Out to pasture
15 November 2007
An opinion-editorial published in The Washington Times, November 13, 2007, by Raymond C. Offenheiser, president of Oxfam America, and Thomas A. Schatz, president of Citizens Againts Government Waste
Both an ABC poll and an NBC/Wall Street Journal poll released last week indicate that between 74 percent and 75 percent of Americans are dissatisfied with the direction that the country is headed. Those percentages would likely be even higher if more taxpayers were aware of efforts in the Senate to rubber stamp the status quo on farm policy.
This week, the Senate will be voting on a $286 billion farm bill that, unless significantly amended on the floor of the Senate, will continue to be costly to taxpayers and consumers, undermine the rural economy, stand in the way of expanding international trade and hurt the world's poorest farmers.
If the Senate agrees with the House-passed version of the farm bill, billions of dollars in subsidies will continue to be paid disproportionately to the wealthiest farmers in spite of record high prices for many farm commodities and strong farm incomes. Even worse, to maintain the current system while providing additional funding for programs like conservation, nutrition and renewable-energy production, the farm bill includes a $15 billion tax increase, despite the fact that simple reforms to existing farm programs could save taxpayers billions and provide funds for other priorities.
Only one-quarter of all farmers participate in commodity-subsidy programs that were originally designed to serve as a safety net to help farmers during times of low market prices or tough weather. But 10 percent of those who do participate realize more than two-thirds of the payments.
A good example of how farmers can continue to realize huge subsidy payments from the federal government is the cotton program. Cotton farms represent 0.6 percent of all U.S. farms, yet they receive nearly 14 percent of all farm subsidies. Ninety-nine percent of all cotton farms receive federal subsidies and the wealthiest cotton farms receive, on average, $500,000 in federal subsidies each year.
Under the farm bill, payments increase with the amount of cotton a farmer produces. So, wealthy farmers who participate in the cotton program buy more land and produce more cotton to reap the benefits of the cotton subsidies, regardless of world market prices. In the meantime, small family farmers find it increasingly difficult to compete as land prices increase and world market prices decline.
To add insult to injury, taxpayers also pay a monthly fee to cotton farmers to store the surplus cotton they produce. Currently, the federal government is holding approximately 10 billion pounds of cotton at an expense of $37 million per month. Storage and interest costs are expected to reach $200 million in 2007 if more cotton is not exported. As long as cotton target prices and loan rates remain at unreasonably high levels — levels set in statute by Congress — taxpayers will continue to subsidize excess cotton production and its storage. U.S. cotton subsidies also have a trade-distorting effect because the incentive to increase cotton production to obtain subsidies results in surplus U.S. cotton flooding world markets. The reduced world market price of cotton undercuts the return that farmers receive for their cotton here and abroad.
Ironically, every year the United States provides millions of dollars in foreign assistance to developing nations like Benin, Burkina Faso, Chad and Mali, which rank among the poorest countries in the world. Their agricultural economies are closely tied to cotton production, so the direct aid we provide is undercut by the price deflating effects of federal subsidies to U.S. cotton farmers. What we give with one hand is literally taken away with the other. Of course, this makes it is more difficult for these poor nations and their struggling farmers to earn a living and, in turn, increases their dependence on direct foreign aid to survive.
Farm policies like these are wasteful and counter-productive. Senators will have an opportunity to change these policies on the Senate floor. An amendment to the farm bill by Sens. Richard Lugar, Indiana Republican, and Frank Lautenberg, New Jersey Democrat, called the FRESH Act, would institute substantial reforms to ensure that farmers get federal help only when they need it. In fact, the FRESH Act would save enough money to fund other agriculture programs — like conservation, nutrition and investments in renewable fuels — while still returning additional savings to the U.S. Treasury.
In addition, an amendment by Sen. Byron Dorgan, North Dakota Democrat, and Charles Grassley, Iowa Republican, would offer a significant reform to the current system by placing a hard cap on payments to individual farms — something the House of Representatives failed to do earlier this year. The polls demonstrate that Americans do not like where the country is headed. They want change. We can only hope that their senators will get the message. If not, perhaps voters will send them out to pasture next fall.
Raymond C. Offenheiser is president of Oxfam America. Thomas A. Schatz is president of Citizens Against Government Waste.
