After failing to pass a new Farm Bill late last year when the 2008 Bill expired, Congress is once again picking up the farm legislation baton. It isn't altogether shocking that we entered 2013 without a new Farm Bill or that last minute deal making on farm and food policies will pervade this summer's news cycle -- the same thing happened in 2008 with the expiration of the 2002 Bill. Though election-year politics in 2012 can be blamed for much of the wrangling and, consequently, lack of action, modern Farm Bills are expensive and contain provisions that deserve lengthy debate. The Congressional Budget Office estimates that over ten years, the 2008 Bill will likely cost taxpayers well over $800 billion and the price tag for anything that Congress can successfully pass in the coming months will undoubtedly be similar.
Though more than 80 percent of Farm Bill spending is directed toward the Supplemental Nutrition Assistance Program (SNAP), the billions of dollars that go directly to farmers as price supports, conservation assistance, crop insurance subsidies and direct payments are no less controversial. Conservatives decry government intervention in markets, liberals underscore the disproportionate support given to large commodity-producing farms and both feel renewed pressure from the electorate to mind the purse strings less casually.
Unfortunately, proponents from both political ideologies consistently fail to justify farm support spending to the American public. The farm lobby, though not without its faults, is in turn vilified and the 24-hour news cycle marches on without any substantive public debate over the virtue of providing a financial safety net to the country's food and fiber producers.
The truth is, agricultural ventures are uniquely risky. Whether growing a few acres of vegetables or milking a thousand dairy cows, farmers from California to New York do what they do at the whims of nature. The market economy rewards businesses that are efficient and well managed but even the best laid plans in farming can be washed away with a few too many raindrops or burned up with a few too little.
It isn't just the risk of disaster from uncontrollable factors that sets farming apart from other industries, though. Consider a toy, clothing or computer manufacturer. When trends and other changes in consumer behavior affect demand for these products, producers can almost instantaneously respond to the desires of the market with increases or decreases in production. Essentially, their ability to meet shortages in the market with additional production or gluts with less production acts as a balance on prices. The result is that these producers face relatively stable prices over time and operate with reasonably accurate expectations of the future.
Beef, milk, grains, fruits and vegetables are profoundly different. Production decisions for these products are made well in advance of actually being able to sell them since they all take considerable time to grow. Farmers therefore can't easily and quickly respond to changes in the markets for their products. It isn't possible, for instance, for dairy producers to boost milk production overnight in response to increased demand for cheese or yogurt; it may in fact take a couple of years to get additional cows into production. Also, once food products have been produced, they must be sold within a relatively small timeframe due to the possibility of spoilage. Farmers simply can't halt price declines by holding product off the market. Altogether, the farmers' inability to respond to changes in the market with immediate increases or decreases in production creates significant and difficult-to-forecast price volatility for their goods.
Of course, the farmer understands the risk of absolute disaster before going into business. And, of course, any student of intro-level economics understands that if a business can't cover its costs and fails to be profitable, it simply shouldn't exist anymore. The problem, though, is that the harsh realities of capitalism apply with a vengeance to food economies. If one dairy producer is experiencing profit-nixing price levels, the entire market is experiencing the same and it isn't as if we can simply do without milk and its derivatives. Nor can we afford to outsource food production to the rest of the world. A mass exodus of farmers from their businesses would excise the root of all other economic activity. Innovation and productivity in manufacturing, information services, technology and the like simply cannot happen unless society's primary survival needs are met with adequate food supply.
Many of the dollars designated for farm support through modern Farm Bills are spent only when market conditions are unsustainable for farmers. Payments through the dairy programs and price or revenue protection programs for crop producers are only triggered at disastrously low price levels. Taxpayer dollars also pay for a portion of the farmer's crop insurance coverage. Nationwide droughts of the last two years provide substantial evidence that this helping hand may, in an era of odd weather patterns, be money well spent.
If none of the economic jabber above seems at least a worthy starting point for intelligent Farm Bill debate, then perhaps one final point merits consideration. As Americans, I believe that we all appreciate the idea of farming and rural life. It is part of our national identity, as Thomas Jefferson would put it. No matter where we live or how many generations we've been removed from the farm, bucolic scenes on weekend drives and the inspiring influence of a landscape interrupted with wide open spaces generate well-being. These are, in academic speak, the positive externalities of agricultural production that have actual monetary value to us. Preserving them requires farmers to keep doing what they do.
Are all farm support dollars wisely spent? No. Should Congress revisit current Farm Bill programs to find new efficiencies? Yes. Should we expect our representatives to move beyond black and white vitriol over government spending to a substantive discussion with the American public over the nuances of policy-making? Absolutely.