News / USA

    Congress Debates Subsidies for US Farmers

    Central Illinois corn and soybean farmer cultivates field in preparation for spring planting, Waverly, Ill., April 4, 2013.
    Central Illinois corn and soybean farmer cultivates field in preparation for spring planting, Waverly, Ill., April 4, 2013.
    This week, Congress began debating whether to cut subsidies to U.S. farmers. Lawmaker are focusing on the Farm Bill, a massive, 5-year, half-trillion dollar package of subsidy, conservation and nutrition programs.

    The U.S. had been backing away from policies that can undermine farmers in other countries. But critics say proposals for the new Farm Bill threaten to undo some of that progress.

    The stereotype of the American farmer propped up with government cash is, at best, a bit out of date.

    Government payments to U.S. farmers growing the major commodities, including maize, wheat, soybeans, cotton and peanuts, make up just eight percent of their income. 

    That's one of the lowest rates among developed countries, says farm policy analyst Václav Vojtech with the Organization for Economic Cooperation and Development (OECD).

    “They are not the front-runners but they are pretty low on average, because the OECD average is about 20 percent,” he said.

    Cutting payments

    One reason for the low payments is high global crop prices. The subsidy that pays farmers when the markets are down has not been much of a factor recently.

    In fact, with grain prices way up, farmers have earned record or near-record profits the past few years. But they still receive about $5 billion per year in what are called “direct payments.” That subsidy goes out in good times and bad. Recipients don’t even have to grow a crop to get direct payments.

    But Congress is looking to cut $20 to $40 billion from the Farm Bill. Even the largest U.S. farmers’ group, the American Farm Bureau Federation, expects direct payments to go away.

    “Politically, I think, we just can’t sell [justify] them anymore," said Mary Kay Thatcher, the Farm Bureau’s chief lobbyist. "People feel like it’s farmers getting money for doing nothing.”

    Continued subsidies

    But that won’t be the end of U.S. farm subsidies.

    “You might say, ‘Gee, U.S. farmers, they’re going to give up $5 billion a year of direct payments,'" said economist David Orden with the International Food Policy Research Institute. "This sounds like a good change in farm policy and a benefit to the taxpayers. But if you look at the analysis of the legislation, they’re basically clawing back about 90 percent of that.”

    The legislation being considered by both chambers of Congress includes new provisions that would increase subsidies if and when crop prices go down again. One proposal raises the market price below which farmers receive a payment. Another protects their total income when prices fall.

    Orden says both versions would anger farmers in other countries because they kick in when farmers around the world are also dealing with falling prices.

    “Right at that point they would see the U.S. expanding its subsidies and they’d shake their heads and say, ‘There goes the U.S. again, protecting its farmers right at the time that we’re feeling the pain,’” Orden said.

    Playing by the rules

    In fact, as far as world trade goes, the direct payments that are going away are a more benign policy, says the Farm Bureau’s Mary Kay Thatcher.

    “It’s crazy because they are practically the only commodity-type program that we have that is viewed as non-trade-distorting. And you look at the European Union, they’re moving their common ag policy toward direct payments. We’re moving away from it,” she said.

    According to US Agriculture Secretary Tom Vilsack, even under the new Farm Bill proposals, the U.S. will still be playing by the rules.

    “I’m confident that the work that has been done up to this point by the U.S. and the work that will be done in the future will not get us in a position where we are doing more than the international community will allow,” he said.

    'Political back-slipping'

    Under World Trade Organization rules, the U.S. is allowed to spend $19 billion on the type of subsidies proposed in the new Farm Bill. Orden says it would take an exceptionally bad year to go over that limit.

    But negotiators have been working for more than a decade on new WTO rules that would lower that limit and require other countries to open their markets, too. Orden says those talks are going nowhere. And that’s one reason the Farm Bill is shaping up this way.

    “The 2013 Farm Bill, in that context, will be a kind of political back-slipping," he said. "Not violate our current commitments, but a political back-slipping that will have ramifications for the future prospects, including the future prospects for U.S. farmers and exporters.”

    Orden says it dims the prospects for U.S. leadership on a new WTO deal that would improve the livelihoods of farmers worldwide.

    Steve Baragona

    Steve Baragona is an award-winning multimedia journalist covering science, environment and health.

    He spent eight years in molecular biology and infectious disease research before deciding that writing about science was more fun than doing it. He graduated from the University of North Carolina at Chapel Hill with a master’s degree in journalism in 2002.

    You May Like

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Brad Wilson from: Iowa
    May 15, 2013 1:38 PM
    This is a summary of how people spin the farm bill, and does a fine job of it, but that's different from providing info on what a farm bill really is, and what the real issues are. In fact, no farm commodity subsidies have ever been needed, except to compensate farmers for Congressional reductions of farm prices. Congress lowered farm prices, increasingly, since, then, starting in 1961, paid subsidies to make up for abut 1/8 of the reductions.

    Really, farm commodities, as grown in regions, are highly inelastic, lacking price responsiveness on both supply and demand sides. Farmers don't stop planting the whole farm with low prices, nor do consumers eat 4, 5, 6 meals, etc. That was fixed with the New Deal, market management, like OPEC in oil. But as oil went up, Congress chose for the US, (with even bigger export market share,) to go down, to lose money on exports.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    X
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.
    Video

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.
    Video

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.
    Video

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora