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Corn+Soybean Digest

Focus On Agriculture

Historical Perspective Of The Current Farm Bill
Some would argue that we no longer need the traditional commodity-based federal government farm programs, and that the next Farm Bill should be a totally different approach to farm policy in the U.S., thus freeing up federal funding for rural development, renewable energy and other less traditional agriculture-related federal programs. Others would argue that the current farm policy in the U.S. has made the agriculture industry strong and has provided the necessary safety net to support and protect producers, but hasn’t hampered growth and innovation in the agriculture industry. This debate will likely be the crux of framing the issues during next several months for the development and policy details for the next Farm Bill.

Many of the core ideas and policies of today’s federal farm programs originated from farm policy that was developed in the late 1930’s post-depression era of the FDR administration. The overall goal of the original federal farm policies of that era was to manage commodity prices in way to benefit both producers and consumers. Over the decades, farm policy price support tools, such as recourse and non-recourse commodity loans, diversion or deficiency (counter-cyclical) payments, and PIK payments have developed. Other supply management tools that have been used by USDA as part of farm programs have included base acres, set-aside acres, grain reserve programs and to some extent conservation land set-aside programs (CRP). Prior to the mid-1990s, when commodity prices paid to producers were low due to excess U.S. grain supplies, USDA would increase required set-aside acres and put more bushels of a commodity into the grain reserve in order to lower available grain supplies, and ultimately increase commodity prices paid to producers. When commodity prices were too high, just the opposite occurred, and USDA would reduce set-aside acres and release grain that was stored in the grain reserve.

However, changes in U.S. agriculture, along with changes in the overall U.S. and world economy, have led to revisions in federal farm policy that is less derived from supply-management type farm programs. The so-called “Freedom to Farm” legislation that was initiated in 1996 gave farm operators almost total planting flexibility,except for the restrictions on the acreage of fruit and vegetable crops on a given farm unit.The 1996 legislation also eliminated the authority that USDA had to establish set-asideacreage each year for program crops, based on ending grain supplies. This change was the most dramatic aspect of the legislation, because it was the first time in several decades that the level of government farm payments was totally separated from the acreage of program cropsthat was actually planted and there wasn’t a requirement for any potential set-aside acreage in order to receive the payments.The planting flexibilityaspects of farm programs have been maintained in the current Farm Bill, again with the exception of restrictions on fruit and vegetable acreage, and some would like to see those restrictions lifted in the next Farm Bill.

USDA also established the Conservation Reserve Program in the late 1980s to take environmentally-sensitive cropland out of production in order to protect the soil, improve water quality, enhance wildlife habitat and to achieve other environmental benefits. Initially, USDA also utilized CRP as a long-term supply management tool, in order to take more crop acres out of production to reduce the large grain surpluses that existed in the late 1980s. Currently, CRP acreage is capped at approximately 39 million acres in the U.S. With the current need for land to meet the rapidly growing demands for renewable energy, some members of Congress may push for some changes in the next Farm Bill regarding the land utilization of CRP acres.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN.

You can contact him at 507-726-2137 or via e-mail at [email protected].
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