FARGO, N.D. – An emerging new attitude in the United States towards farm support programs appears to echo the Canadian approach.
Some economists and farm groups are floating the concept of whole-farm income stabilization, similar to the Net Income Stabilization Account, as an alternative to support programs aimed at specific commodities.
Carol Brookins, president of a Washington-based analysis and consulting firm, said a group of Iowa farm groups has recently developed a proposal for a revenue insurance program.
She’d prefer to see the U.S. move toward a whole-farm “equity assurance” program, one that supports farmers based on what they sell, rather than what they produce.
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But she told an international trade symposium here recently that something has to change. Current U.S. domestic farm support programs are not only expensive and environmentally unsound, but they are hurting the country’s ability to compete as an international trader of grain.
Policy destroyed advantage
“We must change our agricultural policies if we are to be a viable and expanding producer and processor and exporter of foods in the next century,” Brookins said. “Our entire policy over the past 20 years has been to destroy the comparative advantage we carried in the world grain markets in 1972.”
Brookins said when world trade in grain began to expand dramatically in the early 1970s, the U.S. was the supplier best positioned to take advantage of the new markets.
“We were competitively priced, we were the largest producer, we had the most competent marketing system and the most efficient infrastructure to deliver product to overseas markets,” she said.
“But our policies and programs undermined every aspect of our commanding lead.”
- The U.S. embargoed exports of grain and soybeans to key customers on several occasions. “Our competitors were more than willing to service those markets. In some cases our buyers invested in other sources of supply because they lost confidence in us.”
- The U.S. implemented acreage reduction programs when prices started to decline, and relied on programs first developed in the 1930s to support domestic farm incomes.
“We set artificially high prices to bolster our markets, and our competitors laughed all the way to the bank as they took advantage of our naive efforts to raise prices by shorting the market when we were involved in a global marketplace.”
Brookins said the U.S. must recognize that policies developed 60 years ago to support rural residents cannot simply be fine-tuned.
“If the Soviet empire can be brought down overnight … isn’t it maybe time to consider maybe releasing our own farmers from the centrally planned agricultural policies of the past 60 years?”
Wayne Boutwell, president of the National Council of Farmer Co-operatives in the U.S., said later that such talk would have been heresy in farm circles a few years ago.
But farmers are seeing government support for their industry decline to the point where it’s not enough for them to survive, he said. “Then the question becomes, once you reach a certain level where they become ineffective, … is there a better way to spend the remaining dollars?
“I think reality is beginning to set in for many of those in the farming areas. I think they are beginning to look for these other alternatives,” said Boutwell.
But moving away from programs that stabilize prices for specific commodities is not a concept farmers will adapt to willingly, said Alan Bergman, president of the North Dakota Farmers Union.
Opposition to idea
“Decoupling is a precedent that we would oppose,” Bergman said. Decoupled support would make farmers more reliant on the goodwill of government treasuries.
Bergman said the direction of U.S. farm policy rhetoric is one that favors trade and exports over the welfare of producers.
He cited the trade spat with Canada over the Canadian Wheat Board as an example. Rather than implement a similar agency, which he said is advantageous to producers, effort by U.S. administration is to “bring it down.”
And as the U.S. government starts work on its newest farm bill, there is little likelihood it will result in a major policy shift, said agriculture undersecretary Eugene Moos.
While the 1995 bill is expected to reflect a “continued push” toward more market-oriented agriculture, “the new farm bill is not expected to radically change the direction of U.S. agricultural policy,” Moos said.
