By Gary R. Blumenthal, World Perspectives, Inc. March 21, 2001
Congressman Larry Combest (R-TX), Chairman of the U.S. House Committee on Agriculture, decided several weeks ago that he needed help in finding a solution to the mess in the farm economy. The criteria he established for farm groups testifying before his committee on a farm bill rewrite has likely "rewritten" farm bill development for all future Congresses.
While most of America sees agriculture as one big amalgam, Combest knew from experience the fractious nature of different commodity groups, and he knew the huge hurdle he faced in convincing the rest of the Congress that the budget for agriculture needed an increase. Finally, he accepted the fact that a surplus production industry was hugely dependent on export markets if it was to better utilize demand and improve prices.
Consequently, he placed three requirements on all groups presenting testimony to his Committee on how they would like to see farm policy changed. Each group had to provide the following:
1. The effect of their proposal on other commodities; they could not be totally parochial in their prescription.
2. The impact of the proposed policy changes on trade (including WTO).
3. Any budgetary impacts (e.g. exact spending implications) of any ideas presented to the Committee.
The Committee had already heard all of the whining about agricultural policy during a series of field hearings it conducted across the country last year. Now farm groups had to come in with specific solutions accompanied by thorough analysis. The result has better engaged farm group leaders on farm policy development, and likely frustrated them with the complexity of the task at hand. Some say it has been a lucrative exercise for agricultural economists as well! The testimony has included all types of economic analysis, including long-range projections on supply, demand, prices and government outlays.
Thus far the committee has held seven hearings on specific farm bill proposals; there are three more on the schedule. Some of the proposals are more "out of the box" than others, but the most novel and perhaps best of the ideas is yet to come. Too many of the concepts simply move more government money around the same traditional programs without addressing the real problems faced by agriculture. Many of the issues involve current problems such as StarLink and biotechnology, but some involve structuring the industry to deal with the resulting demand for identity preservation (perhaps through product certification), concentration and other structural developments.
In sympathy for the elected leaders of these farm groups, most of them are successful business people with an underlying disdain for how their industry has become so dependent on government programs. But they are elected leaders and they know the importance of government transfers to the viability of the smaller farmers in their constituency. They want their industry to succeed by the traditional market rules of competition but supporting such a harsh approach would cause a revolt amongst their members. So most of the resulting recommendations involve raising the floor of support for commodities. They keep LDPs but many suggest changing loan rates through so-called "rebalancing." AMTA is demanded by the bankers, so they stay, and all of the groups read the report of the Commission on 21st Century Agriculture and have folded in a countercyclical program to boost support when farm prices are low. Some of the ideas are more distorting (WTO Amber Box) than others (WTO Green Box).
There is also general agreement to eliminate payment limitation, and a desire to funnel support to farmers rather than land owners, though no one has figured out how to achieve that result. There is a divide over acreage set-asides, with some general farm groups seeing them as good, and some commodity specific groups wanting no part of it.
The proposals presented to Mr. Combest thus far do not seem to be the panacea the Chairman was hoping for as a result of his request. As mentioned earlier, there may be a proposal unveiled soon that is more attractive than the others. However, the key point at this juncture in what could be a year or longer debate is that farm and commodity groups are no longer passively awaiting the behind-closed-doors work of their lobbyists and Congressmen. Chairman Combest has caused them to become engaged as never before, and this kind of self-control over destiny is at once a burden, and a hoped for blessing in ultimately creating a better U.S. farm policy.:
