Talking Points for the 2012 Farm Bill
By Brad Wilson at May 13, 2012
The 2012 farm bill is full of bad ideas. Some key framing of the bad ideas centers around the following:
1. Eliminate Direct Payment subsidies and,
2. Switch subsidies toward Crop Insurance, including Revenue Insurance subsidies.
3. Do nothing about the underlying cause, the strange reason for why farmers came to need to be subsidized in the first place.
The Senate Agriculture Committee has now sent out a draft farm bill proposal along these lines. The House is working away at it's own proposal, which is expected to be even worse.
Meanwhile progressive food advocates and mainstream media are again misunderstanding the big farm bill issues. In different ways, so are most "farm commodity groups," and organizations like Farm Bureau.
Here are key, targeted, Talking Points to bring food advocates, farmers, legislators and others up to speed on the debate. They are supported by numerous econometric studies, large volumes of historic farm program data and the decades of experience of the farm justice movement, which is now led by the National Family Farm Coalition. These are followed by a few key references, which link to the leading supportive analysis, including data charts, videos and econometric studies, most of which are available online.
Key Talking Points
1. Revenue Insurance1: The New Direct Payments. Direct payments were based upon absurd, unrealistic, ideological, free-market ideas (ie. “de-coupling,” see below2). They are given whether you need them or not, which, for strange reasons, sort of made sense in the past, (they would have been “needed” by farmers every year 1981-2006, except 1996!). The same holds for Revenue Insurance. Under some conditions, (such as when market prices are high and stay high, then slowly come down,) you get them even though you don’t need them.
2. Farmers Often Do NOT Get Revenue Insurance Subsidies When the Need them! Revenue Insurance subsidies are even more absurd. They’re based upon a 5 year “Olympic average,” (5 years of previous farm prices, minus the highest and lowest average price years,) not any fixed standard, such as the cost of production. If prices go low, and stay low, (like they did 1981-95 and 1997-2005,) then the formula’s don’t result in any Revenue Insurance subsidies
3. Most Farmers Rejected the Revenue Insurance Programs of the 2008 Farm Bill! "Only 8% of farms with about 13% of eligible acres were enrolled" in the ACRE program, and for good reasons! Though ACRE was specifically eliminated in the Senate Farm Bill proposal this summer, the basic idea is maintained.
4. Farm Program Subsidies Compensate Farmers for Bad Farm Programs! Hear’s how it works:
a. First, economically, farm commodity supplies and prices don’t self-correct under most market conditions we’ve had for more than 100 years, (not very well at all for the groups of commodities that farmers choose from in the real world). Farm Commodity supply and demand just don’t balance out. It’s a lack of “price responsiveness on BOTH the supply and demand sides. Economically, therefore, farm commodity prices have usually been very low.
b. Second, this was fixed politically in the New Deal, as farm programs were run like a business, balancing supply and demand and putting a floor under market prices (for farmers) and a ceiling over prices, (for consumers and other buyers,) leaving room for market adjustments in between the floor and ceiling.
c. Third, Congress (& Presidents), under corporate pressure, reduced (1953-1995) and eliminated (1996-) price and supply management programs, to usually provide farm commodities to US and foreign corporations at prices below fair market value, and often below the cost of production.
d. Fourth, government (taxpayer) farm commodity subsidies were added later to partially compensate farmers for these bad programs. There’s never been any need for subsidies other than to compensate farmers for massive reductions in income (caused economically, as above, and) caused politically by bad farm bills.
5. Subsidy Caps & Subsidy Elimination Don NOT at All Fix the Farm Bill.3 There are huge farm and food injustices caused by cheap market prices for corn and other farm commodities. These, include cheap grain from crop farms to covertly subsidizes animal factories, and processors of junk foods and junk food ingredients. Numerous studies have shown that capping or eliminating subsidies does not fix any of this. It was a problem for many years prior to farm subsidy programs.
6. Most Subsidy Recipients are Not Full-Time Farmers. Full-Time "family farmers," (and those similar in size and structure to family farms,) who primarily raise commodity crops, make up less than 10% of farm subsidy recipients, and they’re almost all in the top 10% of subsidy recipients (or 20% for less specialized farmers of these crops,). The majority of subsidy recipients who are small and medium-sized full-time farmers are in the top 10% of the "Farm Subsidy Database." The bottom 80% of subsidy recipients average only about 7% of the size of sub-minimum-sized full-time corn/soybean farm of 200 acres. The bottom half is tiny, only about 3.3% of full-time, at most.4
7. Farm Costs are Skyrocketing, like they did after the 1970s price spike, but the 1980 Farm Bill was Much More Sustainable than 2008 and 2012 Proposals. Small and Medium sized family farmers could quickly be devastated by a massive crisis if the farm bill isn’t fixed in 2012. Cheap feed crop prices push livestock off farms and into animal factories. This eliminates the economic need for legume forages like clover and alfalfa (which “fix” free nitrogen from the air). This takes away the flexibility of Resource Conserving Crop Rotations, turning farmers into victims of the fertilizer and farm pesticide agribusiness power complex.
