By Stu Ellis
Farmgateblog
It is not on the House of Representatives calendar for this week, but within the next 12 legislative days before the August recess, GOP Majority Leader Eric Cantor said, "Members should be prepared to act on a revised Farm Bill.” If you remember, the Senate has approved a new five year program for agriculture, and the June 20th House effort to do the same failed to get a majority supporting its own Ag Committee’s proposal.
The key word is “revised,” and everyone following the progress of the Farm Bill proposals and debate for the past two years knows the word refers to separation of food and nutrition programs out of the Farm Bill.
Why is that a problem, since farm policy addresses rural America and food and nutrition policy is a metropolitan priority? Why is that a problem, since producing food and consuming food have a complex and lengthy economic path separating each other? Why is that a problem, since food and nutrition programs make up 80% of USDA spending and the Agriculture Department could just focus on the $20 billion for conservation, rural development, commodity programs, and crop insurance?
It is expected that the “revised” Farm Bill proposal will only reflect agriculture programs since the Democrats voted against the first proposal because it did not spend enough on food and nutrition programs and the Republicans who voted against it said it spent too much. Without any middle ground in that debate, the GOP leadership is proposing a solution that allows the House to vote on a separate farm policy and a separate nutrition policy.
Driving the proposal is the conservative Heritage Foundation which wants the separation as well as conversion of the food and nutrition programs into a “work activation” program for recipients of food stamps. Democrats withdrew their support of the House Farm Bill proposal when an amendment was approved that required food stamp recipients to work.
President Hoover had opposed a government-funded food program saying “the hungry and unemployed will be cared for by our sense of voluntary organization and community service.” Although he was defeated in 1932, it was not until 1938 when President Roosevelt initiated the program, but ironically opposed giving out free money and food without requiring work.
In that period of the Great Depression, USDA programs were initiated and eventually absorbed food stamps, which allowed consumers to have surplus food that farmers could not sell. The combination kept the nation from starving and kept farmers producing food and away from city unemployment lines. Yes, today is different, but nutrition is still an issue, while the price of corn is above the 10-cent level of the 1930’s.
The problems with hunger in America will not dissolve in the next two years. And in that same time span, larger crops could easily push commodity prices down to levels of unprofitability, based on current production costs. The Great Depression will not return, but there will be some parallels.
That is one of the reasons why 532 farm organizations last Wednesday sent a letter to House Speaker John Boehner saying, “We believe that splitting the nutrition title from the rest of the bill could result in neither farm nor nutrition programs passing, and urge you to move a unified farm bill forward.” They promised support of the food programs, which were not addressed by farm groups in their initial lobbying for the Farm Bill.
For decades, the Farm Bill has enjoyed bi-partisan support, and urban members Congress vote for it because of the food and nutrition programs, just as rural Congressmen support the farm safety net. If farm and food policy were split, there is no reason for an urban Congressman to vote for soil conservation and crop insurance.
Then what?
Carl Zulauf, agricultural economist at Ohio State University, says, “Given the current state of the relationship between farm and nonfarm household income and the current size of farms, it will be hard for the U.S. farm safety net to avoid continuing cuts.” That comes from his perspectives on the relationship of income differences between farm and non farm families. He says, “Average household incomes can be compared back to 1960. In 1960, average farm household income was 65% of average U.S. household income. Thus, over the last half century, farm household income has increased substantially relative to income of U.S. households.” But now he says every year since 1996 the average income of farm households has exceeded the average income of all US households. That has also been the case in two out of three years going back to 1972. (The farm financial crisis in the early 1980’s makes up the balance.)
With the financial separation between farm and non-farm households, Zulauf says it becomes harder for the public to support a higher farm safety net, and that is reflected by the reluctance of urban Congressmen to vote for high dollar farm programs.
If farmers are making so much money, where does it come from? You may not be one of those families, but they are out there, and Zulauf points to two dynamics at work. “One is the increasing size of the farm production unit, which in turn is partially driven by technology. The second is the increasing role of nonfarm income (also referred to as off-farm income).” That non-farm income for some large farms is more than the average US household income. And while it may not be needed for survival of the farm, it may be a risk management strategy, says Zulauf.
So what is at issue? Zulauf says is the vote that will soon be coming on a Farm Bill that will likely not have any nutrition title, and will be 20% of the cost of the last Farm Bill due to elimination of food and nutrition programs. If an urban member of Congress sees a threat to his constituents, he or she may be unwilling to support a farm policy that is disconnected to food stamps and other nutrition programs. Zulauf says, “Lower spending on the farm safety net will make it difficult to reach agreement because each farm actor wants to protect their part of the farm safety net. It would be easier to craft a new farm bill if projected baseline spending in the future was higher, but that means farm income would have to decline. Higher government spending on the farm safety net as a result of lower farm income may not be a desirable situation for the U.S. farm sector.”
Summary:
The pending re-introduction of the Farm Bill will likely be similar to the legislation that failed on June 20th, but without the nutrition title and $80 billion per year in spending on food and nutrition programs. Splitting the farm and food policy will put farm policy at risk of not being approved, since urban members of Congress would see no reason to support it, and see that farm incomes are currently above that of median household income.
Source : farmgateblog