Wisconsin State Journal / April 29, 2001
It will be two years before the federal farm bill expires. But the time for Congress to shift its work on the new farm bill into high gear is now.
The sooner Congress agrees on an outline of farm legislation that will address the failures of the current bill and offer a direction that farmers and their lenders can plan on, the better off farmers, agribusinesses and taxpayers will be. Lurching annually from one emergency aid package to the next, as the nation has been doing under the current farm bill, is satisfactory to no one.
Among the conclusions that should inform the debate on the new farm bill are these:
* Freer markets should remain the goal. The farm bill now in effect, passed in 1996, was a breakthrough in agricultural policy. Realizing the inefficiencies of earlier farm policy under which markets were heavily influenced by government programs at taxpayers' expense, Congress created a bill to move agriculture into freer markets, where farmers would produce to meet consumer demand.
Congress had the right idea. But because of unforeseen events, the result was a disaster for farmers and costly for taxpayers. Bumper crops in the United States and elsewhere in the world produced unexpectedly high supplies. Economic troubles in Asia, Latin America and Russia reduced demand. The crunch sent crop prices plummeting.
As a result, annual transition payments under the farm bill were doubled in the past two years, and Congress has added $23 billion in emergency aid since fiscal 1999.
In the long run, however, there is no doubt that freeing farmers to produce for consumer demand will yield the best combination of cheap, high quality food and livable farm incomes. That should remain the long-term goal.
* Dairy policy should be made fairer to Wisconsin. The dairy farm economy is one area of agriculture that remains too tied to government programs. A chief victim of government's market meddling is Wisconsin, America's Dairyland. An antiquated policy of establishing higher milk prices for farmers the farther they are from Eau Claire leaves Wisconsin farmers at a disadvantage.
Though recent modifications have reduced the unfairness somewhat, Congress has failed to eliminate it, in large measure because of regional protectionism within the dairy industry. That same regional protectionism has created new unfairness with the Northeast Dairy Compact, which establishes higher prices for farmers in Northeastern states at the expense of consumers there and of farmers in other regions.
Sen. Herb Kohl, D-Wis., and Sen. Rick Santorum, R-Pa., have offered a bill designed to bring fairness to milk pricing. Called the National Dairy Farmers Fairness Act, it's a good place for Congress to start looking for a solution.
* Supply and demand should be brought into better balance. On the supply side of the farm equation, American farmers are too efficient for their own good. Until global demand catches up, their production will keep prices too low to provide good incomes. One option for policy makers is to encourage farmers to produce less by taking land out of production.
Massive land set-aside programs were discredited years ago because they encourage other nations to take shares of the global farm markets at U.S. expense. But with environmentalists campaigning for more conservation of land and more green space for wildlife habitat, it is time to consider expanding conservation programs that pay farmers to keep marginal land idle.
On the demand side, U.S. trade negotiators' efforts to open foreign markets more fully to U.S. farm products loom important.
* Farmers deserve a predictable safety net. Events of the past four years show that turning farmers loose on freer markets is complicated by factors outside the control of policy makers or farmers -- weather and foreign politics, for example -- as well as the lingering impact of years of government market influence.
It's in the national interest to provide a safety net to ensure that good farmers are not forced out of business by extraordinary conditions. The safety net in the 1996 bill proved inadequate, leaving farmers and their lenders waiting for the yearly emergency supplements. The new bill should provide a net that is predictable, so that farmers and lenders can plan for the future.
The structure of the safety net, however, will require careful consideration to be compatible with the goal of freer markets. For example, raising price supports for particular crops would encourage farmers to overproduce those crops and could violate international trade agreements. An alternative -- to supplement farmers' incomes with government payments when an index of crop incomes falls below a minimum level -- gained the support of a commission appointed to recommend farm bill changes.
Putting together a farm bill that meets the needs of farmers, consumers and taxpayers will be no easy task. Congress should approach it with a sense of urgency.
Copyright 2001 Madison Newspapers, Inc.:
