A lot of deals were made in passing the farm bill last year. Now the losers in some of these are coming forward and asking that the bill be reopened for a little fine-tuning. Some of their proposals are predictable and bad ideas, but others are pretty good.
1.As Congress was passing the farm bill in December, it was also enacting the Gramm-Rudman amendment. It was understood that Gramm- Rudman would mean cuts in the farm price and income support levels, and it has; dairy price supports are to be cut 4.3 percent or about 50 cents per hundredweight.
A cut in supports is likely to mean some decline in the price of all dairy products -- not just the surplus the government buys but products consumers buy in stores. To avert that, dairy-state members have proposed that farmers instead be assessed about a dime a hundredweight on all they produce. The assessments would go to the Treasury as an alternative to the money the government would save by cutting price supports. In effect the farmers would be allowed to buy continued high price supports from the government at the expense of consumers. A mischievous idea, particularly because price supports are already too high.
2.The costliest provisions in last year's bill are the so-called deficiency payments it provides, income supplements for wheat, feed grain, rice and cotton producers. Farmers are paid, not according to actual production each year, but according to a formula meant to reflect their average production over several years. The formula was deliberately altered in final negotiations last year to reduce the bill's likely cost to the range insisted upon by the president; the new formula would cut payments an estimated $1.2 billion over three years. Members now want some of that back; some have suggested the $1.2 billion be saved instead by killing an export subsidy program also in the bill. That might be a good trade; the export program has always been a silly idea.
3.The federal support programs have the perverse effect of encouraging production of crops already in oversupply. To encourage diversification instead, and perhaps save the government some money, the bill says a farmer can plant as little as half his normal supported crop -- say, wheat -- and still get 92 percent of the deficiency payments to which he would be entitled if he had planted it all. He can then use the idled acres to venture into crops that are not supported. That is fine for the wheat farmer and the government, less so for producers of unsupported crops, for whom it means new competition and possibly much lower prices. Congress last year thought more about the good side of this proposal than the bad. Unsubsidized farmers are protesting and deserve some protection. No one thinks that there should be a cartelization of U.S. farm land, but it is not fair to change the rules of the game this fast.