Farm Bill Tills New Ground

The 5-year farm bill before Congress this year should continue the nation’s farms on course toward a more market-oriented policy, according to the National Commission on Agriculture and Rural Development Policy. It is good advice, if not easy to implement.

The commission was established by the 1985 farm bill and consists of 15 persons nominated by the governors and appointed by Ronald Reagan when he was President, plus the four congressional farm committee leaders.

Commission members support a phase-out of subsidies, enhancement of free trade and an end to government incentives that distort farm policies, all good and useful objectives. A major role of government would be to provide a safety net “to stabilize incomes” in times of low prices or low yields without the distortion of incomes inherent in existing programs. This would be facilitated by relying on crop insurance rather than ad hoc disaster relief to cushion farmers in times of crisis.

The report praises the 1985 farm bill. The performance of that legislation did not always conform to its good intentions, however, a measure of the problems that could be faced writing the 1990 bill. The 1985 act generated the highest government direct payments to farmers in the history of American farming. Much of the export increase that it encouraged was the result of new subsidies that further distorted global trade. It also perpetuated programs, like the protectionist sugar quotas, that are damaging to American consumers as well as American relations with strategically important sugar-producing nations.

There is a welcome emphasis on competitiveness in this new report. American farm prosperity depends on the expansion of exports, the report argues. Competitiveness in world markets depends not only on farm efficiency but also on such global economic factors as trade liberalization, market access and monetary stability. Productivity growth rates in U.S. agriculture have exceeded those of foreign competitors over the last two decades, according to the report, noting the large world trade share maintained for American wheat, feed grains, cotton and soybeans. The report leaves unanswered, however, serious questions about the ability of American farmers to compete in the future, even if all the artificial barriers and subsidies are stripped away.

Perhaps the most useful recommendation in the report is for more investment in agricultural research and development. Once the world leader in this area, the United States has fallen behind. Without improved products and more efficient production, there will be no way to compete.