Primer: Farm Justice Proposals for the 2012 Farm Bill
By Brad Wilson at May 11, 2012
Here are the big “Farm Bill 101” proposals you’ve been waiting for. The following 3 specific farm justice proposals address the biggest issues in the farm bill, the market management issues of the Commodity Title (cheap corn-transfats/CAFO-subsidization/export-dumping. Historically, in today’s dollars, these are multitrillion dollar issues and much bigger than any other farm bill issue, especially when viewed in terms of global impact, (the US is the dominant global farm commodity exporter, setting world price levels). These proposals go far beyond any other proposals, even effectively eliminating the need for farm subsidies. They free up the maximum amounts of money for other purposes.
Unfortunately, they’re either too new to have been represented in the main food films and books, or are unknown in the food movement, mainstream media. They likewise deal with fundamental farm bill purposes that are not significantly discussed in any general government farm bill documents of recent years. It’s important that they be widely disseminated and acted upon in the food movement, sustainable agriculture movement, farm justice movement and beyond.
This document includes a Primer of online references to the key fact sheets, reports, PowerPoint presentations and online videos needed for study of these issues by the food movement, mainstream media, and others. It includes references to 6 econometric studies these proposals that have found that these are the most effective and most cost effective alternatives out there. Another 5 economic studies are identified that found that mere subsidy reforms would be ineffective and costly.
1. PROPOSAL: NFFC’s “Food from Family Farms Act: Commodity Title”
This is the major farm justice policy package that eliminates cheap corn and other cheap farm commodity prices. It moves more money toward better purposes than any other farm bill proposal, but with greatly reduced, not increased, government spending. In particular, it eliminates the need for any farm subsidies, freeing up the most government subsidy money for other purposes of any farm bill reform proposal.
The sponsor, the National Family Farm Coalition, is the major farm justice coalition in the US, and has carried forward the farm and food justice fight from past decades. For example, a version of this bill, (Harkin-Gephardt,) was introduced by Congressional Democrats in 1985. It won the Senate and got a lot of votes in the House.
While this proposal is not new, it’s largely unknown in the food movement, so it is new to most food movement advocates, staff and bloggers. For example, though the problems of cheap corn were identified in the main food books and films, the Food from Family Farms Act and the kind of policy provisions it features were not mentioned. Similarly, a Yahoo search of “Michael Pollan” and “Food from Family Farms Act” turns up no places where Pollan has used his bully pulpit to even mention this specific solution to the main farm policy problems that he repeatedly describes.
KEY PROVISIONS: The Food from Family Farms Act utilizes Price Floors and sustainable Supply Reductions to put an end to cheap corn and other cheap farm commodity prices. On the topside of price, it features Price Ceilings to trigger the release of Reserve Supplies, as needed to protect consumers, the poor, livestock interests, processors and others. When Price Floors are set at fair trade levels, no subsidies are needed.
ECONOMETRIC RESEARCH: Three studies by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri and Iowa State University during the 1980s found that this bill would save a ton of money for the government, provide family farmers with fair returns, and end export dumping, (which devastates farmers in poor countries, causing poverty and hunger). Those findings were confirmed by a 2003 POLYSYS study by the Agricultural Policy Analysis Center at the University of Tennessee. Government costs would be greatly reduced, as farm commodity subsidies would no longer be needed. Agribusiness buyers, including animal factories and processors of transfats and high fructose corn syrup, would be required to pay fair prices, and no longer be “implicitly subsidized” by cheap corn market prices.
Note that the cost savingshere are much greater than with subsidy caps. More importantly, unlike subsidy caps and other subsidy reforms, this approach effectively ends cheap commodity prices, which are caused by the absence of Price Floors and supply reductions, not by the presence of subsidies to compensate farmers for part of the market price reductions.
2. PROPOSAL: Farmer Owned reserves: NFU’s “Market Driven Inventory System.”
The National Farmers Union’s MDIS is a modest alternative to NFFC’s proposal that doesn’t require agribusiness interests to pay all the way up to fair trade standards. On the other hand, it leaves some subsidies in place. It’s value is as a modest option to help get Congress to again consider addressing the dual problems of volatile farm commodity prices, (chronically low or spiking high,) and expensive farm subsidies.
