Farm Bill Primer

Brad’s Farm Justice Primer

Farm Bill 101

INTRODUCTION

In simple terms there are two main parts to the farmer parts of the Farm Bill, plus the food subsidy portion, where the two parts have different locations.

SCROLL DOWN TO SEE LINKS TO ONLINE ARTICLES from various organixations and academics  that explain the Farm Bill.  Topics include:  Why We Need a Farm Bill and “What is the Farm Bill,” plus explainations of various Farm Bill issues.

Price Floor Programs  (with Supply Reductions, as Needed)

The first and most important part of the Farm Bill, historically and for purposes of Farm Bill reform, is Market Management, and the most important of these are Price Floor programs.  Market Management is similar to Minumum Wage and Living Wage.  It’s a standard, not a government check.  On the bottom side of price, to prevent prices from falling to low, are Price Floors, (again, similar to minimum wage).

These were the main tools of the original Farm Bill, and were needed because free markets don’t work very well at all for agriculture, and haven’t for 150 years.  Supply and Demand don’t automatically balance out or self-correct with an “invisible hand”  in a timely manner.  As a result, farm prices are too low, below the cost of production, most of the time.  From 1942-1952 Congress set Price Floor levels at 90% of Parity.  Parity is the traditional standard of fair farm prices, and is similar to a “living wage” standard for farm prices.

Agribusiness buyers, such as grain buyers, lobbied against Price Floors, and Congress then lowered them down and down, from 1953-1995, and then eliminated them in 1996.  These corporate buyers had repeated record profits and returns on equity at times over this period, as farmers increasingly lost money.  As a result of these political changes by Congress, on behalf of agribusiness, most farmers went out of business.  By reducing and ending these program, the United States as a whole, the dominant farm exporter, has chosen to lose money per unit on major farm exports for decades.  Farm States have been the big losers in these changes.

The crops featured in the main programs are feed and food grains, oilseeds and cotton.  These are grown on most of the cropland.  Sugarcane and sugarbeets have similar programs, and these still exist, though Price Floors are set extremely low.  Dairy has also had Price Floor programs, and these too have been ended.  Fruits and vegetables have less direct programs, through Market Orders, (similar to dairy,) and these too have been allowed to deteriorate, resulting in cheaper and cheaper market prices over the years.

To make Price Floors work well, Congress balanced supply and demand, which usually means reducing supplies to prevent oversupply, which drives down market prices.

Price Ceiling Programs  (With Reserve Supplies, as Needed)

Unlike the Minimum Wage and Living Wage, the Farm Bill also had Price Ceilings, maximum price levels.  These protect consumers, livestock interests and industry.  Originally these were set above parity.

Price Ceilings are tied to Reserve Supplies which can be placed on the market if prices start  to go too high.

Price Ceilings and Reserve Supply programs were also ended in 1996, under pressure from mega-corporate agribusiness.

Farm Subsidies (Explained in Context)

After lowering farm prices for 8 years, from 1953-1960, Congress chose to have the government write checks to farmers to compensate them for a part of the continuing free market failures, even as they further lowered Price Floors.  These government subsidies started in 1961.  At all times during the history of subsidy payments, Congress could have maintained higher Price Floors, (for higher market prices, paid by agribusiness to farmers,) and had no subsidies.  Farmers are always better off if their income comes from the market place, rather than from subsidies, and a majority of farmers has always supported fair prices instead of subsidies.

Over the years, subsidies have served as an ideological cover for massive agribusiness benefits.  Subsidies to farmers are visible, so farmers are believed to be “supported” by the Farm Bill, even as most farmers have been run out of business by the reducing and eliminating of Price Floor programs.  The benefits to agribusiness are much larger than farm subsidies, perhaps 8 times larger, (leaving farmers with a 7/8 net reduction, in receiving $1 in subsidies for each $8 in reductions).  Agribusiness benefits come from free market failures, and don’t show up in farm bill spending, such as on farm subsidies.

LINKS:  FARM JUSTICE PRIMER

What’s the Farm Bill?

“What’s the Farm Bill:”  https://www.lexiconoffood.com/post/whats-farm-bill

“The Hidden Farm Bill:”  http://www.slideshare.net/bradwilson581525/the-hidden-farm-bill-37959389

It’s NOT a “Clever Money Delivery System:”  http://agpolicy.org/weekcol/334.html

Why do we need a Farm Bill?

Because of the “Lack of Price Responsiveness:”  http://agpolicy.org/weekcol/268.html

Which is a chronic problem:  http://agpolicy.org/weekcol/325.html

Because free markets fail:  “Policy premise correct three times a century:” http://agpolicy.org/weekcol/268.html

What are the best online booklets on these issues?

History:  Mark Ritchie & Kevin Ristau, Crisis by Design:  A Brief Review of US Farm Policyhttp://www.iatp.org/search/node/%22Crisis%20by%20Design%22%20%22A%20Brief%20review%20of%20US%20Farm%20Policy%22

Daryll E. Ray, et al, Rethinking U.S. Agricultural Policy, http://agpolicy.org/blueprint.html

What Proposals are available to Restore the Farm Bill?

Fact Sheet:  https://zcomm.org/zblogs/fact-sheet-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson/

Primer: https://zcomm.org/zblogs/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson/

National Family Farm Coalition:  http://nffc.net/index.php/domestic-farm-and-food-policy/

Many more links in my “Farm Justice Primer” at ZSpace:  https://zcomm.org/zblogs/farm-justice-primer-a-farm-bill-primer/

 

 

 

 

 

 

 

 

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