This Milk Law Is Way Past Its Expiration Date
In the closing days of 2012, “Dairy Cliff” puns provided some comic relief amidst Fiscal Cliff fears.
Confusingly associated with sequestration, thanks to a “cliff”-happy media, the possibility of milk prices spiking on January 1 actually had nothing to do with debt-ceiling negotiations—and everything to do with the House’s inability to pass a new version of the Farm Bill.
The milky precipice was averted, like its monetary cousin, but only temporarily, thanks to a last-minute $100 million cut to SNAP. Those diverted food-aid funds kept the modern safety net for dairy producers, the Milk Income Loss Contract, in place. Otherwise, as the much-repeated line goes, dairy subsidies would have reverted to 1949 levels, thereby doubling the price of a gallon of milk.
So the Dairy Cliff speaks to the haphazard nature of agriculture policy and the significant financial advantages Big Ag has when it comes to federal crop subsidies. With the 113th Congress set to tackle the Farm Bill the 112th could not pass, it’s worth looking back at the permanent law of the farmland and the political process that brought it about.
The ag-policy time warp would land in 1949 because that year Congress passed what remains the permanent legislation governing U.S. agriculture, inventively known as The Agriculture Act of 1949. Each five-year (give or take, depending on the efficacy of the sitting Congress) reauthorization of the Farm Bill is essentially a process of amending and modernizing the President Harry Truman-era law.
Milk, with its year-round production cycle, would be the first agricultural product to go time travelling on farmers and consumers if the Farm Bill expired and the outdated law took over. Hence the narrow focus on the “Dairy Cliff” rather than “Agricultural-Industrial Complex Cliff.”
But subsidies for crops like corn and wheat would rise dramatically if we went without a contemporary Farm Bill for an extended period of time. According to a press release issued in 2008 by the USDA, which addressed the potential effect of the 2002 Farm Bill lapsing in that year, “Price support rates for corn would almost double, from $1.95 to a minimum of $3.78 per bushel.” Payments to farmers who grow soybeans, an insignificant crop in 1949, would disappear. Tobacco farmers, whose federal support will be completely phased out by 2014, would go back to receiving subsidy payments formulated in an era when over 40 percent of adults smoked cigarettes.
If Harry Truman’s Secretary of Agriculture, Charles Brannan, a New Deal Democrat, had his way, each temporary Farm Bill might have a very different permanent underpinning. Rather than basing subsidies on commodity prices, the so-called Brannan Plan would start “computation with an income criterion as the base on which price supports are determined.” In other words, the Secretary was advocating for a sort of living wage for farmers.
That quote from Brannan appears in a Virgil W. Dean story published by Agricultural History in 1995. He goes on to write that Brannan was seemingly influenced by a memo from the left-leaning National Farmers Union, which suggested that policies should “promote family type operations,” and “place producers on a parity of income level with the rest of the nation’s folks.”
Responses to the partial Farm Bill extension passed on January 1 suggest that, similarly to 1949, when the Republican-led Congress opted for a commodity-price-based approach to farm subsidies over Brannan and Truman’s “Fair Deal,” small farmers have again been left in the lurch.
The National Farmers Union issued a press release on the first day of 2013 that read, in part, “Once again, Congress has left rural American out in the cold.” The Union says that the extension “fails to provide disaster aid for farmers or necessary support for our dairy industry, yet continues unjustifiable direct payments.”
Indeed, the stopgap measure includes $5 billion earmarked for direct payment to farmers—which replaced price supports enacted through government purchases of commodities in 1996—in the coming year. This adds to the $45.6 billion that has been paid out to the industry since 2002, according to the Environmental Working Group (EWG), the year when that controversial form subsidy was supposed to be phased out. Astonishingly, only 10 percent of America’s farms collected 75 percent of all payments, according to the EWG, leaving the bottom 80 percent of farms an average annual payment of less than $600 between 1995 and 2011.
In a rather bitter-sounding column from 2002, the year Congress passed a Farm Bill that promised to pay out $180 billion over ten years, New York Times columnist Paul Krugman attacked the myth of the farming heartland being “morally superior.” Krugman argues that the “grotesque” Farm Bill “by itself, should put an end to all such assertions; but it only adds to the immense subsidies the heartland already receives from the rest of the country.”
On the opposite side of the political spectrum, the anti-tax group Citizens Against Government Waste refers to federal farming subsidies (for peanuts, in particular) as a “Soviet-style regulatory approach.”
You’d be hard-pressed to find fans of farming subsidies that aren’t cashing government checks themselves.
The coming Farm Bill debate will surely include discussions of crop insurance and federal disaster-relief aid for drought-stricken farmers and ranchers. These are just the kind of uncontrollable instances that would bankrupt farmers and have a lasting effect on the national food supply if it weren’t for government support of what remains, despite technological advances, a very tenuous industry.
Taking up a Brannan-inspired approach to farm subsidies, one that would address the financial concerns of middle-class farmers rather than explicitly benefiting corporate agricultural interests, as the direct-payment system so clearly does, wouldn’t seem to be out of step with President Obama’s approach to tax policy.
After all, farmers are certainly deserving of a Fair Deal.
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