KEY PROVISIONS: In light of the recent higher farm commodity prices since late fall 2006, (and following the lowest prices in history, 1998-2005,) NFU hired APAC to study a farm bill proposal emphasizing the use of a “farmer-owned reserve,” like we had in past years, to moderate the high prices. The proposal developed for the study featured a kind of soft price floor, a “Loan Rate” level, to then trigger supply reductions whenever prices fell too low, (such as during the periods 1981-1995 and 1997-2006). On the top side, Reserve Supplies were used to moderate the much higher prices we’ve had recently.
ECONOMETRIC RESEARCH: APAC has conducted two recent econometric studies of this kind of an option. The first study looked, not forward using projected “baseline” data, (which levels out all of the bumps,) but backward, using real world farm price data from 1998-2010, a time when the price bumps looked like death valley (below sea level,) followed abruptly by the Appalachian Mountains (up and down). A second study used baseline data to look forward, but converted baseline data based upon the volatile conditions of 1998-2010. Each of these methods could therefore show more dramatic results than the more modest baseline data used in the NFFC-FFFA studies, above. In particular, the studies were able to show both the benefits of keeping market prices up (ie. 1998-2006), with supply reductions as the operative mechanism, and the benefits of keeping them from going too high up (ie. 2007-2010), with reserve supplies as the operative mechanism.
The findings, which closely parallel those of the FFFA-type studies, above, include greatly reduced government costs, significant improvements in farm income during the low price years, (ie. a fix for cheap corn, etc.,) and protection of livestock interests and consumers from price spikes. These findings, from very modest changes in the Commodity Title of the Farm Bill, dramatize the absurdity of the zero price floor, massive subsidy programs we’ve had since 1996, (and the low price floor programs since 1953, and the subsidy compensations since 1961).
3. PROPOSAL: NFFC’s “Federal Milk Marketing Improvement Act of 2011” (SB 1640).
SB 1640 is the most critical piece of farm and food justice legislation for the 2012 Farm Bill, because the Dairy Crisis is the most acute crisis of injustice family farmers face today. We risk losing almost all surviving family dairy farms if something effective isn’t done in the 2012 farm bill. The bill has been introduced into Congress by Senator Robert P. Casey, Jr., from Pennsylvania.
KEY PROVISIONS: As Loren Lopes argues, “S-1640 is the only Bill that uses the dairy farmers’ costs to establish the value of raw milk at the farm. In addition, S-1640 is the only dairy proposal that contains a milk supply management program that does not depend on government subsidies!” While there are various other dairy proposals out there, most of them preserve the benefits to and exploitative practices from dairy processors. This bill directly fixes that.
PRIMER: ONLINE REFERENCES
For all 3 see:
“Fact Sheet: “Farm Justice Proposals for the 2012 Farm Bill,” (http://www.zcommunications.org/fact-sheet-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson), 2 pp.
1. NFFC’s “Food from Family Farms Act
FFFA: “Good for the Environment”
“Food from Family Farms Act: A Proposal for the 2012 U.S. Farm Bill,” http://www.nffc.net/Learn/Fact%20Sheets/FFFA2007.pdf
Agricultural Policy Analysis Center: 2003 Farm Bill Study: Home: http://agpolicy.org/blueprint.html.
“Rethinking US Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide:”
Executive Summary: http://agpolicy.org/blueprint/Summary.pdf
Full Report: http://agpolicy.org/blueprint/APACReport8-20-03WITHCOVER.pdf
Report PowerPoint Presentation (.ppt as pdf): http://agpolicy.org/blueprint/PresentationAPACReport.pdf
Short Policy Columns on the study: Daryll E. Ray and the Agricultural Policy Analysis Center, University of Tennessee, Knoxville, TN:
“Rethinking US Ag Policy,” September 12, 2003 #162, http://agpolicy.org/weekcol/162.html
“Farmer-oriented blueprint increases corn prices 37%,” August 26, 2005 #264, http://agpolicy.org/weekcol/264.html
“Eliminating commodity programs reduces net farm income by 25%,” August 19, 2005 #263, http://agpolicy.org/weekcol/263.html
“U.S. Cotton Program & Black Cotton Farmers in the United States: Part Three
Recommendations for Agriculture Policy Based on the Research Findings,” http://www.federationsoutherncoop.com/cottonstudy/cotton3.htm (http://www.federationsoutherncoop.com/cottonstudy/cottonsections.htm)
Jerry Pennick, Heather Gray, “Ensure that farmers receive a fair living wage,” Federation of Southern Land Cooperatives: Land Assistance Fund, 10/10/06, http://www.zcommunications.org/ensure-that-farmers-receive-a-fair-living-wage-by-jerry-pennick-heather-gray.
Data charts graphically dramatizing the Issues: Brad Wilson, “Farm Bill Slides,” "Hidden Farm Bill Pie," etc. http://www.zcommunications.org/albums/list/bradwilson. See also the PowerPoint presentations of Daryll Ray for FFFA and MDIS.
Econometric studies of these kinds of proposals, and lesser alternatives, from the 1980s.
Food and Agrcultural Policy Research Institute, “An Evaluation of Proposed Program Designs for the 1985 Farm Bill,” (Columbia: Center for
University of Missouri, 1985).
Food and Agrcultural Policy Research Institute, “Agricultural Policy
Alternatives, Modifed Current Policy or Mandatory Supply Reductions:
Expected Economic Consequences,” (Columbia: Center for National Food
and Agrcultural Policy, Department of Agrcultural Economics, University
of Missouri, 1985).
S.R. Johnson, et aI., “Options for the 1985 Farm Bill: an Analysis and Evaluation,” Columbia, Missouri: FAPRI Staff Report #1-85, State University, 1985.
Abner W. Womack, et aI, “An Analysis of the Food Security Act of 1985,” (Columbia, Missouri: Food and Agricultural Policy Research Institute, University of Missouri-Columbia, Iowa State University. February 1986).
Note: Some of the FAPRI studies are available online.
2. NFU’s “Market Driven Inventory System.”
NFU: MDIS study: Home: http://nfu.org/study
NFU Fact Sheet (phase 1): “Farmer-Owned Reserves Study: Key Findings,” http://nfu.org/images/stories/policy/Study_One-Pager.pdf
Daryll E. Ray & Harwood D. Schaffer, (Phase 1, column) “Impacts of a farm policy do-over for historical 1998 to 2010,” APAC, U of Tenn., 9/30/11, http://agpolicy.org/weekcol/583.html, ((pdf: http://agpolicy.org/weekpdf/583.pdf).
Executive Summary (phase 2): “Market-Driven Inventory System (MDIS),” http://nfu.org/images/stories/Press_event_handouts_finalUSE2.pdf
PowerPoint Presentation: “A Market Directed Inventory System (MDIS),” Presented at National Farmers Union Annual Convention, Omaha, Nebraska, Daryll E. Ray, March 5, 2012, http://agpolicy.org/present/2012/MDIS03052021.pdf
Daryll E. Ray & Harwood D. Schaffer, (Phase 2, column) “NFU’s Market-Driven Inventory System: Estimated Impacts Compared to Current Policy,” March 23, 2012, Policy Pennings, http://agpolicy.org/weekcol/608.html, (pdf: http://agpolicy.org/weekpdf/608.pdf)
Phase I (draft) Report: Sept. 10, 2011, “A Study of the Impact of a Reserve Program Had One Been in Effect in the Period, 1998 to 2010,” Harwood D. Schaffer, Research Assistant Professor, Chad Hellwinckel, Research Assistant Professor, Daryll E. Ray, Professor and Director, Daniel G. De La Torre Ugarte, Professor and Assistant Director, Agricultural Policy Analysis Center, Department of Agricultural and Resource Economics, University of Tennessee Institute of Agriculture, Knoxville, Tennessee, http://nfu.org/images/stories/policy/091211_Report.pdf
Full Report (phase 2 study,): “An Analysis of a Market-Driven Inventory System (MDIS),” Harwood D. Schaffer, Research Assistant Professor, Chad Hellwinckel, Research Assistant Professor, Daryll E. Ray, Professor and Co-Director, Daniel G. De La Torre Ugarte, Professor and Co-Director, Agricultural Policy Analysis Center, Department of Agricultural and Resource Economics, University of Tennessee Institute of Agriculture, Knoxville, Tennessee, http://nfu.org/images/stories/NFU-April2012-FinalReport-AsSentToNFUApr2-2012.pdf
Testimony of Roger Johnson, National Farmers Union, Submitted to the U.S. Senate Committee on Agriculture, Nutrition and Forestry, to Discuss Risk Management and Commodities in the 2012 Farm Bill,” March 14, 2012, Washington, D.C., http://nfu.org/images/stories/3_14_12_Farm_Bill_Commodity_Title_-_Senate_Ag_FINAL.pdf
Ben Lilliston, “A Farm Bill idea that helps farmers and consumers,” IATP, March 9, 2012, http://www.iatp.org/blog/201203/a-farm-bill-idea-that-helps-farmers-and-consumers
