The Farm Bill

2012: The Food Bill Comes to the Table

The main avenues for taxpayer dollars to reach food producers are through the “Farm Bill” which in 2008 was called the Food, Conservation, and Energy Act. The package of U.S. policy known as “the Farm Bill”, which we shall call the Food Bill because it is far more appropriate, has a lot to do with what we eat, what we pay for it, and how our soil and water resources are treated to produce it.

America needs farmers. The quality and safety of our food supply depends entirely on our access to U.S. grown food- the more local the better. How can we create a Farm Bill that works for good food and farmers?

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The Farm Bill: How Tax Money Gets to Farmers

The Food Bill contains more than a dozen “titles” or packages of legislation. Here are a few of the mechanisms now in the legislation that deliver taxpayer dollars to food producers and how they affect our food:

The Commodity Title, which sets price “floors” and price “targets” for certain crops- mainly corn, wheat, rice, cotton, and soybeans. In recent years, with grain prices like $7 per bushel corn, these floor and target payments have hardly been made. Should crop prices drop, for instance in the case of corn to less than $2 or $3 per bushel, these may regain their prominence. Until then, few taxpayer dollars are traveling this route.

The Commodity Title also contains a “Direct Payment” program in which farmers get a payment based on the crop history and historic yield of the land for commodity crops. This program was created in 1996 as a tool to wean farmers from commodity payments. It has failed. It is now considered a “money for nothing” payment. The program does, however, increase the value of cropland - becoming a bankable asset, and includes penalties for landowners seeking to grow fruit and vegetable crops on land that has historically grown commodity crops.

Conservation Title Programs that compensate farmers for farming practices and acreage set aside to provide soil quality, water quality, or wildlife benefits. Farmers who otherwise might harm wetlands, riparian zones, hillsides or other erodible land can be eligible for a payment that keeps those less than ideal lands out of production and allows them to provide ecological services like flood storage, water quality improvement, and habitat. The payments can be made through cost share programs, where the landowner pays 25%-50% of the cost of an ecological practice such as buffer strips, terraces, cattle fencing, livestock watering systems (to keep cows out of streams), or food plots for wildlife. Other conservation payments can be in the form of easement payments, land rental payments, or payments tied to the level of conservation services a farming operation provides. These provide a win-win for farmers and taxpayers because they help keep soil from eroding, keep farm chemicals and fertilizer out of waterways, and provide habitat for wildlife.

Unfortunately, conservation programs are usually the first programs to get cut, despite their record of success. One such program, the Environmental Quality Incentive Program, is exploited by factory farms in order to wrangle taxpayer money to construct manure handling infrastructure like expensive waste lagoons or waste application equipment. Despite this black mark, the Conservation Title has delivered for taxpayers.

Crop Insurance Title, which subsidizes 16 insurance companies to offer crop insurance to farmers while also subsidizing farmer’s premiums for those policies. The commodity crop farmers benefit most from crop insurance because the policies are most practical for industrialized, monoculture farming. It is a defect that good policies are not yet practical for organic, diversified, sustainable farming operations. Typically, an organic soybean farmer who suffers a crop loss to drought, flood or pests, can only insure the value of the non-organic soybeans, despite the premium price organic soybeans get in the market. A Community Supported Agriculture farm growing many crops for the market would find it impractical and prohibitively expensive to take out dozens of policies on each type of food grown.

Crop insurance that minimizes risk helps encourage farming. Then there’s another kind of insurance called “revenue insurance” which goes beyond reducing the risk of farming and makes sure it pays.

With revenue insurance farmers take out policies (subsidized) to insure a certain per bushel price for their crop. Before spring planting, a corn farmer can insure his harvest at his preferred level of a $6.01 per bushel price guarantee that will be assumed for his typical recorded yield--for instance, 150 bushels per acre on designated acreage. If the harvest prices for corn drop below the guaranteed price per bushel, the farmer collects the difference. With revenue insurance, no disaster need befall the farmer. In fact, farmers with a record harvest can still collect since they are insuring a high price, not just a crop failure. Predictably, revenue insurance is popular with farmers of commodity crops. Its cost to taxpayers is escalating at an astonishing rate. Revenue insurance is now the major avenue for farms to receive taxpayer support, dwarfing price supports. Subsidizing risk serves to encourage risk-taking, and in agriculture that reality is evident when farmers begin to cultivate remaining native and sensitive lands with a low probability for a good crop, but a high probability of an insurance payment.