Fixing Freedom to Farm
Stenholm, Charlie, Independent Banker
After several emergency appropriations, farmers need protection from extreme market fluctuations
Four years into the policies of the Federal Agriculture Improvement and Reform Act, the 1996 farm bill, it is painfully clear that complete dependence on foreign markets has failed to provide producers with the incomes promised by the authors of the "Freedom to Farm" legislation.
Congress has acknowledged this failing by providing ad hoc emergency income assistance two years running and is likely to do so again in 2000. This emergency assistance has eradicated all but $1 billion of the $13 billion deficit reduction accomplished in the 1995 draft of Freedom to Farm-a primary foundation of the FAIR Act.
Last year, Congress recognized that our current mix of farm programs and risk management tools was simply not adequate. The agriculture appropriations bill for fiscal year 1999 included $6 billion in emergency assistance to farmers and ranchers, designating $2.4 billion for producers who lost crops in 1998 or over the course of multiple years. The remaining funds were used for the unprecedented purpose of compensating producers for low prices, including areas that were unaffected by weather-related disasters.
These funds came in the form of supplemental Agricultural Market Transition Act payments. Since the AMTA contract does not require a producer actually to plant a crop, it is likely that a significant portion went to individuals who did not produce the commodity for which the assistance was being provided. Such ad hoc relief is a poor substitute for a long-term policy. Farmers and taxpayers are more secure when the conditions of federal assistance are established prior to-the need.
Last year's emergency crop-loss aid illustrates the need for improvements in the crop insurance program. The need for emergency income support demonstrates the need for improvements in our basic farm-income assistance programs. In 1999, Congress provided an additional $6 billion for crop insurance. This year, consistent with our budget obligations, Congress should also provide for income protection.
Remembering a Promise
In passing the 1996 farm bill, the House leadership promised to revisit the measure if Congress failed to take action to open world markets, reduce regulations and provide tax relief to agricultural producers. Thus far, no action has been taken to authorize U.S. participation in multilateral trade negotiations to open markets, export sanctions relief has been denied, no real effort has been made to provide the promised regulatory relief, and tax relief has been modest at best. On the whole, our current farm policy is backed by broken promises.
On the positive side, the 1996 FAIR Act re-- flects the recognition that farmers need to be able to respond to world markets when demand is there. Greater planting flexibility enables producers to plant those crops consumers need and want. It also recognizes that government-determined supply controls do not benefit U.S. producers if our producers are the only ones to reduce farm output. These principles should continue.
That being said, agricultural producers also need assistance from year to year to meet the challenges posed by weather and changes in price. These benefits, however, should accrue to those family-sized farms that are actually engaged in agricultural production.
WhIte risk management tools such as crop or revenue insurance may adequately protect producers from yield or price declines within a crop year, these do not make up for declines from previous year's price levels. …