Jun 01 2012
So Much Ag, So Little Food. Understanding the Farm Bill
Despite its innocuous name, the Farm Bill is a beast of legislation. Every five to seven years, Congress drafts, debates, and passes this collection of laws that covers nearly everything relating to food. Food stamps and nutrition, commodity crops, trade and foreign food aid, conservation and water supply, food safety and marketing, and energy policy are all addressed within the pages of the Farm Bill.
The last time the Farm Bill was up for discussion and reauthorization--2008--I didn't know of its existence. The bill was debated and passed and I don't remember hearing anything about it. Not only was I ignorant of the bill (and I was listening to NPR everyday during my commute!), news of the Farm Bill's passing was so far from the mainstream that I wasn't even aware of my ignorance.
Skip to 2012, and the Farm Bill is once again in the process of reauthorization. I'm aware of the process this time around because I read about food issues and policy daily. But even as someone who is constantly keeping up on food politics, I needed a week of studying and research to even begin to understand the bill and its multi-faceted components. While the Farm Bill reauthorization is not an easy process to understand, it's one of the most important pieces of legislation in the country due to its broad impact on our nation's food supply, and even the world's food supply.
Why does one law have such far-reaching consequences? As Daniel Imhoff writes in "Food Fight: A Citizen's Guide to a Food and Farm Bill":
Congress finds it advantageous to combine many of these laws [food stamps, nutrition, food safety, conservation, etc] into a single, large-scale reauthorization of multiple statutes at the same time they renew the farm commodity programs. That way, the omnibus [legislation that addresses multiple issues simultaneously] makes us oblivious: it's nearly impossible for any single person to really understand the full extent of what the Farm Bill actually covers.
If I weren't reading about food daily, the 2012 Farm Bill might have passed much like the 2008 bill--without my even thinking about it. It's incredibly easy to ignore the reauthorization of the Farm Bill:
* It's complicated
* It's tedious
* It's hidden (debates are behind closed doors)
* It changes gears at the last minute, when things get added on or removed
* It's beyond my control
This last point is what I've most struggled with in trying to understand the Farm Bill. The Farm Bill sets the tone for food policy, commodity subsidies, food aid, and conservation, but with each passing version, aspects of the United States' food system become engrained, and thus harder to modify, and the resulting economic and environmental effects continue to pile up. As a citizen, I can sign petitions asking for funding for conservation programs, calling for a change in subsidy distribution, or advocating for expanded market access for smaller farms: I can do my small part, but after reading about the bill, it's evident that when the Farm Bill process begins, it's potentially on a course that's hard to alter.
The Farm Bill contains specific legislation on everything from crop production to energy to food aid (including SNAP). But despite the fact that it performs such vital functions as regulating school lunch, setting the rules that determine meat production, and determining which crops the government will support, the Farm Bill has virtually no input from citizens.
The Bill can trace its history to 1933 and the passing of the Agricultural Adjustment Act. A cornerstone of the New Deal, this law was created to address the environmental and economic devastation of the "Dust Bowl", focusing on issues of soil erosion, plummeting commodity prices, national hunger, and lack of farmer credit. The heart of the 1933 bill was the "Ever Normal Granary" system. Through this system, the government would purchase and stockpile surplus crop and livestock during "good" years. Farmers were required to idle a certain percent of acreage, and were told to sell their product at the market's target price. When the market dropped below the target price, farmers could take a loan from the government and store their grain until the price rose. When the price rose, they could either sell the stored crop and pay back the loan, or keep the money and give the government the corn.
This system worked for several decades, but unraveled in the 1950s, coinciding with America's rapid suburbanization after World War II. The technological and industrial capacities developed during wartime were quickly adopted by the agricultural system. Traditional farms found that they had no advocates, which opened the door for agribusiness to dominate farming and its legislation. USDA secretary Earl Butz advocated an "adapt or die" mentality, encouraging farmers to plant fencerow to fencerow. Wetlands were drained and progress began to be measured by yield only, not stewardship or sustainability.
By the 1980s, companies like Cargill and ADM had captured a disproportionate amount of control over the Farm Bill, with a goal of ensuring a steady supply of commodity crops that they could trade and process. Today, the environmental protection and small farmer relief of the 1933 Agricultural Adjustment Act have been long forgotten.
The Farm Bill being debated now has two major components, with each component capturing around 75-80% of the Farm Bill's total spending: food stamps and nutrition (an astonishing 60% of the budget), and income and price supports for commodity crops. While the Farm Bill funds other titles that include trade and foreign food aid, conservation and the environment, and food marketing and safety, these other aspects of the country's agricultural policy amount to less than 20% of the Farm Bill's spending.
