Thursday, September 07, 2006

And we're off...

The Great Farm Bill Debate (Version 200.7) is truly underway. It is attracting comment around the world as a rare confluence of cosmic forces could signal something might actually change.
  • The administration has not just signaled - it has defined a sharp change in mood about how subsidies should be forked out to farmers. The big question here is if pundits are right about a shift in the political makeup of the House and Pres. Bush's poll numbers don't improve - why would any Congressperson pay any attention to the White House? Already, you can almost hear the sound of one lame duck quacking.
  • International trading partners smell a hint of reform possibility in the air as well.
Add to these farm lobbies a cacophony of environmentalists, nutritionists and others, and it is unclear what will come out of the legislative sausage machine. The smart money is on more emphasis on alternative energy and the environment, more subsidies for conservation and less money for trade-distorting crop support. Since wheat, corn and soyabean farmers
can jump on the energy bandwagon, the real losers may be rice and cotton
From a trade perspective, the new farm bill could be a modest
improvement. America may well be heading for more green subsidies and fewer
trade-distorting ones. But despite Washington's budget crunch, few expect Uncle Sam's generosity to farmers to abate much.

But with our US popularity at abysmal levels I think most politicos would be shocked if our global neighbors approved of anything we do, so why bother?

  • Farmers themselves are pausing in mid-seduction by the Fair Ethanol to opine that perhaps a "insurance" scheme might work better. The secret here is not to be in front of this idea. Yikes - you get arrows from both directions!
  • Some of the LDP-wannahaves are finally getting up the gumption to fight for a piece of the action. This is a political jewel, I think. Congress can still deliver the same $20 bil or so, just spread the fiscal peanut butter over a whole lot more bread.
  • A split Congress (hey - it could happen!) might just mean sterner fiscal discipline among Republicans as they try to re-energize their disaffected [economic] conservative base. Farm programs will be in the cross hairs, as the number of voters affected is relatively small.

Right now it looks like the traditional solidarity of farm groups could be lost in the scuffle to push rice and cotton under the bus - or at least be looking somewhere else while WTO does the dirty work. [See also NAFTA; sugar program; 2008]

Of course, the really important thing to remember is it is never over. Regardless of the shape of the new Farm Bill and even the amounts involved, farmers will be back in Washington the next day for a disaster/supplemental/emergency payment. And very likely get it (although it has proved to be tougher going than many suspected this year). But payments likely will not get smaller.

One thing we can count on, I believe is dire predictions of the consequences for farmers.

Which makes me wonder all the more why cash rents are going up. Maybe farmers have decided the world won't end either way.

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