NCPA - National Center for Policy Analysis

Why the Next Farm Bill Should Be the Last

May 2, 2013

Supreme Court Justice Elena Kagan recently called the Agricultural Marketing Agreement Act of 1937 "the world's most outdated law." As just one part of the entire agriculture subsidy program, Kagan's statement alludes to the awe-inspiring inefficiency of the entire program itself. Riddled with market interventions and tax transfers, the U.S. farm support system should be wound down in the next farm bill, which should be the last, says Daniel Sumner, director of the University of California Agricultural Issues Center and a professor at UC Davis.

  • Just this past New Year's Eve, dairy farmers were saved from going over the "dairy cliff," a point after which federal subsidies for dairy farmers would be discontinued, causing milk prices to rise.
  • During the Vietnam War, the wool and mohair subsidy was offered to ensure that there would be wool for combat uniforms. Today, we provide crop insurance for export and biofuels like corn, soybeans and cotton.
  • All of today's subsidies, which include price supports and subsidized business insurance, are supposed to support food security, yet for decades no one has been able to provide a reason why the subsidies should be sustained.

Justifications for farm subsidies that would have been valid in the 1950s -- that farmers tend to be poor, that the free market just doesn't work or that farm subsidies support rural economies -- have been shown to be weak rationalizations for transfers to the wealthy.

  • In fact, farms account for a small percentage of rural employment and subsidies tend to go to large corporations, which now dominate the agriculture industry.
  • Despite record high farm profits and land prices, a powerful farm lobby still claims that farmers need safety nets for protection from the free market, and the weather.

Legislation on the farm bill has been delayed from 2012 to the middle of 2013, a long enough time to reconsider the bill, particularly the addition of the Supplemental Nutritional Assistance Program (SNAP), which accounts for a large portion of farm bill spending.

  • SNAP, once called food stamps, has no connection to farming but acts as a vehicle that allows Congress to tack on the less popular farm subsidies for approval.
  • SNAP should be removed from the farm bill, as should agricultural research, and the next farm bill should be the shortest in history.

Farm commodity subsidies, including federal crop insurance, trade barriers, arcane price regulations for milk and other products, and the subsides for the grans, cotton and oilseed, serve no purpose in the modern, profitable agriculture market.

Sources: Daniel Sumner, "'The World's Most Outdated Law': Why the Next Farm Bill Should Be the Last," The Atlantic, April 25, 2013.


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