Here we are right in the middle of writing of the 2007 Farm Bill and the debate hasn't changed much over the last decade - it's still about subsidies. There's a whole host of organizations claiming to represent the interests of the environment, taxpayers, poor country farmers, and free traders who want to slash subsidies. In response, mainstream farm groups are circling the wagons and pushing for largely an extension of the current system with some slight changes.
But what about a middle ground that protects farmer income and reduces subsidies? This month, over 30 organizations sent a letter to House Agriculture leaders explaining how to get there. The proposal should sound familiar - it's based on long-proven tools of supply management to ensure farmers receive fair prices from the marketplace, and not bailouts from taxpayers. The U.S. sugar program, which ensures a fair price for farmers and costs the government nothing - angering the big food companies to no end - is an example of how this can work.
Drs. Daryll Ray and Daniel De La Torre Ugarte at the Agriculture Policy Analysis Center at the University of Tennesee have written frequently on the benefits of a system that manages supply. Their report, Rethinking US Agriculture Policy, explains why many who wish to simply slash subsidies won't get their desired result in the countryside. Namely, farmers will continue to over produce with the same accompanying low prices and environmental degradation.
The strength of a supply management approach is that it's based on a fundamental American ideal - that the market should pay people an honest price or wage for their work. Employers in the U.S. are required to pay workers a minimum wage. Why shouldn't the food companies be required to pay farmers a minimum price? It's also based on basic business 101: supply needs to match demand.
A stable price for commodity crops would have benefits for a broad range of constituencies. As IATP's Dennis Olson puts it, "Whether you’re a corn farmer facing the uncertainty of this year’s harvest, a venture capitalist investing in an ethanol plant, a family dairy farmer wondering what your feed prices might be by the end of year, or a consumer wondering if food prices will rise, you have a stake in a stable, affordable supply of grains in the supply chains. Strategic grain reserves would help reduce the dangerous volatility that can harm everyone.”
Many have dismissed a supply management approach to the Farm Bill as politically impractical. But it deserves a fresh look, particularly in light of recently volatile corn prices, which make the costs of various subsidy programs nearly impossible to predict for the future. An updated supply management system that includes new ideas to support environmental benefits and the development of new crops for the bioeconomy could help achieve the goals of players on all sides of the subsidy debate.
