U.S. farmers will no longer get automatic checks from the government under new agriculture legislation President Obama signed into law Friday. But critics say the new Farm Bill simply replaces the old subsidies with new ones that may violate international trade rules. The bill also includes reforms in how the U.S. helps the hungry around the world.
The Farm Bill Obama signed ended $5 billion per year in automatic payments to farmers.
"This bill helps to clamp down on loopholes that allowed people to receive benefits whether they were planting crops or not. And it saves taxpayers hard-earned dollars by making sure that we only support farmers when disaster strikes or prices drop. It's not just automatic," the president said.
President Barack Obama, surrounded by members of Congress, signs the Farm Bill, Feb. 7, 2014, at Michigan State University in East Lansing, Michigan.
The new Farm Bill expands programs that buffer growers from bad weather or bad markets.
It raises the minimum price growers are guaranteed for certain crops. And it offers subsidized insurance that guarantees farmers’ incomes do not drop much from year to year.
Those programs could create problems says University of California at Davis economist Dan Sumner.
“That’s the kind of assurances that the U.S. government is willing to provide that most farmers in the world, in fact, don’t have access to,” he said.
With the backing of the government, Sumner says U.S. farmers can produce more and export more.
“Ultimately, that drives down world prices and it’s a little tougher for farmers in developing countries to compete with that,” Sumner said.
Subsidies pushed down world cotton prices in the early 2000s, and the U.S. lost a trade dispute over them.
Sumner says the new Farm Bill could re-open that dispute.
But growers’ groups note that trade rules do allow governments to pay a limited amount of subsidies.
“We’re pretty confident that it would take an extremely bad situation for us to even come close to violating those particular limits, something the United States hasn’t come close to in years,” said Dale Moore, policy chief at the American Farm Bureau Federation.
Elsewhere in the Farm Bill, changes should help food aid get to more needy people around the world.
Aid groups can spend more of the funding they receive buying food from markets near where it will be used, rather than from the United States.
“Not only will that save money, but it will reach people faster," said Oxfam America's Eric Munoz. "The actual program of buying locally is a much quicker response than buying food from the United States and shipping it.”
Munoz says with the same funding, help can now reach hundreds of thousands more hungry people.