jumble of subsidies and other programs, such as quotas and price setting, that dole out welfare to corporate agricultural interests. It creates barriers for new farmers, wastes resources, and creates risk for farmers and taxpayers alike.

The bill leaves intact numerous harmful policies, including programs designed to shield the U.S. sugar industry from competition, which help keep U.S. sugar prices double those of the rest of the world. This hurts consumers and sugar-using businesses alike.

And when it comes to reining in cronyism and abuse, the final bill actually worsens the status quo. It would expand two expensive new programs from the 2014 farm bill: Agriculture Risk Coverage and Price Loss Coverage. ARC covers farmers for revenue losses, while PLC covers them for low prices. Under the 2014 bill, farmers had to choose one or the other. But this bill would let them go back and forth each year to maximize their subsidies.

But the most expensive part of the bill is the Supplemental Nutrition Assistance Program, better known as food stamps. The House bill this year included reasonable changes to SNAP that put recipients on a path to work and self-sufficiency through work requirements, while focusing resources on those who need them most. Yet all these reforms were rejected in the Senate and in the final version of the bill.

For its part, the Senate version contained some modest reforms as well. It reduced eligibility for farm subsidies from the current $900,000 income level ($1.8 million for farm couples) to a still-generous $700,000 ($1.4 million for farm couples). It also contained the commonsense amendment, championed by Senator Chuck Grassley (R., Iowa), that would have closed the loophole that allows farmers to designate an unlimited number of “farm managers” to collect subsidies. Unbelievably, these reforms were rejected during the conference committee’s closed-door proceedings.

A better farm bill would rein in corporate welfare and move to a tightly targeted safety net for farmers in truly unforeseen economic challenges. The livestock and specialty-crop (fruits and vegetables) industries don’t get the same kind of support that farmers handling other crops do, and we aren’t lacking for their products at affordable prices.

When asked what would happen if crop subsidies were significantly reduced, Bob Stallman, former Farm Bureau president, told the Washington Post: “Within about five years you’d have a restructuring, including reduced acres of heavily subsidized crops. And farms would get more efficient — and larger. We would not have a national security crisis or a lack of food.” This is exactly what New Zealand did in the 1980s, and its agriculture industry flourished as a result.

If Washington really wanted to help, it would work to end the tariffs that have wreaked havoc on farmers and their export markets. Farmers would far prefer to have trade than the billions in aid now being doled out by the U.S. Department of Agriculture.

This farm bill represents everything that is wrong with Washington. Congress should take a mulligan.

— Caroline Kitchens is a policy analyst and director of federal-government affairs at the R Street Institute. Alison Acosta Winters is a senior policy fellow at Americans for Prosperity.

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