Farm spending boost seen
Critics say subsidies create a surplus of commodities
Congress appears to be in the process of substituting one unworkable farm bill for another.
The 1996 "Freedom to Farm Bill," which expires this year, was supposed to end farmers' dependence on government subsidies. It failed to do so and ultimately required many billions of dollars in emergency aid for farmers, who faced extremely low commodity prices.
Now the House and Senate have approved $73.5 billion in new farm spending over the next 10 years. Under the Senate plan, $45 billion would be spent in the first five years, while the House bill would limit spending to $38.5 billion for that period. The House vote conformed to President Bush's request for spending limits in the first five years.
There is no question that farmers are not yet ready to dispense with federal support, but many experts say that government price supports tend to encourage over-production and that leads to surpluses and low farm prices.
The basic problem is twofold:
1. Farmers, unlike most other businesses, lack the ability to set the price for their own products.
2. Agribusiness is highly centralized in the hands of a few large corporations that have the power to control the market for farm products for their own benefit.
Government subsidies keep some farmers in business, but they do not solve either of these problems.
The Senate farm bill has two additional provisions that will engender fierce debate. One establishes a $275,000 ceiling on the subsidies a farmer can receive. This provision, introduced by Sen. Paul Wellstone, D-Minn., was prompted by the widespread publicity given to the heavy subsidies received by some farmers and businesses last year. The Environmental Working Group, which supports more money for conservation and less for subsidies, brought widespread attention to the subsidy issue by listing every subsidy given to every farmer in the country on its Web site, www.ewg.org.
A second provision, also introduced by Wellstone, would prohibit meatpacking companies from buying livestock within two weeks of their slaughter. Wellstone said the amendment is needed to keep big companies from controlling the market.
However, critics have said this amendment would be unworkable. It would force some companies to sell huge pork and beef production facilities on short notice and possibly lead to shutting down some meatpacking plants. That could leave farmers in those areas without a market.
We agree with the goal of the amendment, which is to give farmers more bargaining power in selling their livestock. However, it appears that requiring such a change immediately might have unintended and damaging consequences.
The Senate bill also allots $2 billion for a price floor for dairy products nationwide. This would treat dairy farms throughout the country equally and would replace the Northeast Dairy Compact, which gave special benefits to New England farmers and was strongly opposed by those in the Midwest.
The measure also increases spending for environmental and nutrition programs.
Because of the budget deficit and the anti-terror war, the farm bill is only one of many major pieces of legislation that Congress must deal with this session. As a result, we are not likely to see a real solution to the problems that have plagued farmers for years.
Congress probably will approve generous farm price supports, but we will still lack a system that will give farmers some control over the prices they can charge for their products.