3. NFFC’s “Federal Milk Marketing Improvement Act of 2011” (SB 1640).
“CDC and CFU support NFFC-backed Federal Milk Marketing Improvement Act” (6.23.11), http://www.nffc.net/Pressroom/Press Releases/2011/CADairyrelease 6.27.11.pdf
“NFFC writes Members of Congress urging support for a new dairy policy - and opposing NMPF’s Foundation for the Future” (4.12.11) http://www.nffc.net/Issues/Dairy/dairy.letter.04082011.pdf
Download: “Senate dairy bill presents a solution to industry issues,” (10.12.10), http://www.nffc.net/Issues/Dairy/Senatedairybill1645byLoriJayneGrahn.doc
Loren Lopes, “Support S-1640,” http://dairybusiness.com/seo/article.php?title=letters-support-s-1640&date=2011-11-30.
"Dairy Crisis Slides," (data charts,) http://www.zcommunications.org/slides-the-dairy-crisis-and-the-farm-bill-by-brad-wilson.
4. Five Econometric Studies that found that subsidy reforms are ineffective.
Introduction. For a chart and brief summary of some findings from these five studies see: Timothy A Wise, “The Paradox of Agricultural Subsidies: Measurement Issues, Agricultural Dumping, and Policy Reform,” Global Development and Environment Institute, Working Paper No. 04-02, pp. 21-23.
Beghin, J. C., D. Roland-Holst, et al, (2002), “Global Agricultural Trade and the Doha Round: What are the Implications for North and South?” Ames, Iowa, Center for Agricultural and Rural Development, Iowa State University.
Diao, X., A. Somwaru, et al. (2001), “A Global Analysis of Agricultural Reform in WTO Member Countries. Agricultural Policy Reform in the WTO - The Road Ahead,” M. Burfisher, Economic Research Service: 25-40.
IFPRI (2003), “Impact of Alternative Agricultural Trade Policies on Developing Countries,” Washington D.C., International Food Policy Research Institute (IFPRI).
Monteagudo, J. and M. Watanuki (2002). “Evaluating Agricultural Reform under the FTAA and Mercosur-EU FTA for Latin America: A Quantitative CGE Assessment,” Washington, D.C., Inter American Development Bank.
Daryll E. Ray, et al, “Rethinking US Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide,” (2003,) cited above under “Food from Family Farms Act.”
5. Impacts of these Proposals on the Global Food Crisis.
Brad Wilson, “WTO Africa Group with NFFC, Not EWG,” Apr 01, 2011
Sophia Murphy, Ben Lilliston and Mary Beth Lake, “WTO Agreement on Agriculture: A Decade of Dumping,” IATP, February 2005.
Brad Wilson, “Via Campesina with NFFC: Support for Fair Farm Prices,” zpace, http://www.zcommunications.org/via-campesina-with-nffc-support-for-fair-farm-prices-by-brad-wilson
Ben Lilliston, ed. “A Fair Farm Bill for the World,” IATP, 3/6/07, http://www.iatp.org/files/258_2_97624.pdf
Brad Wilson, “Unique US Role in Fixing the LDC Food Poverty Crisis,” La Vida Locavore, Apr 14, 2011, http://www.lavidalocavore.org/diary/4655/unique-us-role-in-fixing-the-ldc-food-poverty-crisis
Brad Wilson , “False on the Food Poverty Crisis: 25 Online Examples,” zspace, Apr 18, 2011, http://www.zcommunications.org/false-on-the-food-poverty-crisis-25-online-examples-by-brad-wilson.
NFFC Farm Bill: “Food Crisis Primer: Food Crisis 101” (links), zspace: http://www.zcommunications.org/zspace/bradwilson.