Economist offers farm bill views
Dec 6, 2006 12:00 PM, By Jim Langcuster Alabama Cooperative Extension System
In an era of fiscal austerity and mounting criticism of U.S. farm subsidies by developing countries, the conventional arguments often marshaled to defend current farm policy are wearing thin, according to one farm policy expert.
As a matter of fact, he believes farmers who are lobbying Congress to preserve the status quo in the new farm bill should be certain of one thing — this effort cannot be defended on the basis of “paying welfare to millionaires” and “paying farmers not to produce.”
“We won't win that debate, I promise you,” says Robert Goodman, an Alabama Cooperative Extension System economist and Auburn University associate professor of agricultural economics.
Instead, Goodman says, farmers should work with policymakers to develop new policies that reward them for producing crops in an “environmentally responsible and sustainable fashion,” rather than for merely letting cropland stand idle year after year.
To generate discussion about the upcoming farm bill debate, Goodman prepared a list of changes he personally would like to see incorporated in the legislation.
One issue that has been repeated by many farmers is the need to tie crop bases to farmers rather than to landlords. In the past, administrators of federal farm programs have found it more convenient in terms of recordkeeping to base these holdings on the landlord rather than on individual farmers. But as Goodman stresses, times are changing.
“Technology has made it possible to keep up with almost anything, and, aside from that, there aren't as many farmers today,” he says.
One other frequent criticism of the current system is that most farm payments seem to end up with the landowner — a problem that has made farm programs increasingly vulnerable to criticism. There is some truth in the argument, Goodman says. For example, when fixed payments were enacted, cropland rent in many areas of Alabama increased by the same amount as the fixed payment, he says.
In the view of many farmers, he says, “these payments get capitalized into the value of cropland and make it so expensive that few of them can afford to own their own land.”
To address this longstanding criticism, Goodman believes the criteria for cropland base in the new farm bill should be calculated from a 10-year rolling average of acreage actually planted by the farmer.
“It's never a good thing when farmers can't afford to own their own land,” says Goodman, who believes that “most government payments should be invisible to the landlord.”
Goodman is hopeful the upcoming farm bill will place heavy emphasis on conservation provisions. One option, he says, would be a conservation base acreage, including a provision that rewards farmers who incorporate conservation practices on this acreage, though he stresses that most of these payments should be tied to production.
He also believes farmers are long overdue for “meaningful crop insurance reform” — a critical need driven home by the 2006 drought, which “made it apparent that the current insurance products don't do enough for the farmer.”
A two-tier approach to crop insurance, he says, would go a long way toward bridging the current gap in coverage. Under such an approach, a separate insurance coverage for area-wide droughts and hurricanes could be combined with more conventional coverage for individual farm disasters of less magnitude.
“Farmers shouldn't have to choose between the group plans and regular insurance,” Goodman says.
Finally, Goodman adds, a strong argument could be made for phasing out the current Conservation Reserve Program and retiring the current crop base associated with the program.
In recent years, the program has been subjected to withering criticism from the Environmental Working Group and other public watchdog groups on the grounds that it is paying farmers — and, in many cases, wealthy landlords — not to farm, Goodman says.
Even more troubling to some groups is that part of this land has been collecting CRP rent for 20 years.
“Many of these watchdogs all along have been saying that ‘enough is enough,' and given the worsening federal budget and the steady barrage of criticism from developing countries about the cost of U.S. farm payments, they have a point,” Goodman says.
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