In Congress, It's Farm Politics as Usual
by David M. Herszenhorn
The New York Times
April 24, 2008
Americans are in sticker-shock over grocery prices, while people in developing countries are rioting over food shortages. And across the heartland, American farmers are enjoying record incomes, but losing sleep over rising expenses and turbulence in the commodity futures markets.
Here on Capitol Hill, though, it is pretty much farm politics as usual.
As Congress works toward final passage of the farm bill, it is poised to continue most of the existing farmer subsidy programs, including about $5.2 billion a year in so-called “direct payments” that will be disbursed even as net farm income is projected to hit a historic high in 2008.
The farm bill, which comes along once every five years and will cost upward of $300 billion, in fact will do little to address many of the most pressing concerns. It will not change biofuel mandates that are directing more corn to ethanol and contributing to a global rise in food prices.
It will do little to ease worldwide food shortages. And at a time of high volatility in the futures markets, it will not require tougher regulation.
In other words, Congress seems oblivious. And longstanding critics of American policy are piling on.
“It really is astounding,” said Representative Ron Kind, Democrat of Wisconsin, who has pushed for broad changes in farm subsidy programs. “It’s as if this farm bill is being negotiated in a vacuum.”
Ken Cook, president of the Environmental Working Group, which maintains a database showing how farm subsidies mostly benefit a small number of wealthy producers, blamed Congressional leaders outside the agriculture committees.
“There really doesn’t seem to be any intervention that reflects these broader crises,” Mr. Cook said. “They are sound asleep at the leadership level.”
The White House, too, has joined the criticism, sharply criticizing Congress for proposing to spend $16 billion more than was initially allocated for the farm bill — mostly for increases in food stamps — at a time when high profits would seem to allow cuts in subsidies.
“With record farm income, now is not the time for Congress to ask other sectors of the economy to pay higher taxes, in order to increase the size of government,” the White House said in a statement Tuesday calling for a one-year extension of the current farm law.
Defenders of the bill say it makes a number of crucial improvements, including a roughly $10 billion increase in food stamps and other nutrition programs, as well as expanded land conservation and rural development programs and new aid for growers of fruits and vegetables, who have never gotten assistance from a farm bill.
But even strong proponents of the bill, like Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, concede that farm interests are deeply entrenched and that there is little appetite for change among many farm state lawmakers, especially when it comes to the direct payment program.
The direct payments are based on the amount of land that certain farmers own, and Mr. Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.
“It’s like the black hole in space that astronomers talk about: everything gets sucked in and nothing ever comes out,” he said. “This is the black hole of agriculture. It doesn’t make sense, but farmers continue to get it.”
Mr. Harkin said there was not much he could do because “I don’t have the votes,” adding, “People love free money.”
Defenders also say that expecting the huge farm bill to address current challenges is like asking a farmer to go out and grow corn for tonight’s supper.
Other bills — on energy, foreign aid, even economic stimulus — have the potential to be more nimble or, in some cases, to cause more harm.
The senior Republican on the House Agriculture Committee, Representative Robert W. Goodlatte of Viriginia, said Democrats were to blame for the jump in food prices because of mandates for higher ethanol production that they included in an energy bill last year.
“When corn prices go as high as they were going, people shift their production out of wheat into corn, out of soybeans into corn, out of rice into corn, even out of cotton into corn,” Mr. Goodlatte said. “The mandate basically says ethanol comes ahead of food on your table, comes ahead of feed for livestock, comes ahead of grains available for export.”
But as lawmakers trying to reconcile the House and Senate versions of the farm bill struggle to meet a Friday deadline when a short extension of the current law will expire, there is little in the bill to help slow the ethanol-driven price increases. In recent weeks, corn prices have hit record levels of $6 a bushel and more.
And lawmakers are fighting over whether to create a pilot program to buy $25 million in food grown locally in poor countries. Environmentalists and antipoverty experts say that would be a step toward a more effective food aid program than the current practice of shipping American products.
There is also no movement to require tighter regulation by the Commodity Futures Trading Commission of futures markets. Many farmers suggest that hedge fund money is building a speculative bubble in farm commodities and causing wide swings in futures prices, making it more expensive for them to use futures to lock in crop prices. Farmers fear that the bubble could burst, like in the housing market.
“It’s a train wreck waiting to happen,” said Tom Buis, the president of the National Farmers Union.
Many experts say the biggest step Congress could take would be to eliminate the direct payments in favor of a new revenue assurance program that would help farmers in times of need, but save money in boom years when crop yields are strong and prices high.
It is a step that even many farmers say would make sense.
“As a farm leader, I can’t justify why someone should receive a guaranteed payment from the federal government, with the high prices they are getting from the marketplace,” Mr. Buis said.
