Farm folly: Time to end wasteful subsidy policies
Farm folly: Time to end wasteful subsidy policies

The Oklahoman Editorial

Published: June 24, 2007

CRITICS of the 2002 federal farm bill said it represented a return to wasteful, 1930s-style subsidy policy, skewed toward large growers of just a few crops, the top 10 percent of which would get nearly 70 percent of the benefits. Guess what: They were right.

As the U.S. House of Representatives debates the next five-year farm bill, statistics show two-thirds of the present bill's subsidies go to 10 percent of the recipients. The Oklahoman's Chris Casteel reports most farms don't receive any payments, while some non-farmers living in big cities do receive payments.

Now the really sobering news: The commodity subsidy program cost nearly $38 billion from 2003 through 2005. Oklahoma ranked 20th in subsidies in that period, with about 48,000 recipients drawing $538.5 million.

We're not against farmers, nor are we against a reasonable program of price supports that helps farmers through lean years. But the current bill — and the one likely to succeed it — miss the mark.

Current policy is rooted in the Great Depression, when Washington thought it could manage American agriculture with subsidies, commodity supply and price controls, acreage allotments, import restrictions and export subsidies. The idea was a safety net, but the result was a disaster. Central planning didn't work, and attempts to control supply helped U.S. agriculture price itself out of the export market. Foreign production filled the vacuum created by idling vast areas of American farmland.

The 1996 "Freedom to Farm” bill tried to change things by letting farmers choose what to plant and by providing market transition payments that would phase out by 2002. The legislation had flaws and loopholes, but it really was done in by its creator: Congress. Foreign economic problems and weather-related disasters prompted lawmakers to appropriate emergency relief on top of farm bill payments. By 2002 it was back to the future with a bill that mirrored pre-1996 legislation.

With the 2002 program expiring, Congress is at it again despite opposition from the White House, budget groups and environmentalists. Smart money is on the traditional approach, but taxpayers would be better served if lawmakers tried again to craft a bill that gets subsidies to those who really need them and eventually phases them out.

One proposal would replace current subsidies with risk management accounts farmers could use to ride out the ups and downs of agriculture. Left alone would be assistance to buy crop and revenue insurance — the proper way to deal with losses from weather-related disasters. (Congress then would have to resist the urge to allocate emergency aid.)

Unfortunately, the 2008 election cycle is under way. Historically that means lawmakers will tend to throw money around trying to win farm votes. So we'll not hold our breath waiting for a reasonable, economical farm bill.