NCPA - National Center for Policy Analysis

Resurrecting Farm Subsidies And Regulations

August 27, 1999

Will Washington lawmakers turn their backs on the 1996 Freedom to Farm Act? That law was designed to drive farming toward free markets and away from government subsidies and regulations. But 1998 and 1999 have been disasters for many farmers and they are lobbying for more money from Washington.

  • The Freedom to Farm Act started a seven-year phase out of most government farm subsidies in exchange for allowing farmers a choice as to what crops they would plant, what livestock they would raise and in what quantities they would do so.
  • But high production and tumbling farm prices last year sent lawmakers racing to approve $10 billion in bailouts -- and they are expected to enact some $20 billion in farm subsidies this year.
  • Critics point out that Freedom to Farm actually caused farm subsidies to rise to a higher level than they would have if the law had not been changed because the act called for $36 billion in "transitional" payments through 2002 to cushion farmers used to subsidies.
  • Political observers say that Iowa -- the first farm state to hold political caucuses -- will have a disproportionate impact on future farm policy, because farmers there are hard-pressed and the state will be crawling with presidential contenders eager to listen to farmers' woes.

Farm values in central Iowa have slumped 11 percent just since last year. And while many farmers like the flexibility to grow what they want, they also want higher subsidies in case they grow too much and prices fall.

Source: Joseph Guinto, "Will Freedom to Farm Go to Seed?" Investor's Business Daily, August 27, 1999.

 

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