Direct Hit: The Farm Bill’s Juiciest Targets for Reformers and Budget Cutters

This is the latest in a series of posts I’m writing for Flavor Magazine’s blog examining the intersection of food, politics, and policy.

The cow is finally out of the barn. And it’s a little leaner than it was four years ago.

Last Friday, the Senate Agriculture Committee fired the opening legislative salvo in the effort to pass a 2012 Farm Bill when Chairwoman Debbie Stabenow (D-Michigan) and Ranking Member Pat Roberts (R-Kansas) released their bipartisan draft bill for consideration by the Committee.

Process-wise, the draft proposal is significant because it represents the official legislative starting point in the process, as well as the culmination of months of hearings and negotiations–both within the Committee and between legislators and agricultural interest groups.

Most of the initial news coverage about the bill will focus on its price tag, which amounts to an approximately $25 billion cut in overall Farm Bill spending over the next ten years (out of a total of $995 billion, for a cut of 2.5%). In addition to serving as a meaty target for the assault on spending, the proposal makes some noteworthy policy changes.

Since the minutiae of farm policy can have the same effect on one’s brain as a captive bolt pistol, it’s best to ease into things slowly. The vast majority of Farm Bill money is divided into four main areas: nutrition, commodity payments, crop insurance, and conservation, with nutrition taking the lion’s share (approximately three-quarters) of that funding.

Nutrition is obviously a centerpiece of the bill, and at the heart of the debate over cutting spending (Congressional Republicans–notably, House Budget Chairman Paul Ryan–have targeted food stamps for massive cuts). However, it is the the other three major pieces–commodities, crop insurance, and conservation–that drive U.S. farm policy.

Of those pieces, commodities payments and crop insurance together comprise what is considered the “safety net” for American farmers. When you hear people arguing about whether our agricultural policies provide the right kinds of incentives for our food system, they are arguing about how this safety net is–and should be–woven together.

For the past decade and a half, the commodities title of the Farm Bill, which dictates the nature and levels of the subsidies that flow to farmers, has essentially been a three-legged stool consisting of direct payments (fixed annual payments based on historical yields irrespective of market conditions), “counter-cyclical” payments (payments based on historical yields triggered when crop prices fall), and marketing assistance loan payments (payments based on a farm’s actual production and triggered when crop prices fall below a price “floor”). Only a handful of staple crops are eligible for these payments, and over 90% of all payments go to five crops: wheat, corn, soybeans, rice, and cotton.

Due to its complexity and reliance on factors that have little to do with market conditions, this system has drawn its fair share of criticism. And the Senate Committee’s draft proposal contains what, in the insular world of DC-savvy agricultural types, amounts to a sea change: the elimination of direct and countercyclical payments, the very face of the “subsidies” that are so often decried.

In their place, the bill would create a new kind of insurance program to complement the existing crop insurance program, significantly shifting the safety net to a system based on risk management, rather than one based on chasing federal subsidy dollars. What remains to be seen is whether the proposed changes will have any significance outside the world of policy-makers–i.e., whether they will be perceived as a positive step for the future direction of our food system as a whole.

Ultimately, it comes down to expectations. If you’ve been hoping that negotiations between mostly self-interested politicians and entrenched interest groups operating under intense budgetary and political pressures would produce a complete overhaul of the farm subsidy system, you’re likely to be disappointed.

However, if you can take some measure of comfort in incremental reform, you have reason to be encouraged by the fact that those same politicians and interest groups have demonstrated a willingness to relax their leather-gloved death grip on a status quo that even they acknowledge had market-distorting effects.

As the Senate Committee begins the work of debating and modifying the draft bill in public mark-ups this week (the first session is being held today), supporters of sustainable agriculture should listen for how the new subsidy system is framed in the context of the effort to reform the food system, as well as how the draft bill addresses other sustainable priorities, including fruits and vegetables, organics, beginning farmers, and research.

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