Agriculture Abyss: Farm Bill Subsidies Argued In Congress

The “Agriculture Abyss” is an astute observation that the congressional gridlock over the Farm Bill may cause another disaster besides the Fiscal Cliff. According to The Economist, farm subsidies cost America’s government tens of billions of dollars each year, even though many farmers are earning more than ever thanks to high commodity prices. Both Democrats and Republicans agree that they need to eliminate direct payment to growers in order to cut some spending, but delays in deciding the specifics for the new Farm Bill may cause more than a little spilt milk.

The Agriculture Abyss would be triggered by the expiration of the last farm bill passed in 2008. With nothing to take its place, the government’s price support scheme would automatically revert to what it was in 1949. Applying the old formulas today would require the federal government to buy up enough milk to establish a minimum wholesale price more than double its current level. Even basic staples like wheat would find its price rocketing up by 67 percent. Can you imagine the effect this would have on the poor?

“Reverting back to an antiquated system…is not responsible,” says Frank Lucas, the Republican chairman of the House agriculture committee. How is that for understatement?

The expiry of the latest bill means several conservation programmes have been frozen, as have export loan guarantees. Even food stamps will be affected by the Farm Bill, which is a point of contention since Democrats are decrying Republican efforts to shave more off the federal budget with a cut that would primarily affect the poor. But both parties agree that food stamps should be cut…just not by how much.

According to the Congressional Budget Office, the Senate version of the Farm Bill favored by Democrats would save $23 billion over the next ten years. The House Agriculture committee’s version cuts Federal spending even further, saving about $35 billion over the next ten years.

The hangup that might lead to the Agriculture Abyss is in how they compensate farmers for the removal of direct payments. The Senate version favors Midwestern wheat and soya growers over Southern peanut and rice farmers.

With Congress having trouble avoiding the Fiscal Cliff and making very little progress it’s possible we may be facing an Agriculture Abyss as well.