Global Development: Views from the Center
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May 07, 2008
The US Farm Bill: From Bad to Worse?
Posted by Kimberly Ann Elliott at 03:08 PM
"House and Senate negotiators bargaining over a new farm bill have reduced funding for a key school lunch program for poor children abroad and agreed to sharply expand nutrition programs for low-income families and children in the United States."
"How can the world's hungriest schoolchildren be denied meals while the farm bill being debated in a House-Senate conference provides millions in subsidies for wealthy farmers? That's what Congress proposes. In all fairness, it should not become law."
Former Senators Robert Dole and George McGovern, Washington Post, May 6, 2008
No one would criticize Congress for doing more to help poor children in the United States, but at the expense of even poorer children overseas? Apparently farm bill negotiators have decided that they must cut nearly $800 million over 5 years from a program that provides school lunches for poor children in developing countries in order to increase funding for nutrition programs for American children. But as the congressional sponsors of the program noted yesterday in the Washington Post, the money could easily be found elsewhere with just a little political will. A few examples of the egregious excesses in the farm bill include:
- Millions that might be saved by capping the adjusted income level at which farmers can collect subsidies at well under the nearly $1 million that has been proposed (income after expenses).
- The failure to fix the rules so that farmers cannot game the system by collecting subsidies and then selling commodities later when prices rise above the subsidy-linked price floor.
Finally, as much as $5 billion annually could be saved by eliminating the so-called direct payments that are paid out every year, no matter how high prices go. A version of these payments was originally created in the 1996 farm bill when the intent was to bolster farm incomes as part of a reform to gradually reduce production-distorting subsidies (for more on this, see my book, Delivering on Doha: Farm Trade and the Poor) The administration has continued to support inclusion of the direct payments because they are "non-distorting." But it is now clear that Congress has no interest in reform and, in today's market, the payments are a pure windfall for farmers already reaping the benefits of historically high prices. They should be eliminated.
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Comments
I always thought that the "non-distorting" nature of the subsidies was rhetoric for the Agreement on Agriculture as a way to shift subsidies from those that would not be allowed to those that would be allowed with minimal reduction in subsidy level. I'm surprised that you read this plan as having intent to "gradually reduce production-distorting subsidies". I imagine that the Clinton administration said it then, but the fact that Republicans may have said the same is entirely due to Lugar who doesn't support the subsidy system in general. When have congressionally allocated programs ever moved gradually? When have trade negotiations ever moved both gradually and voluntarily? If any farm subsidies are going to be gradually reduced it has to be gradually reduced through the length of the current bill to zero during the last year it is in effect.
Posted by: Tucker at May 7, 2008 04:20 PM
I have no problem at all with the US choosing to expand US nutrition programs and cutting ones for children abroad. The US government has a responsibility to protect the interests of its citizens. One of the problems with our current foreign policy is that we've taken it upon ourselves to solve what we deem as other people's problems. If the UN or some other international body wants to take up this cause, that's great, but it's not Congresses job.
Posted by: James at May 8, 2008 09:44 AM
It's ironic that the U.S. Congress would take food from poor children anywhere as a way to reduce the cost of the disastrous U.S. Farm Bill. Even farm groups are acknowledging that the current high prices have handed windfall benefits to major U.S. farm producers, and yet Congress persists in paying out subsidies. School breakfast and lunch programs work in the U.S. and in poor countries to increase children's weight, school performance, and school enrollment. They have also been proven to increase local farm production in developing countries since farmers can supply their nearby schools. All of these outcomes reduce poverty in the long-run and enable children to become productive members of society - wherever they live. The World Food Program has rigorous analysis demonstrating benefits of school feeding at (http://www.wfp.org/food_aid/school_feeding/Docs/SF_Research_Seminar_Report.pdf). Such an investment in poverty reduction does more for U.S. interests than making rich farmers richer.
Posted by: rachel at May 8, 2008 02:23 PM