The U.S. Farm Bill is the main agricultural and food policy instrument of the federal government. Every five years or so, Congress uses the bill to tackle, among other things, the federal government’s spending on farm subsidies, food for the domestic poor, agriculture conservation programs and overseas food aid. While this bill may not seem like the most pressing domestic issue at the moment, the farm bill touches on economic, social, and health issues. It shapes our approach to a basic commodity: food.
The latest farm bill expired on September 30, 2012. If a new bill fails to pass, farm programs would lose billions of dollars and would go back to the 1949 law, which would reintroduce higher governments price supports for milk, corn, rice, wheat and could lead to higher consumer prices and federal spending. Moreover, amid disagreement over Supplemental Nutrition Assistance Program, the U.S. House didn’t pass the farm bill in 2012 in order to avoid a "fiscal cliff." Therefore, as of December 31, 2012, Congress extended the current farm bill instead of proceeding with a comprehensive reform of the five-year farm bill.
More specifically, according to the Congressional Budget Office, the highest provisions of the bill go to food stamps and nutrition ($768.2 billion – 78.8%) and crop insurance ($94.6 billion – 9.7%). Even though it's essential to secure food for the poorest, it's important to address the farm bill more holistically. In times of economic hardship, fiscal funds need to be directed towards more productive industries that would generate higher social returns. In addition, the agricultural sector in the U.S. isn't the major employment industry and the subsidies contribute to higher prices which in turn are covered by food stamps.
American Farmland Trust (AFT) President Jon Scholl said that this decision is a “missed opportunity to sew up a long-term, well-balanced farm bill that leaves U.S. farmers less secure and puts important programs that conserve soil and improve water quality in limbo.”
On the other hand, the International Dairy Foods Association, which represents Kroger Co. (KR), the largest U.S. grocery chain, and Nestle SA (NESN), the world’s biggest food company, agreed with the extension of the farm bill that avoided higher milk prices. The group said: “This agreement allows Congress time to fully and openly consider future reforms to our nation’s dairy policy.”
The Institute for Agriculture and Trade Policy views the farm bill as a failed patchwork of programs, which, combined with growing influence of corporate money in Washington, holds significant reform at a standstill. Indeed, the farm bill ignores systemic challenges facing the farmers and the food system, such as wild fluctuations in agriculture prices due to droughts, skyrocketing land prices and rising income inequality.
The farm bill needs to be re-evaluated because businesses that produce commodity crops such as corn, soy, cotton or wheat, benefit from a variety of federal supports, among other reasons. For example, one type of direct payments provides a percentage subsidy for some farmland owners, independently of prices, crop yield, or profitability. Consequently, some farm businesses making huge profits still receive generous annual check from the federal governments even if they don’t grow a crop.
The farm bill isn't solely a monetary challenge, but also a health, social and environmental one. Policymakers should take into consideration comprehensive and transparent strategies that ensure fair prices to farmers and consumers; the agriculture and food systems should be able to face shocks in market prices. The focus should be on a health-oriented food system, on land use planning, and on control of natural resources in order to ensure a more equal distribution of income.
Clearly, passing a farm bill this year may be more difficult than in previous years, given the sluggish state of the economy and the ever-increasing budget pressures. Even though amendments were made to the current farm bill as part of national debt reduction measures, it’s important to carefully think about the different implications that might result from passing it, and to design a public policy agenda that supports a fair and sustainable food and farm system.