Advertisement

Recession in Farm Thinking

Share

Both the Reagan Administration and Congress seem to have abandoned efforts to write a new farm bill that makes economic sense. The farm recession, and the political reaction to the declining income of so many farmers, is blamed for the tendency to bow to short-term problems by ignoring long-term necessity. That bodes ill for American agriculture.

Many members of Congress are now frankly saying that the protection of farm income is the basic issue in drawing up legislation to replace the expiring 1981 act. And they have discovered that a minimum income-protection plan would cost more than $30 billion over the next three years. That is roughly $10 billion more than the farm allocation in the tentative budget adopted by the Senate.

The 1981 law proved even more costly. In its first four years, farmers were paid $52.8 billion--an all-time record. It was a price tag that the nation could afford only if it produced both farm prosperity and a product competitive in the world market. It produced neither.

Advertisement

Some improvements are under consideration. Both the House and the Senate seem determined to lower the loan rates on food and feed grains, notably wheat and corn, to bring them into line with world prices. Market-clearing prices--prices that are competitive and result in sales--are an absolute minimum requirement of any legislation. Competitive prices would not guarantee a return to export success, because the high value of the dollar continues to be a major obstacle. But lower prices would at least begin the process of expanding exports back toward the record levels of the last decade.

Both houses of Congress also remain committed to income guarantees under a target price system that may prove too expensive to be affordable. In past legislation the enormous subsidies have gone largely to the huge farms, the ones that need it the least. An income-protection plan can be acceptable only if narrowly targeted, with the kind of strict ceilings on payments proposed initially by Secretary of Agriculture John R. Block. The beneficiaries should be neither the small farm--the avocation of people with other work--nor the very large farm that does not need government intervention to survive.

Unfortunately, some members of Congress still succumb easily to special interests in agriculture, providing extravagant support to small groups and thus distorting the entire farm situation. This is nowhere more evident than in a recent vote in the House Agriculture Committee to continue the profligate dairy program despite overwhelming evidence of its failure to do anything in the past except provide vast subsidies to a few thousand producers. The vote came only a few weeks after the Department of Agriculture showed that the dairy diversion program had failed to achieve the intended reductions in dairy production, leaving a $1.5-billion cost to Commodity Credit Corp. In California, second after Wisconsin in receipts under that program, 92% of the farmers who benefited received an average of $175,000 each.

Consumers in the United States are obviously proud of the effective and efficient agricultural sector that feeds the nation well at relatively low cost. But patience is wearing thin with costly support programs that serve neither the farmers who need help nor the national interest in an export-oriented, competitive farm economy.

Advertisement