A Brief History of U.S. Farm Bills

Published on: 20:07PM Nov 04, 2016

The first farm bill, the Agricultural Adjustment Act, was enacted in 1933, in response to the economic hardships faced by U.S. farmers as a result of a pair of major catastrophes. The first was the Great Depression, which started after the U.S. stock market crashed in 1929 and the resulting softening of aggregate demand accelerated a slide in commodity prices that had started in the previous decade. The second was the Dust Bowl, which started in 1931, with drought and persistently high winds which initially picked up topsoil throughout the Southern Plains states, leading to severe yield declines of 50 percent or more for wheat and corn crops in states like Oklahoma and Kansas. The Dust Bowl persisted for eight long years, driving as many as 3.5 million people to abandon their farms and move to other parts of the country. Due to the confluence of these two disasters, it is estimated that per-capita income for farmers was only one-third that of the rest of the U.S. population in the 1930s.

That first farm bill was aimed at boosting farm income by reducing the amount of agricultural commodities produced for the U.S. market. It paid farmers to withhold some of their land from cultivation so as to increase the prices that would be received for the crops. Also, each farmer was given the option of receiving loans for his crops from the federal government based on the established loan rates, with the crop itself serving as collateral. At the end of the loan period, the farmer could either repay the loan or forfeit the crop to the government if prevailing crop prices had fallen below the cost of repayment. That bill was 54 pages long, and had only two titles, 'Agricultural Adjustment' which included the commodity programs described above, and 'Agricultural Credits'.   

In later farm bills, a focus on land set-asides for conservation purposes was incorporated in the legislation in the 1950's, with the establishment of the Soil Bank Program. In the 1973 Agricultural and Consumer Protection Act, the food stamp program was incorporated into a farm bill for the first time. This was the first farm bill to exceed 100 pages in length, coming in at 250 pages. The 1977 Act was the first that included a separate agricultural research title, although individual research provisions had appeared in earlier bills. The Federal Agriculture Improvement and Reform Act of 1996 was the first to consolidate all commodity program provisions into one title—in previous bills, dairy, wool and mohair, wheat and feed grains, cotton, rice, peanuts, soybeans, sugar, and general commodity provisions all had their own titles. The Farm Security and Rural Investment Act of 2002 added an energy title, and the Food, Conservation, and Energy Act of 2008 added separate crop insurance and horticultural crop titles.

The addition of titles that incorporated new sets of policy issues over the years reflects two related phenomena: First, it reflects the recognition that farm policy needs to be about more than just producing more and more commodities, that is, the supply aspect. In order to balance the market, farm bills also need to address expanding or finding new outlets for the products, on the demand side. Second, it also reflects the fact that agricultural productivity gains and other socio-demographic factors over the decades increasingly had led to a shrinking of the area of the country where agriculture accounted for a significant share of economic activity.  Consequently, in order to maintain political support for farm bills, more policy issues were pulled in to garner and maintain interest in the legislation by both rural and urban members of Congress.

Since the first farm bill in 1933, there have been 16 more like it over the past eight plus decades, with a new one enacted every five years on average. The longest gap between two farm bills was nine years, between 1956 and 1965, and the shortest gap was one year, between 1948 and 1949. Most farm bill provisions are designed to expire at the end of a given bill, so as to give the House and Senate Agriculture Committees the impetus to re-examine the policies periodically in light of changes in market environments over the medium term. The Committees have also chosen to leave so-called permanent legislation, primarily the commodity provisions of the Agricultural Act of 1949, in place rather than repeal it, with their authority temporarily suspended for the term of that farm bill. This practice helps to create additional pressure to have a new farm bill in place when the old one expires, or at least be prepared to extend the old farm bill. If Congress failed to take either step, the programs from 1949 would kick back in.  Those programs would support key commodities at prices from more than 100 years ago, adjusted for inflation. For example, the so-called parity price for corn as of January 2016 was $13 per bushel, while the U.S. market price was about $3.70 per bushel.