Reuters / January 28, 2000
WASHINGTON -- Three academics threw economic cold water on the idea of major changes in the landmark 1996 law that deregulated U.S. farming, despite two years of unexpected low grain prices.
Congress has enacted more than $15 billion in emergency farm aid to offset bad weather and low prices since late 1998. Another bail-out was likely this year, lawmakers say.
As part of budget plans due Feb. 7, President Bill Clinton was expected to propose farm-law changes so aid automatically increases during hard times.
"We believe ... Congress should hold a steady course," professors Don Paarlberg and David Orden told a federal commission that will suggest the shape of U.S. farm policy in coming years. Ohio State University economist Luther Tweeten also urged retention of 1996 reforms.
"That trend (reducing the federal role) needs to continue," Tweeten told commission members.
All three supported a targeting of federal payments to small and medium-size operations as a way to preserve family farms.
"But how are you going to do it?" asked commission leader Barry Flinchbaugh. He said farmers could divide their land into smaller parcels to collect aid calculated per-farm instead of the current supports based on volume of production.
"Freedom to Farm" eliminated most controls on what farmers grow in exchange for the first-ever limit on farm supports, set at a few billion dollars a year.
The economists said there should be no return to:
- land idling schemes to limit crop output.
- unduly high crop supports.
- supports tied to production of a specific crop.
- conservation programmes used to control crop output.
- government stockpiling of large, market-depressing amounts of grain.
Paarlberg, of Wellesley College, said the "decoupling" of farm subsidies could make it easier to limit the size of payments to farmers, which now can exceed $100,000 a year.
Commission member Leland Swenson, president of the activist National Farmers Union, said the academics were relying too much on free-market theory.
"The government isn't out of any other sector of the economy," Swenson said, citing the influence of interest rates, labour laws and military spending. "The economics (of farming) do not bode well to survive today."
The 1999 corn and soybean crops were expected to fetch the lowest average price in two decades.
Another commission member, Bob Stallman, president of the American Farm Bureau Federation, said in an interview that other perspectives would be heard before the commission writes its report. The AFBF favours so-called counter-cyclical aid that would put more federal money in farmers' hands when prices fall.
During its two-day session, the commission was to hear from critics of "Freedom to Farm," former California agriculture director Ann Veneman and former Agriculture Secretary Mike Espy.:
