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Researchers: Many farm programs outdated, wasteful
By CAROL RYAN DUMAS
Capital Press Posted: Wednesday, August 03, 2011 10:13 AM
A nonpartisan Washington, D.C., think tank contends most farm programs are obsolete and can be eliminated. Congress can end or reduce funding for several programs without harm to the food supply, saving up to $100 billion over the next 10 years, said Vince Smith, project director of the research commissioned by American Enterprise Institute. The institute promotes free enterprise.
One of the fundamental concerns is that most subsidies go to the largest and wealthiest farmers, with very little trickling down to the poorest farmers, said Smith, a professor of agricultural economics at Montana State University. Current farm programs are a throwback to the Dust Bowl era and are no longer justified or needed on today's economically viable farms, he said.
"The average farm family income is $80,000 a year, compared with $70,000 for the non-farm family, and with very little debt," he said. Agriculture is less risky than non-farm small business, with 1 out of 200 farms failing annually, compared with 1 in 7 non-farm small businesses, he added. Farms "do face some risks, but it's not the risky business it's perceived to be," he said.
Many agricultural groups defend agricultural subsidies as a financial safety net, allowing farmers to survive periods of low crop prices. Without the safety net, they argue the nation's food supply would be at risk. The institute commissioned 12 research papers by ag experts and economists on how to best restructure ag policy and concluded reforms could save $8 billion to $10 billion a year without affecting the U.S. food supply or the financial viability of farmers. It recommends eliminating commodity programs; crop insurance; disaster aid; and cotton, sugar and dairy programs. It also recommends restructuring conservation programs and increasing funding for ag research and development.
The institute held eight events in mid-July to drive home the following points:
* Direct payments through commodity programs are direct handouts to the largest and wealthiest farmers and serve no role in the modern ag economy.
* Crop insurance subsidies encourage inefficient production practices, offer incentives to farm highly vulnerable land and give farmers insurance coverage they wouldn't otherwise buy.
* Disaster payments are wasteful, encourage farmers to take risky options, and are paid to farmers in a disaster-declared area whether or not they raise the harmed crop.
* Conservation programs are not well-coordinated, adding needless administration and management costs and often pay farmers for practices they were doing before programs existed.
* Ethanol policy is an expensive way to meet the stated goals of less dependence on foreign oil, increasing farm wealth and reducing greenhouse gases.
* Cotton, dairy and sugar programs create problems in international trade relations and negotiations, inhibit export development and raise prices to consumers.
* Research and development funding needs to increase, as it shows a good rate of return on investment, benefits every American household and is needed to increase farm productivity to meet future global needs.
The institute hopes its research will influence policy-makers and commodity groups, Smith said. The message is: "If you send money to the farm sector, do so much more effectively," he said.
The time is right to rethink farm policy, said Henry Olsen, professor of ag economics at North Carolina State University and an institute vice president. Political opposition to farm programs exists now because of the massive budget crisis. "$100 billion over 10 years is nothing to sneeze at," he said. In addition, funding for Social Security, Medicare and education results in more bang for the buck because those programs affect so many more people, he said.
"There is more money spent on fewer people in the farm program than virtually any other program," he said.
Online
The American Enterprise Institute for Public Policy Research: www.aei.org
By CAROL RYAN DUMAS
Capital Press Posted: Wednesday, August 03, 2011 10:13 AM
A nonpartisan Washington, D.C., think tank contends most farm programs are obsolete and can be eliminated. Congress can end or reduce funding for several programs without harm to the food supply, saving up to $100 billion over the next 10 years, said Vince Smith, project director of the research commissioned by American Enterprise Institute. The institute promotes free enterprise.
One of the fundamental concerns is that most subsidies go to the largest and wealthiest farmers, with very little trickling down to the poorest farmers, said Smith, a professor of agricultural economics at Montana State University. Current farm programs are a throwback to the Dust Bowl era and are no longer justified or needed on today's economically viable farms, he said.
"The average farm family income is $80,000 a year, compared with $70,000 for the non-farm family, and with very little debt," he said. Agriculture is less risky than non-farm small business, with 1 out of 200 farms failing annually, compared with 1 in 7 non-farm small businesses, he added. Farms "do face some risks, but it's not the risky business it's perceived to be," he said.
Many agricultural groups defend agricultural subsidies as a financial safety net, allowing farmers to survive periods of low crop prices. Without the safety net, they argue the nation's food supply would be at risk. The institute commissioned 12 research papers by ag experts and economists on how to best restructure ag policy and concluded reforms could save $8 billion to $10 billion a year without affecting the U.S. food supply or the financial viability of farmers. It recommends eliminating commodity programs; crop insurance; disaster aid; and cotton, sugar and dairy programs. It also recommends restructuring conservation programs and increasing funding for ag research and development.
The institute held eight events in mid-July to drive home the following points:
* Direct payments through commodity programs are direct handouts to the largest and wealthiest farmers and serve no role in the modern ag economy.
* Crop insurance subsidies encourage inefficient production practices, offer incentives to farm highly vulnerable land and give farmers insurance coverage they wouldn't otherwise buy.
* Disaster payments are wasteful, encourage farmers to take risky options, and are paid to farmers in a disaster-declared area whether or not they raise the harmed crop.
* Conservation programs are not well-coordinated, adding needless administration and management costs and often pay farmers for practices they were doing before programs existed.
* Ethanol policy is an expensive way to meet the stated goals of less dependence on foreign oil, increasing farm wealth and reducing greenhouse gases.
* Cotton, dairy and sugar programs create problems in international trade relations and negotiations, inhibit export development and raise prices to consumers.
* Research and development funding needs to increase, as it shows a good rate of return on investment, benefits every American household and is needed to increase farm productivity to meet future global needs.
The institute hopes its research will influence policy-makers and commodity groups, Smith said. The message is: "If you send money to the farm sector, do so much more effectively," he said.
The time is right to rethink farm policy, said Henry Olsen, professor of ag economics at North Carolina State University and an institute vice president. Political opposition to farm programs exists now because of the massive budget crisis. "$100 billion over 10 years is nothing to sneeze at," he said. In addition, funding for Social Security, Medicare and education results in more bang for the buck because those programs affect so many more people, he said.
"There is more money spent on fewer people in the farm program than virtually any other program," he said.
Online
The American Enterprise Institute for Public Policy Research: www.aei.org
