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Perspective: The Perfectly Good Storm

September 6, 2012
By: John Phipps, Farm Journal Columnist
 
 

We’ve passed the sell-by date on the phrase "the perfect storm," thank goodness. But if I had to describe the situation facing U.S. farm policy right now, I would reach for those very words. In addition to the usual problems of intercommodity squabbling, friction between food and farm payments, and confusing support schemes, we face new and formidable opponents on a hostile playing field.

Fiscal hawks are more numerous and intransigent. Food aid proponents bolt if expected cuts fall too heavily on their constituents. (For all our "agvocating" about feeding the world, farmers can’t seem to make a connection between funding food aid and farm prices.)

These and other developments have turned the House of Representatives into a minefield. We have sailed a farm bill through dangerous waters before, with ag payments stuck to the hull like a barnacle. But we have never had a political mindset in play where stopping all legislation, not just shaping it to your ideology, is the goal. Nor have we had so many Americans convinced our national debt and annual deficits are clear and present dangers, despite what the bond market keeps trying to tell us.

Farm bills have always been an ugly, expensive compromise—a mishmash of legislative shopping lists. But this time, compromise itself is considered suspect, tantamount to consorting with the enemy. Those who still believe in finding middle ground quickly get their come-uppance in a primary fight.

Could the outlook get any grimmer for federal farm policy? Let me suggest that what we are witnessing is illusory—political computer graphics, if you will. I’ll go further and submit that our anxiety is totally overblown, if you simply check the facts.

First, we don’t need anything like current farm policy. We can grow corn, soybeans, wheat, etc., all by ourselves. Nobody worries about a french-fry shortage, yet potato producers get no love from Washington.

Our beloved farmer safety net is a hypocritical economic farce. When ag economist Bruce Babcock bravely appeared on The Colbert Report, the best received joke was Stephen Colbert’s remark that crop insurance is "just Obamacare for our corn."

Most commodities are produced without subsidies, and all could be. What we have is not a perfect storm but a perfect opportunity to let go of policy that was a bad idea from the start. There are almost no burdensome surpluses in commodities, demand is escalating, and there are real questions about production amid climate variability.

The Courage to Set Sail. Agriculture needs transparent, functional markets. That can only occur in the absence of an intrusive farm policy. Nor would it cost producers more than we can pay.

Studies indicate ethanol can lose the mandate and compete for corn just like cattle feeders. While world trade isn’t perfect, it is allocating supplies and production far better than a decade ago.

Crop insurance could be funded just like all other insurance—by premiums alone. While it would be significantly more expensive, it would make planting decisions reality-based. The added costs would come out of rents. If needed, high-difficulty acres would set higher prices to bring them into production.

When all commodities are treated alike—zero government support—whining about unfairness ceases. Meanwhile, profits follow risk, as is always the case, and the only way for a landowner to maximize his profit is to choose the best producer. Good operators would gain considerable leverage in rental negotiations.

Finally, farmers could lay aside a load of duplicity about what we do. Our worries about whether the American voter loves us would fade. We could become a special asset instead of a special interest.

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FEATURED IN: Top Producer - September 2012

 
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