Of the $112 billion taxpayer dollars spent on commodity subsidies between 1995 and 2004, more than 80% went to the production of five crops, the so-called "big five": corn, wheat, cotton, rice, and soy. Half of that money went to the seven states that produce most of those commodities. What's more, the richest 10% of farm-subsidy recipients (including corporations) took in 2/3rds of those payments!
If farm payments were based on states' overall agricultural contribution rather than the big five commodity groups, the benefits of the Bill would be more equal distributed among all the states.
How do subsidies work?
Direct payment subsidies for commodity crops were established in 1996. The direct subsidies were supposed to phase out all traditional subsidies and create “market transition” payments to ease into a subsidy-free farm system.
These subsidies are doled out based on production, regardless of commodity prices, and are provided without regard to the economic need of the recipients or the financial condition of the farm economy. These direct subsidies are tied to “base acres,” the average number of acres and average yield of a certain crop that a farmer had planted in the 1981-1985 seasons. These fixed checks go out every year to the largest growers of commodity crops whether farmers need them or not. The more acres of commodity crops you farm, the more subsidies you can collect.
As an added twist, farmers who have base acres in corn do not need to grow corn on that land in order to receive the payments – in fact, they don’t have to plant anything at all.
Ironically, direct payments were originally meant to wean farmers off traditional subsidies that are triggered during periods of low prices of the Big Five commodities. The extent of the new system's failure is easily captured in a single number: between 1995-2010, corn growers received $77,123,770,222.
According to 2007 data, as many as 62% of American farmers don't receive any subsidies at all. While the government intended direct subsidies to remove incentives dictating what acres to plant, in reality this planting flexibility was specifically slated towards the big commodity crops. If a corn farmer decided to stop planting corn and plant wheat, he'd still receive a subsidy, but if he stopped planting wheat and planted strawberries, he'd stop receiving direct payments.
Subsidized crop producers are not allowed to rotate to fruits and vegetables because of concern that producers with a protected base would shift to growing non-program crops (including fruits and vegetables) during periods of high prices. The entrance of these large producers into new markets would drive down prices and negatively impact farmers who rely solely on these fruits and vegetables for their livelihoods.
A hidden benefit of direct subsidies is that farm subsidy recipients are required to comply with certain environmental regulations in exchange for payments. While this stipulation has led to some improvements in conservation, it's worth mentioning that the law has only been marginally enforced.
Direct subsidies are being retired with the current Farm Bill. In fact, they're already on the cutting room floor. Instead of direct payment subsidies, the crop insurance subsidy program will be expanded. As Twilight Greenaway, food editor at Grist, points out, this change is not necessarily something to cheer for. Rather, it's just "shifting rhetoric".
While “crop insurance” sounds fairly innocent, Greenaway cautions that the term is being stretched beyond its traditional meaning. Some crop insurance does cover disaster relief, but the latest form also “insures” (mostly large) farms against revenue loss. Even a 5% revenue loss will be made up for with taxpayer dollars. Under the federal crop insurance program, farmers can buy insurance policies that cover poor yields, declines in prices, or both. In addition, crop insurance subsidies are not tied to conservation efforts.
As The Atlantic's Gabriel Silverman details, crop insurance used to be delivered through the government, but was shifted to the private sector in 1980 to boost farmer participation. It's now administered through 15 private companies, but is heavily subsidized by public funds. The government pays the insurance companies more than 75 percent of their operating costs to offer the program, and taxpayers cover about 60 percent of farmers' premium costs. As of now, crop insurance payments have no cap, so farmers can get millions in subsidies regardless of their income. There is a current proposal by the Government Accountability Office (GAO) to cap crop insurance premium subsidies at $40,000 per individual producer.
Professor Bruce Babcock of Iowa State University recently wrote an article highlighting the current inefficiencies in the crop insurance system, and argues that Congress should move to replace the system of premium insurance with a free yield protection program. This program could be a core safety net every farmer could have, covering 70% of average crop yield, where producers are compensated at 100% of a crop's market price. The policy would cover all of an insured crop, rather than field by field, in order to reduce incentives to farm on high risk terrain. He concludes that this system would save taxpayers $5 billion, along with the $50 billion saved from ending direct payment subsidies.
Because crop insurance policies operate on a per crop basis, smaller, diverse farms are frequently uninsured. Enrollment in insurance programs can mean these farms must complete dozens of applications.
Organic insurance plans also impose a 5% surcharge and compensation for losses is based on conventional market prices. As a result, many of these farms operate without any insurance.
According to Ferd Hoefner, the policy director of the National Sustainable Agriculture Coalition, the switch to revenue insurance will "further reduce the risk of putting the pedal to the metal on commodity production, [with] no incentive whatsoever to diversify crops or leave any ground unplanted."
