Sunday, December 09, 2007

A rope-a-dope farm bill strategy...

Editorials continue to be scribbled inveighing against the farm bill, using pretty much identical arguments that have not gained much traction with Congress.
There was a time when farmers were in real trouble. In 1985, Neil Young, Willie Nelson and others started the Farm Aid concerts in the U.S. Midwest to help farmers who were about to lose their land to surly creditors (the concerts are still held). In Europe, farmers seem to have had second careers as protesters. Americans, Canadians and Europeans grew fat on cheap food. Today, with prices moving up at double-digit rates across the board, it makes no more sense to subsidize farmers than it does to subsidize oil producers. On both sides of the Atlantic, agriculture reform has been more myth than reality. Yes, farm subsidies as a percentage of farm income has come down by a small amount. But the drop has been offset many times by the rise in prices. If there were any time to get serious about weaning the farmer off the taxpayer teat, it's now. [More - note the interesting comments from Canadian producers who also seem to presume now to be absolutely entitled to government aid]

Consider the situation in California and two Senators who between them probably represent more people than the entire Corn Belt. Fruit and vegetable growers were easily bought off with their first taste of federal money, an especially popular idea with organization staff, since the money would go to "programs" [read: careers] as opposed to a DCP to an actual farmer.
The produce industry takes no position on payment limits but staunchly opposes the Lugar-Lautenberg proposal because by ending current farm programs, it would also end a ban on planting fruits and vegetables on land now used to grow subsidized crops. "We believe what we've gotten from the House and Senate is what's best for our industry," Nassif said. "It's in line with what we want, and it more clearly reflects the economic interests of our industry." Boxer said earlier this week that she is analyzing how amendments "impact our state, what does it mean to our specialty crops, what does it mean to our consumers? So I will vote for as much reform as I feel helps our consumers and the state."

Reformers might want more. "The Senate has an opportunity and a duty to the country to adopt policies that are in the national interest," said Rick Swartz , who is coordinating the coalition of groups fighting the crop subsidies. "These include reforming subsidy programs to provide a much more equitable safety net while saving taxpayer dollars and creating opportunities to reinvest some of thos
e savings to conservation, nutrition and other priorities with no new taxes, no budget gimmicks and no long-term unexpected costs." [More]
But perhaps the most ironic tragedy of this sputtering reform movement is the timing. As food prices soar, the grocery shopper is going to start asking some harder questions about what exactly these billions in subsidies are doing for her.

With agflation, policy has reached a new level of self-parody. Take America's supposedly verdant ethanol subsidies. It is not just that they are supporting a relatively dirty version of ethanol (far better to import Brazil's sugar-based liquor); they are also offsetting older grain subsidies that lowered prices by encouraging overproduction. Intervention multiplies like lies. Now countries such as Russia and Venezuela have imposed price controls—an aid to consumers—to offset America's aid to ethanol producers. Meanwhile, high grain prices are persuading people to clear forests to plant more maize.

Dearer food is a chance to break this dizzying cycle. Higher market prices make it possible to reduce subsidies without hurting incomes. A farm bill is now going through America's Congress. The European Union has promised a root-and-branch review (not yet reform) of its farm-support scheme. The reforms of the past few decades have, in fact, grappled with the rich world's farm programmes—but only timidly. Now comes the chance for politicians to show that they are serious when they say they want to put agriculture right.

Cutting rich-world subsidies and trade barriers would help taxpayers; it could revive the stalled Doha round of world trade talks, boosting the world economy; and, most important, it would directly help many of the world's poor. In terms of economic policy, it is hard to think of a greater good. [More]

Another year of food inflation at increased rates could add strength to the reform movement all over the globe. So here's what this farmer wants for Christmas:

A presidential veto of the congressional reform-failure product, and an extension of the 2002 bill setting a lower baseline, hurting food stamp recipients enough to peel them off from the farm bill to their own legislative vehicle, further exposure of our policy to WTO rulings, and consumers getting angrier by the shopping trip. Meanwhile, grain producers reap record income while pushing the livestock sector into the reform camp. And Congress would be campaigning the whole time.

A 2008 bill would be a different breed of cat altogether.

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