U.S. farm programs should be broadened to provide benefits to greater numbers of producers, but not in a way that makes “wealthy farms” even larger, Agriculture Secretary Mike Johanns says.
The secretary also says any changes in U.S. farm programs should make them less vulnerable to challenges in the WTO where dispute panels have ruled against provisions of the U.S. cotton program and may consider a challenge to the rice program.
Johanns used a speech to the United Fresh Fruit and Vegetable Association in Chicago to unveil USDA’s first theme paper – on risk management – from the series of 52 Farm Bill Forums the department conducted last year and to give what might be described as the most comprehensive look at his views on U.S. farm policy yet.
The look included his perception of the safety net those farm programs are supposed to provide for U.S. farmers and ranchers, one that he said must be “equitable, predictable and beyond challenge.
“A true safety net for agriculture is much more than subsidies,” he said. “It is good farm policy that opens and expands market access. It is also good tax policy, trade policy, sanitary and phytosanitary policy and investment in new markets.”
Johanns has talked about the importance of increased market access and the relatively small percentage of producers who receive the lion’s share of farm program benefits, but it was the first time he spelled out some of his objections to the current farm programs.
He cited a Farm Bill Forum comment by a Kansas farmer as evidence of the demand for revamping farm programs while conceding that many farmers said they were happy with the current law.
“‘We didn't raise anything because of a drought,’” Johanns quoted the farmer as saying. “‘The prices went up, and we didn’t get any payment; we didn’t have anything to sell. A target revenue program would fix that. We think it would be more WTO-compliant than what we have currently if we base it off historic prices and historic yields.’”
When he talks to fruit and vegetable growers like those attending the meeting in Chicago, specialty crop farmers and livestock producers, Johanns said he rarely hears requests that theirs become program crops and thus eligible for more farm program benefits.
“Instead, I hear about the importance of increased research money, rural development, conservation, sanitary and phytosanitary enforcement, global market access, the fruit and vegetable program in our schools and expanding it,” he said.
“Expanding these components of the safety net benefit a larger percentage of the agricultural community, and I believe we owe it to you to have an open national discussion with you about these programs.”
The secretary said that while the WTO negotiations “are not the driving force behind domestic policy, Congress must still be mindful of the potential challenges to current farm programs when it writes a new farm law.
“Our programs are coming under fire, and I would suggest we have a choice to make,” he said in the speech May 8. “We can sit back and watch as our farm policy is literally picked apart piece by piece, or we can discuss how to craft a farm policy that provides a low-risk, meaningful safety net for farmers and ranchers.”
Noting that U.S. agricultural productivity is increasing at a rate of 2 percent per year, he said new markets are becoming more important. “If we want to open more markets to American agriculture, we need to ensure that we are in compliance with international trade policies.”
Johanns also had less than positive things to say about the marketing loan, one of the mainstays of U.S. farm policy.
“Marketing loan benefits are not paid on lost production,” he said. “That means that in a period of low yields, producers receive less assistance, not more. So we have risk management payments that aren’t always successful at reducing risk.
“And to the extent that wealthy farms have more capital to invest in their operations and tend to be more productive per acre, they may be eligible for more program payments, which could help finance further expansion. While we certainly want to encourage productivity, this is not the most efficient way of mitigating risk for smaller and mid-sized farms.”
He also expressed misgivings about ad hoc disaster assistance programs, which have been the center of controversy between the Bush administration and farm-state senators in recent days.
“Ad hoc disaster assistance has also been made available on a case-by-case basis in the past,” he noted. “I will share with you, and this was not a finding in the analysis paper, that my feeling is that producers dislike uncertainty, like everybody else. Not knowing whether disaster aid will be provided makes it difficult for producers to plan.
“I submit to you that farmers and ranchers really do deserve better. You deserve an open discussion about options that ensure your safety net programs provide something that is predictable and its reliable.”
Johanns said he was not suggesting policy, but simply using papers like the one on risk management to lay out the facts and some options.
“These are simply a few alternatives that our USDA economists and researchers drafted based on the feedback we received during the Farm Bill Forum tour,” he noted. “We believe this analysis will contribute to the public debate.”
To view the risk manager paper, go to http://www.usda.gov. Transcripts of last year’s Farm Bill Forums and the 41 farm bill comment summary papers released by USDA last month are also posted on the site.