Elevating the farm bill debate

By Franz A. Matzner

The Aug. 21 Southeast Missourian article on farm subsidies ("Fields of green yield crop of cash") raised important issues about the besieged 2002 Farm Bill. Unfortunately, supporters of the current system did your readers a disservice by substituting scare tactics for the facts and ignoring the enormous public stake in programs which cost the nation tens of billions every year.

Reforming the present subsidy programs would neither leave the nation "dependent on countries who hate us for our nation's food" nor result in a spike in food prices. Empty threats of this type only reveal the untenable nature of the current system and are nothing more than political spin used to hide the fact that farm subsidies are really just a delivery system for pork that bilks taxpayers while providing little public benefit.

Local farmer Ken Minton got it right: "Subsidies allow us to keep producing even though the market says don't produce." This distortion contradicts the basic free-market principles that form the foundation of America's thriving economy.

Freeing farmers from government dependency would return the agriculture sector to the principles of competition and free-trade. Imports already comprise almost 20 percent of our crops-based foods and are supplied by a wide variety of countries throughout the world. Expanding global trade would enhance food security by further diversifying food sources and providing consumers with the most competitive prices and more choice.

The specter of a food price spike is equally spurious. The price consumers pay for food at the checkout line has little relation to the price producers receive at the farm gate. When customers plunk down hard earned dollars, most of what they pay for is processing, transportation and advertising costs of the final product.

Recently, Iowa agricultural economist Bruce Babcock concluded, "It is difficult to come up with examples in which subsidized U.S. commodities have a greater than 10 percent share of final retail value." Consequently, any increase in the cost of subsidized commodities would have very little impact on retail food prices.

Despite the current politics of fear, the reform -- even elimination -- of commodity subsidies would benefit farmers and nonfarmers alike. The current system concentrates payments in the hands of only the very largest and wealthiest farms, underwriting their ability to drive smaller farms out of business.

For example, in Missouri, between 1995 and 2004, the largest 4 percent of recipients squirreled away 51 percent of the $3.7 billion in commodity program payments.

USDA data on farm household net worth shows that the largest 4 percent of Missouri's farms are owned by millionaires. (In contrast, the average Missouri resident's net worth is just more than $100,000.)

Federal policy should not be lavishing already wealthy farmers and absentee landowners with billions of dollars in extra profits.

Last spring, Congress wisely rejected the first push for an extension of current law. Not only is the debate about extension contrary to the nation's fiscal, trade and foreign policy goals, it represents a denial of the many changes facing 21st century agriculture.

It is time for Congress to step forward with new policies that embrace change instead of hobbling the agriculture sector with intrusive government policies that suppress innovation, distort markets and cost taxpayers billions.

Franz A. Matzner is a senior policy analyst for agriculture at Taxpayers for Common Sense, a nonpartisan watchdog organization in Washington, D.C.