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Corn+Soybean Digest

New Thinking Guides New Farm Bill

A philosophical shift underlies the 2012 debate.


Changes in agricultural policy are often more evolutionary than revolutionary. The philosophical changes underlying the debate on the next farm bill are an important step in that evolution, says Carl Zulauf, a professor of ag economics at Ohio State University.

If you look at the proposals in their entirety, there’s a lot of overlap, Zulauf says. “They tend to have a shallow loss component, they tend to address multiple-year revenue risk and they tend to be revenue-oriented. If you focus on the differences, you miss what is really a striking number of similarities in policy change.”

Zulauf, one of the developers of what became the Average Crop Revenue Election (ACRE) program in the 2008 farm bill, says that the final legislation passed by Congress may not include all – or even any – of these types of programs. Even so, his analysis of 10 leading farm bill proposals suggests policymakers are shifting their basic way of thinking about federal farm policy.

“Since at least 1996, there’s been a very intense discussion about the purpose of a farm program,” he says. The basic question is what type of farm safety net is appropriate in the modern era.

Mary Kay Thatcher, senior director of congressional relations at the American Farm Bureau Federation, says she remains skeptical that the types of evolutionary changes Zulauf observed in the proposals will actually make it into the final farm bill.

“The chaos (of the supercommittee process) proves we’re not actually trying to build a better mousetrap,” she says. “There’s no economist in the country good enough to create a different program for each crop that will give every farmer complete equity. Coming up with programs that only work for one or two commodities is not good policy.”

She agrees with Zulauf that change is in the air on commodity-title thinking.

“Policy has moved more toward revenue, while crop insurance has moved away from specific crop coverage,” she explains. “Both programs have converged, causing a great deal of the problem. How do you have some sort of a safety net, but that the programs don’t overlap?”

Overlapping programs, Thatcher points out, could send farmers signals contrary to the market in how much of a given crop to plant. “Every year we move away from direct payments to something more like a revenue-type provision, and we’re hitting at the same target.”

Of particular note is the concept of overlap between crop insurance, now required for participation in some programs administered under the farm bill, and some of the revenue programs proposed during the current farm bill debate.

“People on the Hill tell me Congress will allow double-dipping,” Thatcher says. “You’ll get indemnity from crop insurance, and Congress will allow you to receive program payments. What kind of signal does that send that farmers now have skin in the game, but we’re also going to turn around and give it to them for free? The Wall Street Journal and the Washington Post will chew us up and spit us out over that.”

Zulauf, meanwhile, says the concept of farmers collecting payments from both Farm-Bill programs and crop insurance is not new. The key policy question he poses is whether the overlap is less under the new types of programs than under the traditional programs when they were making payments to farmers.

The 2012 farm bill debate is far from over. Even so, it’s clear that attitudes, opinions and circumstances influencing federal farm policy are continually changing.

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