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Will We Ever Have a Free Market Farm Bill?


Posted by Kelly William Cobb on Wednesday, May 9th, 2012, 2:37 PM PERMALINK


This week, the House will vote to slash Agriculture spending by $33.7 billion. This presents a huge opportunity to reform agriculture in a free-market direction, yet it’s an opportunity being squandered by Congress.

For one thing, Sen. Debbie Stabenow (D-Mich.), who chairs the Senate Agriculture Committee, is pushing a Farm Bill that reportedly contains only $24.7 billion in spending cuts. Yet not all farm programs are treated equal and some don’t even rely on direct payments to farmers at all. The most market distorting programs rely on a convoluted system of supply management and price control programs, where government buys products off the market, makes loans to farmers with their crop as collateral, and sets tariffs and other mechanisms so that food is significantly more expensive than it would otherwise be in a free market.

A couple examples: the government employs all three types of these programs just for sugar, keeping it nearly twice the world price. The reforms proposed by Stabenow to dairy programs would effectively tax farmers when prices drop, then use that money to buy the farmers’ own products back off the market, effectively guaranteeing them an income while consumer prices stay high. Taxpayers don’t directly see the cost from these programs in their tax bill, but find that it’s built into the price of their food.

It's with these market distorting programs that Sen. Stabenow’s Farm Bill doubles down on more of the same. While cutting direct payment programs, it generally replaces them with government crop insurance. This is just as distortionary a system that will be even harder to fix. Not only does it hide the cost of the programs from taxpayers – who won’t be able to see how much farmers are directly subsidized – but it keeps Americans oblivious to the extra cost built into food thanks to government involvement. The result: farmers continue to earn about twice that of the average American family, while some American families struggle just to put food on the table due to high prices.

For this reason, Americans for Tax Reform joined 10 other taxpayer and free-market groups calling on Congress to dramatically slash agriculture spending and also reduce government's role in artificially and unethically keeping food prices high. See below or click here for a copy of the letter.

Dear Representative:

On behalf of the millions of members represented by our organizations, we write urging you to support efforts to cut Washington’s outsized and outdated role in American agriculture.

Farm businesses are a testament to the skill, ingenuity, and persistence of Americans. While many sectors continue to feel the effects of the recession, American agriculture is one of the few bright spots in the economy. Net farm income is at $98 billion, nearly doubling between 2001 and 2011. Farm businesses exported nearly $140 billion worth of products, exceeding imports of agricultural products by more than $37 billion. And it’s estimated that one out of every 12 jobs is connected to agriculture.

With the Farm Bill reauthorization in progress, Congress must take this opportunity to reassess unnecessary and complicated federal policies that manipulate market decisions in this critical and vibrant component of our economy.

We believe the nearly $30 billion reduction in federal spending on agriculture agreed to in the House Budget Resolution should be the minimum reduction in the Farm Bill. Eliminating direct payments, as the resolution suggests, is long overdue. Making meaningful reforms to the largest Washington-based support for agriculture, federally subsidized crop insurance, is also a must. The Congressional Budget Office estimates this program—which provided $2.2 million in subsidies for just one agricultural producer’s insurance premiums in 2011—will cost more than $90 billion over the next ten years.

Also, we believe Congress must not create any new potentially budget-busting entitlement programs that would increase Washington’s role in farm business decisions, such as efforts to put taxpayers on the hook for “shallow losses” in annual farm business revenue. And Congress should not use the Farm Bill to undo the responsible cuts to biofuels programs the House achieved in last year’s minibus appropriations bill.

America’s agricultural economy is strong. This strength and the glaring weakness of the federal budget—$15 trillion in debt and trillion dollar deficits projected for the next decade—make it essential that Washington’s role in agricultural policy be reformed. The House of Representatives must lead a full and open legislative debate on Farm Bill reauthorization. For more information, please contact Joshua Sewell of Taxpayers for Common Sense at 202-546-8500 x116, or josh@taxpayer.net.

Sincerely,

American Commitment
Americans for Prosperity
Americans for Tax Reform
Council for Citizens Against Government Waste 
Competitive Enterprise Institute
FreedomWorks
The Heartland Institute
Heritage Action for America
National Taxpayers Union
Taxpayers for Common Sense
Taxpayers Protection Alliance

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