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Debate Mounts Over U.S. $20 Billion Annual Tax Subsidies to Commodity Crops & Corporate Farms

Farm Policy Issues
A. Farm Bill

Scott Kilman and Roger Thurow <>, provided an in depth look at the future of U.S. farm policy in today's Wall Street Journal.

"A movement to uproot crop subsidies, which have been worth nearly $600 billion to U.S. farmers over the decades, is gaining ground in some unlikely places -- including down on the farm.

"In Iowa, one of the most heavily subsidized states, a Republican running to be state agriculture secretary is telling big farmers they should get smaller checks. Mark W. Leonard <> , who collects subsidies himself and campaigns in a white cowboy hat, told a room full of farmers recently that federal payments spur overproduction, which depresses prices for poor growers overseas.

"'From a Christian standpoint, what it is doing to Africa tugs at your heartstrings,' Mr. Leonard told them. Last year, he helped humanitarian group Oxfam International <> in its anti-subsidy campaign by escorting a cotton farmer from Mali to church gatherings near his farm in Holstein."

The Journal writers went on to point out that, "In Washington, D.C., the Alliance for Sensible Agriculture Policies is meeting to share ideas about changing the farm bill. Participants include Oxfam and Environmental Defense <> from the left, the National Taxpayers Union <> on the right and the libertarian Cato Institute <> . Prominent philanthropic organizations, including the William and Flora Hewlett Foundation <>, are financing some of this advocacy.

"'There are a growing number of people who want to weigh in on farm policy,' says Rep. Jerry Moran <> , a Kansas Republican who sits on the House Agriculture Committee. 'They care about Africa. They care about the environment. They care about nutrition.'"

As a reminder, the Journal article provided this brief historical perspective regarding the current farm bill, "In 1996, a Republican-led Congress passed legislation to wean farmers from subsidies over seven years. But Washington backed off as the farm economy entered one of its cyclical tailspins.

The 2002 farm bill
<> signed by President Bush is one of the most lavish ever, even as the economic cycle improved. Last year, the government paid a record $23 billion to farmers."

From the executive branch perspective, the Journal writers noted that, "The Bush administration is in the reform camp. At the WTO, it has offered to cut by 60% the amount of money it can spend every year on certain subsidies, if the European Union cuts by 83%, a move that the U.S. says would bring both blocs into line. Last month, the White House Council of Economic Advisers took the unusual step of devoting a chapter in the annual 'Economic Report of the President' to lambasting crop subsidies, saying they 'hurt countries that could benefit from exporting these commodities to the United States.'"

The Journal article noted a couple of examples of the more diverse interest in U.S. farm policy, saying that, "Bono's [the Irish rock star Bono of the band U2] advocacy organization, Debt AIDS Trade Africa, or DATA <> , has now joined with the One Campaign <> , an alliance consisting of organizations such as Oxfam, to target agriculture policies and subsidies. 'If you care about debt cancellation and AIDS, then you have to care about the trade issues, too,' says Jamie Drummond, executive director of DATA."

Similarly, the Journal indicated that, "The field organizer in Kansas is a far cry from the typical idealistic humanitarian worker. A farmer who often votes Republican, Jim French, 52, abhors attention-getting stunts such as dumping crops on the ground. He came to the attention of Oxfam through his work for Kansas Rural Center <> , a nonprofit advocacy group for family farmers.

"He's pushing the idea that subsidies should be linked to something other than production, such as environmental improvements. 'There's a common solution for a problem of the farmers on the Great Plains and a problem of the farmers in Africa,' Mr. French says.

"He has driven his 12-year-old, hail-pocked Buick LeSabre nearly 20,000 miles over the past year for Oxfam, speaking at farmer conventions, prodding editorial writers at Great Plains newspapers and attending community meetings with members of Congress home from Washington. Last September, he collected hundreds of signatures for a fair-trade petition at a concert in the suburbs of Kansas City, Kan., by a British band he'd never heard of before: Coldplay. In April, he plans to escort an African farmer around the Great Plains."

Coming full circle, the article gets back to where it started with these concluding paragraphs, "On the campaign stump, Mr. Leonard, 49, who raises cattle and crops, argues that production-based subsidies increase farmers' incentives to get bigger, a development that's speeding the depopulation of the countryside as farmers buy up more acreage.

"'Inadvertently, it is a government-sponsored farm-consolidation program,' he tells a group of farmers in Ames. 'What we need is for that subsidy money to be divided among more farmers.'

"That sentiment brought him into Oxfam's orbit. Last year, the group was seeking a farmer to speak in Washington in a favor of legislation co-sponsored by Iowa Republican Sen. Charles Grassley <> that would cut the maximum subsidy payment to a farmer to $250,000 from $360,000. The proposal was defeated in November, 46-53, but the debate helped to pull together people of disparate politics now mobilizing to work on the next Farm Bill.

"'As a conservative, Oxfam and I can disagree on a lot of social issues,' says Mr. Leonard, who leaves his Oxfam button at home while out campaigning. 'But for us to agree on subsidies means something big is happening.'"

Meanwhile, an item posted yesterday at the Western Farm Press <> webpage provided some more information about the House Agriculture Committee hearing that took place in California <> earlier this month.

"National Cotton Council <> Vice Chairman John Pucheu told the House Agriculture Committee that a significant majority of California’s upland and pima cotton producers strongly support current farm law and see it as a sound basis for future farm policy," the article said.

"Testifying at that panel's farm policy review hearing here today, the Tranquillity, Calif., cotton producer said current farm law must continue to operate without major modification through its scheduled expiration with the 2007 crop because 'producers have made substantial long-term investments and cropping and marketing decisions based on current farm law. We are particularly concerned by repeated efforts to further reduce limitations on benefits or limit eligibility to the loan, and we you to continue to oppose these proposals. Current limitations already place most commercially viable California operations at a disadvantage because of our costs and economies of scale.'"

Ken Meter <> , in a post yesterday at the Grist Magazine blog (Seattle, WA) filed an opinion regarding the future of U.S. farm policy.

"America is scheduled to write a new farm bill in 2007. With the World Trade Organization ruling that our farm subsidies distort trade, and public expenses for flood relief and the war effort taxing the treasury, this could be a time of interesting shifts in how we view farm policy," Mr. Meter noted.

The update moved on to suggest that, "The first thing to note is: We don't need a farm bill in 2007. We need a food bill, or a rural development bill. We need to invest in communities, not commodities.

"We support farmers in the U.S. because we want to ensure access to healthy food. But the vast majority of the $250 billion in farm commodities farmers sell in this country each year are just that: commodities. They are raw materials for industry. Fresh-food items are a tiny proportion of what is sold by growers. In fact, only 0.5% of U.S. food trade involves direct sales by farmers to consumers, as the Agriculture Census <> shows. Most commodities are sold to processors, who trade for a higher price, add value by creating a food product, or feed animals raised on industrial lots. Much of our corn is converted into corn sweeteners; most soybeans end up as animal food. There is no reason our federal dollars should subsidize cheap commodities for industrial production.

"Moreover, on the eating end, things are spinning out of balance. Two of every three Americans are overweight. The medical costs of obesity now amount to $118 billion per year. Half of all public-school students can't afford to pay full rates for school lunch. Ten percent of all households will face food shortages this year. America loses 5,000 citizens a year to food poisoning. As I mentioned in a recent post, the U.S. is about to become a net food importer <>
If our farm bill is intended to ensure reliable supplies of food, and healthy eating, it has failed miserably," Mr. Meter said.

Jillian Burgess
<> , in an article published in yesterday's Stuttgart Daily Leader (Stuttgart, AR), reported that, "Mike Johanns, U.S. secretary of agriculture, addressed Arkansas Farm Bureau <> Tuesday, March 7 in Washington D.C. about various topics which will influence the nation’s farmers this year. One of those is the Doha round of negotiations at the World Trade Organization."

The article noted that, "The Doha round of WTO negotiations <> may even directly impact Stuttgart.

"'We're certainly in favor of free trade,' Keith Glover, CEO of Producer's Rice Mill, said. 'It's sort of a scary thing though. I'm really concerned about the cut in the safety net and even though opening certain markets will help, it may take years to see that impact. In the past, with free trade agreements , we usually get the short-end of the stick. Other parties usually don't hold up on their end of the deal which leads us to be short-changed.

"'I've got mixed emotions about the Doha round so far. We need to get a peace clause involved. A peace clause would mean that as long as we’re under a certain amount of money, no country can come in and take pop-shots or market distorting. We do a lot of exporting here so I know that free trade would open up some doors. But, the current administration is not favorable,' Glover said.

"'The encouraging thing is that when it comes to this administration, our senators and representatives will have a big say-so in the final outcome. And they're all very much in support of keeping rural America in light and seeing how this will impact our state.'"

In conclusion, the article stated that, "'The backbone of Arkansas’ economy is agriculture,' Sen. Mark Pryor <> said, addressing Farm Bureau in Washington. 'We’re going to do our best to make sure Arkansas’ agriculture is in the forefront of this administration’s mindset throughout all facets.'"