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Farm Bill Drafts prioritize the unnecessary and unaffordable

This analysis is based on the latest news and will be updated. To contact the author, please send an email (email protected)

The Senate and House of Representatives agriculture committees have finally released summaries of their farm bills, just seven months after the previous five-year law expired. For those who prioritize free markets and worry about our budget prospects, time has not improved the outcome. The House Ag Committee calls their version a “high level” summary, but that description is better applied to the expected price tag.

Although the Senate version seeks to emphasize party-political divisions, based on the committees’ overviews, Republicans and Democrats in the House of Representatives are united in their efforts to increase spending, maintain the administration’s heavy-handed involvement in the agricultural sector and ignoring opportunities for reform. that would increase transparency and better target subsidies.

Based on early analysis of these designs, here are some eyebrow-raising provisions:

  • Higher Reference Prices: Either design would provide an unnecessary boost to commodity prices, increasing the likelihood that the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs will pay out. Some Republican lawmakers and limited government organizations have opposed the move.
  • Inflated Baseline: Both drafts integrate Inflation Reduction Act conservation funds into conservation funding, creating a permanent expansion of the baseline for farm bills and increasing overall spending in perpetuity.
  • Irrational Trade Policy: Both drafts mention increased funding for the U.S. Department of Agriculture’s (USDA) market access and foreign market development programs. These programs are considered wasteful examples of corporate welfare on a twofold basis, as noted in the Green Scissors database. The main beneficiaries are established, wealthy companies. Ironically, other parts of the summaries are awash with protectionist language and policy suggestions that could make potential trading partners wary, to put it lightly. Eliminating the costly tariffs imposed and/or perpetuated by previous and current U.S. administrations, and the punitive retaliatory tariffs that these ill-conceived policies brought about in the first place, appears to be a cheaper and more effective approach.

Many details, especially on the House of Representatives side, remain to be seen and experts continue to explore the real-world implications of what we know so far. And of course, the markup process and floor consideration can involve significant changes. But this first reading is very disappointing.

Most of the changes currently available can be summarized as a costly extension of policies that are both unnecessary and unaffordable in light of our precarious budget prospects.

According to the House of Representatives summary, the main justifications for raising reference prices are “rising production costs” and inflation, but input costs are falling and net farm incomes remain high. It is said that rising interest rates are increasing taxpayer-backed borrowing, but the rock-bottom rates of the past decade are not the norm and should not be the expectation.

Another theme that emerges is the continued imposition of risk on taxpayers, whether that is the risk of large and small private farms, the risk of crop insurers and food producers with a global reach, or the risk of energy producers. An increasing share of the price of doing business, prices that would typically send important signals to markets and industries, is being passed on to already overburdened taxpayers. Not only does this add to our debt, it also creates a tidal wave of unintended consequences that come with their own costs to the environment, consumers, and many others.

Hopefully, as more details emerge and the legislative process progresses, much-needed reforms and savings will be achieved.