National Center for Policy Analysis
MONTH IN REVIEW
Agriculture
July, 1996
DISPOSING OF' THOSE REMAINING FARM PROGRAMS
In passing the Freedom to Farm law last year, Congress eliminated subsidy
payments and production limits on wheat, feed grains, cotton and rice. But
three major support programs were left unchanged -- those for peanuts, tobacco
and sugar. Free market advocates are urging the Senate to correct that through
the agriculture appropriations bill coming up for a vote this month; the
House has already passed its version and left the programs intact.
All three of the remaining programs rely more heavily on tight controls
on both domestic production and imports than on direct federal subsidy payments,
which drive up the prices of these commodities.
- Critics note that the peanut program, which requires growers to obtain
a permit to grow and market their crops, raises the price of peanuts and
drives those farmers who cannot obtain a "quota" allotment out
of business.
- The peanut program costs American consumers between $300 million and
$500 million annually, has reduced the use of peanuts in processed foods
by 10 percent since 1990 and reduced U. S. exports of peanuts by 27 percent
since 1989.
- While the export market for tobacco is now booming, quotas are capping
production.
- And acreage for sugar beets is less than it was 20 years ago as food
processors turn to lower-priced corn-based sweeteners.
Source: Dave Juday (Hudson Institute), "The Remaining Agriculture Subsidies,"
Wall Street Journal, July 17, 1996.