The New York Times
April 24, 2008
Americans are in sticker-shock over grocery prices, while people in developing countries are rioting over food shortages. And across the heartland, American farmers are enjoying record incomes, but losing sleep over rising expenses and turbulence in the commodity futures markets.
Here on Capitol Hill, though, it is pretty much farm politics as usual.
As Congress works toward final passage of the farm bill, it is poised to continue most of the existing farmer subsidy programs, including about $5.2 billion a year in so-called “direct payments” that will be disbursed even as net farm income is projected to hit a historic high in 2008.
The farm bill, which comes along once every five years and will cost upward of $300 billion, in fact will do little to address many of the most pressing concerns. It will not change biofuel mandates that are directing more corn to ethanol and contributing to a global rise in food prices.
It will do little to ease worldwide food shortages. And at a time of high volatility in the futures markets, it will not require tougher regulation.
In other words, Congress seems oblivious. And longstanding critics of American policy are piling on.
“It really is astounding,” said Representative Ron Kind, Democrat of Wisconsin, who has pushed for broad changes in farm subsidy programs. “It’s as if this farm bill is being negotiated in a vacuum.”
Ken Cook, president of the Environmental Working Group, which maintains a database showing how farm subsidies mostly benefit a small number of wealthy producers, blamed Congressional leaders outside the agriculture committees.
“There really doesn’t seem to be any intervention that reflects these broader crises,” Mr. Cook said. “They are sound asleep at the leadership level.”
The White House, too, has joined the criticism, sharply criticizing Congress for proposing to spend $16 billion more than was initially allocated for the farm bill — mostly for increases in food stamps — at a time when high profits would seem to allow cuts in subsidies.
“With record farm income, now is not the time for Congress to ask other sectors of the economy to pay higher taxes, in order to increase the size of government,” the White House said in a statement Tuesday calling for a one-year extension of the current farm law.
Defenders of the bill say it makes a number of crucial improvements, including a roughly $10 billion increase in food stamps and other nutrition programs, as well as expanded land conservation and rural development programs and new aid for growers of fruits and vegetables, who have never gotten assistance from a farm bill.
But even strong proponents of the bill, like Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, concede that farm interests are deeply entrenched and that there is little appetite for change among many farm state lawmakers, especially when it comes to the direct payment program.
The direct payments are based on the amount of land that certain farmers own, and Mr. Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.
“It’s like the black hole in space that astronomers talk about: everything gets sucked in and nothing ever comes out,” he said. “This is the black hole of agriculture. It doesn’t make sense, but farmers continue to get it.”
Mr. Harkin said there was not much he could do because “I don’t have the votes,” adding, “People love free money.”
Defenders also say that expecting the huge farm bill to address current challenges is like asking a farmer to go out and grow corn for tonight’s supper.
Other bills — on energy, foreign aid, even economic stimulus — have the potential to be more nimble or, in some cases, to cause more harm.
The senior Republican on the House Agriculture Committee, Representative Robert W. Goodlatte of Viriginia, said Democrats were to blame for the jump in food prices because of mandates for higher ethanol production that they included in an energy bill last year.
“When corn prices go as high as they were going, people shift their production out of wheat into corn, out of soybeans into corn, out of rice into corn, even out of cotton into corn,” Mr. Goodlatte said. “The mandate basically says ethanol comes ahead of food on your table, comes ahead of feed for livestock, comes ahead of grains available for export.”
But as lawmakers trying to reconcile the House and Senate versions of the farm bill struggle to meet a Friday deadline when a short extension of the current law will expire, there is little in the bill to help slow the ethanol-driven price increases. In recent weeks, corn prices have hit record levels of $6 a bushel and more.
And lawmakers are fighting over whether to create a pilot program to buy $25 million in food grown locally in poor countries. Environmentalists and antipoverty experts say that would be a step toward a more effective food aid program than the current practice of shipping American products.
There is also no movement to require tighter regulation by the Commodity Futures Trading Commission of futures markets. Many farmers suggest that hedge fund money is building a speculative bubble in farm commodities and causing wide swings in futures prices, making it more expensive for them to use futures to lock in crop prices. Farmers fear that the bubble could burst, like in the housing market.
“It’s a train wreck waiting to happen,” said Tom Buis, the president of the National Farmers Union.
Many experts say the biggest step Congress could take would be to eliminate the direct payments in favor of a new revenue assurance program that would help farmers in times of need, but save money in boom years when crop yields are strong and prices high.
It is a step that even many farmers say would make sense.
“As a farm leader, I can’t justify why someone should receive a guaranteed payment from the federal government, with the high prices they are getting from the marketplace,” Mr. Buis said.
Copyright 2008 The New York Times Company
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