Farm Bill Drafts Prioritize the Unnecessary and Unaffordable
The Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture finally released summaries of their farm bills—seven months after the previous five-year bill expired. For those who prioritize free markets and worry about our fiscal outlook, time has not improved the outcome. The House Ag Committee calls their summary “high-level,” a term that more accurately applies to the anticipated price tag.
Though the Senate version tries to highlight partisan contrasts, both drafts show House Republicans and Senate Democrats united in their efforts to increase spending, maintain heavy-handed engagement by the government in the agriculture industry, and ignore reform opportunities that would increase transparency and better target subsidies.
Based on a preliminary analysis of these drafts, here are some provisions that should raise eyebrows:
- Increased reference prices: Both drafts would unnecessarily boost commodity prices, making the Agriculture Risk Coverage and Price Loss Coverage programs more likely to pay out. Some Republican legislators and limited government organizations have opposed this move.
- Inflated baseline: Both drafts integrate conservation funds from the Inflation Reduction Act into conservation funding, creating a permanent expansion of the farm bill baseline and increasing overall spending in perpetuity.
- Irrational trade policy: Both drafts report increased funding for the U.S. Department of Agriculture’s Market Access and Foreign Market Development programs, whose primary beneficiaries are well-established, wealthy corporations. As noted in the Green Scissors database, these programs are considered wasteful examples of corporate welfare on a bipartisan basis. Ironically, other portions of the summaries are awash in protectionist language and policy suggestions that could make potential trading partners wary (to put it lightly). Eliminating the costly tariffs imposed and/or perpetuated by previous and current U.S. administrations as well as the punishing retaliatory tariffs those ill-conceived policies engendered in the first place seems like a cheaper and more effective approach.
- Expanded biofuels handouts: Both drafts continue damaging biofuels policies that have forced corn ethanol and other underperforming fuels into consumer gas tanks. Though well-intentioned, the fallout has been an expensive ecological disaster.
Many details—particularly on the House side—remain to be seen, and experts continue to investigate the real-world implications of what we know so far. Of course, the markup process and floor consideration could bring significant changes. But this initial read is deeply disappointing.
The bulk of the changes currently available can be summed up as a costly expansion of policies that are both unnecessary and unaffordable in light of our precarious fiscal outlook.
According to the House draft, primary justifications for boosting reference prices are the “rising costs of production” and inflation, but input costs are falling and net farm incomes remain high. Likewise, rising interest rates are cited as expanding taxpayer-backed loans, but the rock-bottom rates of the past decade are not the norm and should not be expected.
Another emerging theme is the continued imposition of risk onto taxpayers—whether that be the risk of private agribusinesses large and small, the risk of crop insurance corporations and food manufacturers with global reach, or the risk of energy producers. More and more, prices that would typically send important signals to markets and industries are shifted onto already overburdened taxpayers. Not only does this add to our debt, but it also sets off a tidal wave of unintended consequences with their own compounding costs to the environment, consumers, and others.
Hopefully, as more details come to light and the legislative process progresses, much-needed reforms and savings will be achieved.