A CASE FOR FARM PROGRAMS

U.S. agriculture is once again on the chopping block as Washington prepares to renew its decade-long attack on federal farm programs. As members of Congress sharpen their budget axes for another swing at agriculture, they might pause to consider the sacrifices the industry has already made at the altar of deficit reduction.

Federal farm programs administered by USDA's Commodity Credit Corp. have long been a favorite target for budget cutters in Washington. While these programs account for less than 1 percent of the federal budget, that has not stopped Washington from slashing farm program spending by two-thirds since 1986. By contrast, total federal spending during this same period increased approximately 50 percent.

This trend shows no signs of stopping. The Congressional Budget Office projects that CCC spending will decline by 8 percent (from $8.5 billion in FY1996 to $7.8 billion in FY2000 with no program changes. Worse, CCC spending would drop by 27 percent (to $6.2 billion in FY2000) if proportional CBO glidepath reductions to a balanced budget were applied to all budget items except Social Security, defense and debt service.

But the unkindest cuts of all could come later this year if Congress decides to reduce commodity target prices by 3 percent a year, as some in Congress have suggested. Three percent doesn't sound like much, but these reductions will be compounded annually. That would mean that CCC spending would be slashed by more than 70 percent -- all the way down to $2.5 billion -- by the turn of the century. Even greater spending reductions could be required if Congress were to pass a budget measure with large tax cuts.

Ironically, as America's farmers continue to contribute to deficit reduction, total federal spending will continue to increase, even under various proposals to reduce the federal deficit. If only other federal programs had taken the same level of cuts over the past decade, the U.S. would be rolling in a substantial budget surplus. With this in mind, the Clinton administration and Congress should apply a fairness test to budget decisions and stop counting on agriculture to balance the budget.

The administration and congressional leaders have just completed a series of town hall meetings and field hearings around the country to focus on the problems facing rural communities. One issue that cropped up again and again during these hearings, including the one in Portageville, is the effect of budget cuts in federal farm program spending.

The impact of these cuts extend well beyond rural America. Indeed, if agriculture programs continue to suffer a disproportionate share of spending cuts when Congress takes up the reauthorization of the Farm Bill later this year, all Americans will feel the pinch.

Agriculture is the nation's largest and most internationally competitive industry -- combined with the food industries, it accounts for nearly 16 percent of Gross Domestic Product, or $1 trillion annually. Nearly one out of every six jobs in this country is attributable to agriculture. From the farm to the retail counter, agriculture provides 21 million jobs for Americans.

Simply put, the projected spending reductions in farm programs are not fair to U.S. agriculture or the millions of American families that depend on agriculture for jobs and the safest, most abundant, and cheapest food supply in the world. Americans now spend just 8 percent of their disposable income on food, the lowest percentage in the world. Over the past 20 years, food prices have lagged behind inflation, rising by only 4.7 percent, compared to a 6.3 percent increase in costs in the non-food sector.

These cuts hurt us abroad as well as at home. The United States has already reduced its support for domestic farm programs by more than the 20 percent required by the recently completed Uruguay Round of the General Agreement on Tariffs and Trade. It is this agreement that permits the European Union to maintain a 3-to-1 advantage over the United States in terms of domestic support for agriculture and a 6-to-1 edge in export subsidies.

These lopsided support levels undermine the U.S. comparative advantage in agriculture. Further cuts would put American farmers at a competitive disadvantage in world markets.

The president, his Cabinet officials, and members of Congress should keep these figures in mind as they sit down over the next few weeks to listen to the American people. Rural communities are not the only ones with a stake in farm programs.

John Hux Jr. is a partner in Hux Farm Agency, a farm management service in Sikeston. He also is a farmer.