A Conservative Farm Bill Must Include Major Subsidy and Regulatory Reforms

By Daren Bakst, Senior Research Fellow in Agricultural Policy, Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

The House Agriculture Committee is expected to release its farm bill next week.

For conservatives, this new farm bill provides an opportunity to address the out-of-control farm handout system and to reduce the crushing regulatory burden on farmers.

Subsidies

A truly conservative farm bill wouldn’t ignore reforming the farm safety net in the farm bill. It wouldn’t maintain or expand a safety net that is just a massive wealth transfer from lower-income to higher-income households.

For context, according to the U.S. Department of Agriculture, the median income for farm households that received commodity subsidies and crop insurance indemnities were both about $145,000 in 2015. That’s far more than double the median income of all U.S. households (about $56,000).

A conservative farm bill would stop the cronyism that characterizes the farm handout system.

Specifically, it would recognize that 94 percent of farm program support shouldn’t be going to just six commodities (corn, cotton, peanuts, rice, soybeans, and wheat) through duplicative programs. These commodities can succeed without such handouts, just like almost every other commodity.

It would end the waste and duplication that allows some farmers to get more than one payment for the same losses.

According to the Environmental Working Group, “for the 2014 and 2015 growing seasons, the Agricultural Risk Coverage program paid out $10.4 billion, and the Price Loss Coverage  program paid out $2.7 billion. In the same years, the revenue-based crop-insurance program paid out $10.7 billion for the same crops that received [Agricultural Risk Coverage] and [Price Loss Coverage] payments.”

A conservative farm bill would also eliminate the anti-capitalist and anti-market sentiments that inform the existing safety net.

For example, there would be no attempts to insulate some agricultural producers from competing in the marketplace like other businesses, including most other agricultural producers.

There would be no supply controls in agriculture, like the marketing allotments in the federal sugar program, which limit how much of a commodity can be sold and drive up food prices (hurting the poor the most).

A conservative farm bill would drastically reduce market distortions that exist as a result of farm subsidies. There would be no programs, like the Price Loss Coverage program, that can easily encourage farmers to produce some commodities over other commodities. It would put an end to programs, such as shallow loss (i.e., minor loss) schemes, which can encourage producers to take on foolish risks because taxpayers will bear much of the costs.

In other words, a conservative farm bill would make major changes to the farm safety net. It certainly wouldn’t allow the House Agriculture Committee to create whatever handout schemes it wants without addressing these and many other important issues that affect taxpayers, consumers, and farmers.

Regulation

Most farmers don’t receive subsidies. However, almost every farmer, regardless of size or region, is being harmed by federal regulations.

A conservative farm bill would focus on how the government makes it more difficult for farmers to farm their land, and this certainly includes federal regulations. It would take advantage of this opportunity to make real regulatory reforms, especially to fight federal environmental overreach.

It wouldn’t turn a blind eye to one of the most egregious federal rules, the Obama administration’s “waters of the United States” (WOTUS) rule. It would take action to ensure this rule never goes into effect.

It would create a clear statutory definition of “waters of the United States” under the Clean Water Act, consistent with a respect for the rule of law, state power, and property rights.

That means ensuring that property owners, including farmers and ranchers, won’t be afraid to engage in normal activities, such as farming, out of concern the federal government may come after them.

A conservative farm bill would alleviate any fears that the Environmental Protection Agency would in effect be able to say where farming is allowed, such as through its attempts to regulate agricultural runoff. It would address problems with the Endangered Species Act, and in particular provide compensation to farmers, ranchers, and other property owners for restrictions placed on the use of their land.

In short, this next farm bill can’t be business as usual.

Conservatives need to start applying their principles to farm subsidies and stop giving a pass to what is arguably one of the worst examples of cronyism.

If they truly want to help farmers and ranchers, they will start getting the federal government out of agriculture. This means major subsidy reforms, and it means major regulatory reforms.

Hopefully, conservative legislators will fight for what is right, not what is convenient.

*To read this commentary on The Daily Signal, click here.

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