Our food aid program doesn't just provide aid within the US, it also provides half of the emergency food aid worldwide. Food aid is administered under the USDA and USAID. Decisions on nearly 90 percent of food aid spending are set by the Farm Bill.
We currently send food around the globe instead of buying it from farmers in the region in need. Shipping food from the US to other countries costs much more than purchasing it locally. In fact, 65% of our food aid budget is consumed by shipping costs--and it takes 2-3 months longer to arrive than if it were purchased locally.
A pilot program in 2008 to purchase food aid locally found that delivery time was cut by 62% and costs were 54% lower. Another alternative would be to ship and store food aid ahead of time in at-risk areas.
Strengthening local markets and infrastructure allows for long term food security and gives more options for fast food aid. Unfortunately, food aid reform is a slippery slope. There's fear that criticism of the current food aid system will lead to its elimination rather than reform.
Existing Farm Bill programs are designed primarily for commodity production in the form of subsidies, research, crop insurance and other risk-management programs. These programs are not available to small and mid-sized growers of fruit and vegetables and other “specialty" crops.
The desire for local, transparent food increases each year. The Institute for Agriculture and Trade Policy reports that local food sales in 2007 were $5 billion. There are now over 5,000 farmers markets nationwide and 2,500 CSA programs.
The Farm Bill could create and enact policy changes that would level the playing field, including farm insurance products for diversified farms and appropriately scaled processing and distribution infrastructure. But small and mid-sized farmers simply don't have the lobbying power of their commodity-growing counterparts, and miss out on the Bill's benefits.
Currently, the "Know your Farmer, Know your Food" programs amount to about $175 million per year—less than 1 percent of the non-food stamps portion of the Farm Bill.
As citizens, we pay for our current Farm Bill three times: during checkout at the grocery store, through taxes, and in environmental and medical costs.
The United States is quickly edging toward becoming a net importer of food. Agriculture only accounts for 2% of our GDP. Frankly, as we face water contamination, toxic air emissions, soil loss, human health crises, and biodiversity loss, we need to pay for change now, or we'll pay to fix the damage later.
The Farm Bill can serve as an economic engine that drives research, species protection, and a healthy food system. It should be easy to find at least a small personal stake, whether you care about the obesity crisis, our health care system, environmental degradation, food insecurity, or the ongoing corporatization of the economy.
I thought I'd study the Farm Bill and end with a clear answer on next steps and ways to have a larger impact on food issuese. Instead, I'm coming away with information. As an individual citizen in a global economy, I may not be able to influence policy--that realm is owned by lobbyists and corporations--but I can remain informed.
There's a theme I've noticed in recent books from authors like Nick Harkaway, Jennifer Egan, and Paolo Bacigalupi: the Accidental Destruction of the World through Global Apathy. An average citizen doesn't wake up one morning with a goal to pollute the waterways, promote consolidation of industry, contribute to rising health care costs, or keep third world countries impoverished. But passivity--letting only a few decide for us all, not understanding how our lives operate from a global perspective, putting temporary hunger ahead of concern over where food comes from--is what we can fight against.
An individual's power comes from his or her everyday choices and knowledge. Your choices influence the decisions of those around you--especially if those choices are informed, reasoned, and shared. I'm not going to be testifying to Congress about the plight of the family farmer. But I can continue to support the family farmer in my daily decisions and learning, until the evidence is overwhelming that polycultural, organic, grass-based farming is how we must farm. I can make informed choices in ways I can control: what I eat, where I buy food, how I limit my daily impact on the world's resources. Corporations like Monsanto and Nestle and Archer Daniels Midland exist. But--I don't have to support them. This is my choice.
Imhoff, Daniel. Food Fight: The Citizen's Guide to a Food and Farm Bill
Babcock, Bruce. Giving it Away: Free Crop Insurance Can Save Money and Strengthen the Farm Safety Net
Walsh, Dylan. Big Risks for Uninsured Farmers
Institute for Agriculture and Trade Policy: Farm Bill 2012
Philpott, Tom. The Worst Farm Bill Ever?
Abbott, Charles. Senate Committee Votes to End Direct Farm Subsidies
Silverman, Gabriel. Direct Subsidies Could be Finished, But...
Nixon, Ron. Report Says a Crop Subsidy Cap Could Save Billions
Farmgate. Should Conservation Compliance be Linked to Crop Insurance?
Laskawy, Tom. Corn, Corn Everywhere
Environmental Working Group. Farm Subsidy Primer
Environmental Working Group. Crop Insurance Primer
Condra, Alli. Growing Crops with Conservation and Food Safety in Mind.
Condra, Alli. Why Fruits, Vegetables are Excluded from Farm Subsidies.
Masterson, Kathleen. Round and Round We Go.
Butkowski, Anna. Understanding the Farm Bill