When I looked back over the topics of my commentaties in 2019 last week, it dawned on me one enduring subject didn’t get much discussion: the new farm bill, or the relatively new bill, at is was put in place last year. During a time when many farmers were in financial difficulty, this is a change from previous fixation on farm bill specifics.
The reasons are manifold, and unprecedented. First and probably most important is the way Market Facilitation Payments – MFPs dominated farm subsidies. Not only were MFPs enormous boosts to farm income, they were a bold move by the administration to bypass Congress, where farm policy is normally negotiated and voted on. As I said at the time, by applying a new interpretation to the permanent farm bill of 1935, the president simply instructed the Secretary of Ag to invent a scheme to borrow money via the CCC and scatter it across the countryside. The formula for paying farmers was arbitrary and not open to any debate by farmers or Congress. As a result, those farm payments really aren’t about lobbying Congress anymore – they are dependent on the good will of the president.
Meanwhile the Farm Bill itself remains largely a complicated mystery as far as farmers are concerned. There are some powerful analysis tools available from the University of Illinois and Texas A & M, but frankly after trying both I agree with Farm Journal financial advisor Paul Neiffer that they both seem optimistic. They also report a probabilistic range of payments, which can be confusing. I’ll keep an eye on those projections.
Finally, the farm bill did maintain subsidies for crop insurance, so farmers continue to only pay about 40% of the cost. This is possibly the most important and reliable source of taxpayer dollars for farmers.
With signs that the trade war may be slowing to a stalemate, the need for more large MFP payments is decreasing. Since they are decided by the president alone, those who want them to continue should be attending political rallies rather than lobbying their representatives.
In short, we’re not talking about the farm bill as much because it has been coopted and overwhelmed by helicopter money from the USDA. Whether that continues is debatable, but in an election year where nobody in Washington seems concerned about massive deficits, I won’t rule out MFPs even if China trade does improve.
