Feb 12, 2014

$ 1 trillion US Farm bill 2014: Business as usual. Subsidising Corporate welfare in the name of farming

An overview of the 2014 US Farm bill

After a lot of dilly-dallying, the US has finally passed the US Farm bill 2014. The earlier Farm bill 2008, which makes budgetary provisions for agriculture and food security, had expired in September 2012. Anyway, with US President Obama putting his signatures on Feb 7, the bill has come into existence. Probably to tide over the push and pulls from political opponents (backed by Corporate interests), this time the bill is for 10 years. The 2014 Farm bill makes a budgetary provision of almost $ 1 trillion ($956 billion to be exact), which includes $ 756 for food security programmes. 

A cursory look at what the bill contains clearly shows that the emphasis once again is on the faulty industrial agriculture. It replaces old subsidies with new ones, raises the minimum price growers receive for certain crops, and of course has cut down the food stamps programme. While signing the bill, Obama said: "This bill helps to clamp down on loopholes that allowed people to receive benefits whether they were planting crops or not. And it saves taxpayers hard-earned dollars by making sure that we only support farmers when disaster strikes or prices drop. It's not just automatic.

But not everyone agrees. Dan Sumner, an economist at the University of California at Davis said: "Those programs could create problems. That’s the kind of assurances that the U.S. government is willing to provide that most farmers in the world, in fact, don’t have access to. With the backing of the government US farmers can produce more and export more. Ultimately, that drives down world prices and it’s a little tougher for farmers in developing countries to compete with that." (New US Farm bill reaps controversy, Voice of Americahttp://www.voanews.com/content/new-us-farm-bill-controversy/1847016.html).  

Bulk of the budgetary allocation is actually for Supplemental Nutrition Assistance Programme (SNAP) that goes to provide food security to an estimated 47 million hungry. Although the SNAP budget has been cut by $ 8.7 billlion from what was earlier proposed, it still shows how crucial is this safety net in a country which calls itself the Mecca of market economy. $756 billion is proposed to be spent in the next ten years on feeding the hungry. Interestingly, the US had objected to India's paltry food security assistance of about US $ 20 billion a year at the recently concluded Bali WTO Ministerial. US finds nothing wrong in its own $ 75.6 billion/year support in the name of food security, but finds the Indian food security initiative to be WTO incompatible !

Regarding the farm incomes, the bill allows farmers to choose between Agricultural Risk Coverage (the Senate Program variable support levels) and Price Loss Coverage (the House program with fixed support levels) on a crop-by-crop basis. According to Daryll E Ray and Harwood D Schaffer of the Agricultural Policy Analysis Centre of the University of Tennessee "If prices remain high for the next 5 years, the ARC will provide most grain farmers with a superior level of coverage. On the other hand, if prices fall and remain there for a sustained period of time, the PLC will provide farmers with the best coverage. For both programs base acres and yields can be updated."

Accordingly "Reference prices for the PLC program are wheat, $5.50/bushel; corn, $3.70/bushel; grain sorghum, $3.95/bushel; barley, $4.95/bushel; oats, $2.40/bushel; long grain rice, $14.00/hundredweight (cwt).; medium grain rice, $14.00/cwt.; soybeans, $8.40/bushel; other oilseeds, $20.15/cwt.; peanuts $535.00/ton; dry peas, $11.00/cwt.; lentils, $19.97/cwt.; small chickpeas, $19.04/cwt.; and large chickpeas, $21.54/cwt.

"It is interested to note that in the previous counter-cyclical program, the target price for corn, barley, and grain sorghum were all the same—$2.63 per bushel. Now the reference price for corn is $3.70 while grain sorghum is $3.95, and barley is $4.95. Not coincidentally grain sorghum is important in House Agricultural Committee Chair Frank Lucas’ state of Oklahoma, while barley is important to House Agricultural Committee Ranking Member Colin Peterson’s northern tier farmers." #

Further reading: 
1.New farm law is bad for Taxpayers and the Environment, Environment Working Group. 

2.What others are saying about the farm bill, Environment Working Group.

3.Finally, a Farm bill. Daryll E Ray and Harwood D Schaffer, University of Tennessee

1 comment:

Manu Sharma said...

This comment is unrelated to your post... just wanted to bring your attention too this interesting essay by Lester Brown in which he talks about his role in triggering the agricultural reforms in India in 1965 which triggered the so called Green revolution (though he never uses the term).