Can Bush Turn Treasury Raid Into Long-Term Farm Solution?
December 4, 2001
WASHINGTON, DC - President Bush is taking a big gamble on farm policy: He’s agreed to accept a new Congressional farm bill that boosts farm subsidies by $73.5 billion over the next few years—supposedly in return for Congressional approval of his long-sought Trade Promotion Authority.
Bush hopes that by accepting an expensive farm bill now he will gain a long-term solution of America’s farm income problem. For that, Bush needs a reform of the farm trade rules under the World Trade Organization so America can get profitable food and feed exports to hungry and increasingly affluent consumers in densely populated Asia.
Because Bush and Gore split the electorate 50-50, both parties are terrified that disgruntled farmers will cost them a House seat in some rural district of Texas or North Dakota, or tilt a Senate race in North Carolina. Therefore, both Democrats and Republicans in Congress are determined to throw big chunks of money at farmers this year. Of course, the current farm program doesn’t run out until next year; and the Federal budget surplus, once thought to be $200 billion next year, has turned into a $50 billion deficit. The public must be counted on to ignore the reality that farm incomes have been so attractive that farmland values have jumped $250 billion (40 percent) in the last decade.
Republican House Agriculture Chairman Larry Combest of Texas started this latest round of Congressional farm vote buying. His bill would resurrect payments to the old crop-growers coalition of the 1930s: cotton, corn, soybeans, wheat, rice, sorghum, barley, and oats. The Senate farm committee chairman, Tom Harkin of Iowa, topped Combest with a still-costlier bill recreating even the subsidy for mohair.
The payments would go only to one-third of U.S. farms, with most of the cash in the pocket of the largest farmers, but that doesn’t bother the Congress. Senator Conrad of North Dakota is even demanding bison subsidies, which would primarily go to media billionaire Ted Turner.
The “farm problem” has been with us since Henry Ford began offering $5 per day in 1910 to kids who’d leave the farm and assemble his Model Ts. Henry also made tractors, which doubled the output of the remaining farmers, while cutting the real cost of food. The great exodus from farm to city was underway.
For a century, the United States and Europe happily expanded their non-farm jobs—while trying to make their farmers content with price supports for grain, milk, and cotton. It hasn’t worked. But with a high price guarantee, a farmer produces more. (It only makes sense.) The government is then stuck with a farm surplus, and it makes all the other countries mad if the surpluses are dumped over their borders. To protect themselves, they erect trade barriers to prevent subsidized exports from countries such as the United States.
The World Trade Organization’s new trade round has the stated goal of eliminating the European export subsidies that depress the world’s farm markets, and also tearing down the farm trade barriers that keep U.S. farm commodities out of Asia.
At long last, the Third World can now afford to eat better. China’s meat consumption doubled in the 1990s, though its per capita meat eating is still far below ours. Ice cream is the new food fad in both China and India. Indonesia is eating far more chicken and French fries.
These densely populated countries don’t have much farmland. America does. Farm trade reform should let American farmers double their export earnings, gaining far more income than the Congress can afford to hand them in subsidies. Bush wants to help lead the reform.
Will the Bush gamble pay off? It’s a tough call. The Democrats seem solidly lined up against giving the President trade negotiating authority. (They also refused it to President Clinton.) Many Republicans also seem reluctant to untie the farm vote from their appropriations purse strings.
There’s something wrong, though, when cynical vote buying defeats rural America’s long-term prosperity.
This article was published by Knight Ridder Tribune
Dennis T. Avery is based in Churchville, Va., and is director of global food issues for the Hudson Institute of Indianapolis.
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