8. The Dairy Crisis Shows the Acute Failure of Farm Programs (and Proposals). What can (and did) happen with these bad farm programs in the past (especially from 1981-2006,) can now be seen in the Dairy Crisis, where family farming is being rapidly devastated. We’ve had a few years of higher prices for crop farmers, but they too could end up in a crisis like dairy.
9. All of This Can be Easily Fixed with 3 Great Farm Bill Proposals5. These proposals eliminate, or greatly reduce farm commodity subsidies, by eliminating the need for subsidies. They run farm programs like a business, not a welfare program, balancing supply and demand and setting a floor under and a ceiling over, market prices. In this way they achieve both farm and food justice, serviing both farmers and consumers. The 3 proposals are:
a. NFFC's "Federal Milk Marketing Improvement Act of 2011" (SB 1640), to fix the dairy crisis without subsidies. This is the essential and effective farm justice solution to the most acute farm/food crisis of today.
b. NFFC's "Food from Family Farms Act: Commodity Title," (FFFA,) to fix the biggest, (historically multitrillion dollar,) issues in the farm bill for sustainabilty, public health, farm justice, food justice and other important purposes, all without subsidies.
c. Farmer Owned reserves: NFU's "Market Driven Inventory System," (MDIS,) is a great, well researched alternative proposal to item b, directly above. In a modest way, it would result in huge improvements in farm market supplies and prices, and save huge farm bill costs, by eliminating the need for most subsidies. This should also be supported, because it asks Congress a different question, to help force them to consider elliminating the need for farm subsidies.
10. These Three Proposals Free Up More Money for Other Farm Bill Titles than Any Other Options. These proposals fix the fundamental economic problems that Revenue Insurance, subsidy caps and all other fake “reform” proposals ignore. But that's not event he half of it. These kinds of proposals serve as a private sector economic stimulus,6 creating wealth and jobs, without the government writing any subsidy checks. As USDA-ERS data on "Commodity Costs and Returns" show, major farm prices (for a sum of corn, wheat, rice, cotton, soybeans, sorghum grain, barley, oats,) were below full costs every year from 1981-2006 (except 1996). Congress chose to have the US lose money on farm exports, instead of a private sector stimulus.
1. For more information in general and on key proposals, see Brad Wilson (compiler): Primer: Revenue Insurance in the 2012 Farm Bill, ZSpace, 5/11/12, http://www.zcommunications.org/primer-revenue-insurance-in-the-2012-farm-bill-by-brad-wilson.
2. De-Coupling: The best thing to read for an in-depth understanding of the strange philosophy behind Direct Payments and WTO subsidy ideas is: IATP, “The ‘De-Coupling’ Approach to Agriculture: History and Analysis of ‘Decoupling’ Policy Proposals," September, 1988, http://www.iatp.org/documents/the-de-coupled-approach-to-agriculture, http://www.iatp.org/files/decoupling88MR.pdf.
3. Brad Wilson, “Cap Farm Subsidies at $250,000, or $25,000, or $0?,” La Vida Locavore, 3/11/12, La Vida Locavore, http://www.lavidalocavore.org/diary/5126/cap-farm-subsidies-at-250000-or-25000-or-0.
4. Brad Wilson, “Subsidy Narratives: How Foodies Unknowingly Bash Family Farmers,” http://www.lavidalocavore.org/diary/5099/subsidy-narratives-how-foodies-unknowingly-bash-family-farmers.
5. Brad Wilson, ZSpace, "Fact Sheet: Farm Justice Proposals for the 2012 Farm Bill," ZSpace http://www.zcommunications.org/fact-sheet-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson ZSpace, 5/11/12.
6. Brad Wilson, "Balance Budget, Win Across the Board with NFFC Farm Bill," http://www.zcommunications.org/balance-budget-win-across-the-board-with-nffc-farm-bill-by-brad-wilson; "Farm Bill was Steagall, New Deal Stimulus," http://www.dailykos.com/story/2009/02/06/693903/-Farm-Bill-was-Steagall-New-Deal-Stimulus.
For more depth see: Brad Wilson, "Primer: Farm Justice Proposals for the 2012 Farm Bill," ZSpace, 5/11/12. This resource also includes the best online PowerPoint presentations and video resources related to the farm bill proposals described in item 9., above http://www.zcommunications.org/primer-farm-justice-proposals-for-the-2012-farm-bill-by-brad-wilson.