What excuse for the new farm bill?
By Dennis T. Avery
The Congress is trying urgently to write a new farm bill—but it can't think of an excuse for passing it. The cold reality, of course, is simply that half of the U.S. Senate is elected in states where the farm vote is significant, and neither party wants to lose an election because of a few unhappy farmers.
Until recently, the Congresspersons could always claim that farmers were "underpaid," and that farm prices were too low. But, in recent decades the average farm family has been earning more than the average city family, even when the return on the farmers' investment in land and machinery is included in the calculation.
Moreover, crop prices today have already been inflated by the new federal mandates on ethanol. Corn prices have shot up from less than $2 per bushel to nearly $4 in the past year or so, and Midwest economists warn that the expansion of ethanol refineries suggests corn at $4.50 per bushel in the near future. This, of course, will drive up the consumer costs of meat, milk, and pet food. Corn has already attracted acres from such competing crops as cotton and wheat, and farmers are seriously thinking about draining wetlands and clearing woodlots to get more cropland.
President Bush has called for at least 35 billion gallons of alternative fuels by 2017—and so far we have only corn to fulfill the mandate. The dream of ethanol from cellulose is still a dream. Since corn produces a net gain of just 50 gallons worth of gasoline per acre per year, and the demand for gasoline is more than 134 billion gallons annually and rising, ethanol represents an almost unlimited demand.
Predictably, the organic movement has offered its own farm bill, pushing to subsidize more organic farming. Unfortunately, there is no evidence that organic food is safer or more nutritious, and the organic farmers refuse to use the soil-safest farming systems—low-till—because they require herbicides. Worst of all, the yields from organic farms are little more than half as high as conventional yields because the organics refuse to use nitrogen fertilizer, and thus must grow their own nitrogen as pasture and green manure crops. Land that is growing nitrogen is not growing much food. The European organic payments were legislated in a period of heavy farm surpluses, when Europe wanted less farm output, not more.
Let's face it, the only rationale for writing a new farm bill is because the farmers expect one. We've had farm bills continually since 1932, whether we needed them or not. The last time the Congress wanted to jack up the cash being mailed to farmers they based it on periodic bad weather in North Dakota. When has there not been periodic bad weather in North Dakota?
For more than 20 years, I've been talking to U.S. farmers about the massive expansion of food demand in the densely populated countries of Asia. I've been demanding the kind of serious trade reform talks that are going on right now, under the aegis of the World Trade Organization, so American farmers would be able to compete fairly in such countries as China and India where incomes are soaring.
The world will need more than twice as much food per year by 2050, to support a peak population of perhaps 8 billion mostly affluent people and their pets. American farmers will be well-situated to provide a lot of that, if they aren't selling all their corn to the federal government at subsidized prices—without making a dent in our "energy independence."
Dennis T. Avery is a senior fellow for Hudson Institute in Washington, D.C. and is the Director for Center for Global Food Issues. He was formerly a senior analyst for the Department of State. Readers may write him at Post Office Box 202, Churchville, VA 24421.
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