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June 4, 2010

Farm and Food File: Suppose you support farm bill reform; it could be cheaper

Originally published in the May 28, 2010, print edition.

Suppose the House ag committee asks you to come to Washington to offer your ideas on how to improve the farm bill for its 2012 update.

Suppose you search your closet for your "new" - well, it's new to you - white shirt and you go.

Suppose you begin your testimony by stating the blindingly obvious: The next U.S. farm bill should do what it's designed to do in the most cost-effective way without hurting farmers, ranchers, the environment and our trading partners.

A solid, if dull, start, right?

Suppose you clear your throat and continue by noting that the federal "crop insurance program has cost taxpayers $37 billion since 2000." Also, of the $13 billion spent by taxpayers on crop insurance "in the last two years, more than $7 billion flowed to companies."

Suppose an eyelid or two on the committee dais twitches.

Suppose you take that sign of life as a cue to jump feet-first into the centerpiece of their 2008 handiwork, ACRE, the Average Crop Revenue Election devised for the farm bill, and SURE, or Supplemental Revenue Assistance Payments, another 2008 creation.

Suppose your voiced opinion of both ends with the phrase "no longer have a public justification."

Suppose you continue by allowing how "The public and members of Congress have shown widespread distaste for the bailouts of big banks, GM, Chrysler and AIG. But at least these interventions were justified in that the economy was threatened with a far more severe downturn if these companies were allowed to fail."

Suppose you look up now and see that members' eyes are narrowing.

Hmm, back off or reload? Forget the white shirt; reload.

"Farmers receive $5 billion a year" - in direct payments, but you suppose the aggies know this - "for nothing more than owning or renting farmland that happens to have base acres."

Suppose you quickly add, "Despite mighty efforts by some of the world's best agricultural economists to find some market impact of direct payments, the evidence suggests that they represent 'money for nothing.' Surely we can accomplish more with $5 billion than simply depositing it in the bank accounts of landowners and renters with base acres."

As the quote marks indicate, none of this - excepting the white shirt fiction - is supposition. The words, and written testimony, were offered to House aggies May 13, by Bruce Babcock, an ag economist and director of the Center for Agricultural and Rural Development at Iowa State University.

Babcock's analysis was hot, straight and hard. To ensure House members got his simple message, he offered it plainly.

Our current farm program, he said, "consists of crop insurance, which costs too much; direct payments, which are no longer justified; cotton payments, which need to be brought into (trade) compliance; ACRE, which duplicates crop insurance but provides inadequate coverage against farm yield losses; and SURE, which tries to make up for crop insurance deficiencies."

Babcock offered a simple fix for most of what ails the 2008 law: change ACRE from a state-level program to a "county-level program;" boost ACRE coverage from its capped 83.3 percent to 100 percent; and "do away with any program feature that requires farm-level yield reporting." (The brief testimony and supporting data are posted at http://agriculture.house.gov/testimony/111/h051310/Babcock.pdf).

Why would a key developer of crop insurance programs like Revenue Assurance question it while advocating ACRE and SURE reform? Simple, says Babcock in a telephone interview May 19. "The reforms continue what Congress began in 2008. They serve farmers better and they save an estimated $20 billion to $25 billion over the life of a new farm bill."

Suppose such a simple, billion-of-dollars fix stands a chance once agbiz and big ag get their hands around its neck?

Suppose it might if you, like Babcock, stood up for a less-costly, more effective farm bill?

...

Alan Guebert's "Farm and Food File" is published weekly in more than 75 newspapers in North America. Contact him at agcomm@sbcglobal.net.

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