The economic importance of passing
a comprehensive food, farm, and jobs bill
Executive Office of the President, The White House
On January 15, the U.S. House of Representatives adopted the 2014 finance law, which, when once it is passed by the Senate, will put an end to three years of budget instability in the United States. As of January 15, the new farm bill is still in the wings, while the old one expired on September 30, 2013.
Lawmakers are stuck on the issue of the food assistance program––a sticking point between the Senate and the House of Representatives––and one of the key current issues is reaching a decent solution by the end of January 2014 to avoid the “dairy cliff”, that is to say soaring milk prices under the permanent laws adopted in 1938 and 1949.
Considering the fervor and multitude of debates it generated, the Farm Bill appears to be much more than mere agricultural legislation. In fact, American agriculture fills many fundamental functions: Food security, geostrategic independence, sustainable development including economic growth, regional development and environmental preservation.
Thus the White House recently pointed out the strategic and specific significance of the Farm Bill and made a plea for the adoption of new legislation on agriculture. We are publishing below excerpts from this document1, which reexamines the economic consequence of passing a farm bill that outlines the elimination of decoupled direct aid by emphasizing insurance systems and innovative programs, such as initiating a management program for dairy production. A law that provides farmers with effective tools to fight revenue uncertainty and market volatility.
In spite of the difficult compromise regarding the new project of agricultural legislation in the United States, the Farm Bill reform upholds the old saying of “doing better with less.” For the reform proves that even under budget pressure, the strategic scope of an agricultural policy can be maintained.
momagri Editorial Board
“We need to focus on what the majority of Americans sent us here to do – grow the economy, create good jobs, strengthen the middle class, lay the foundation for broad-based prosperity, and get our fiscal house in order for the long haul. … [That’s why] we should pass a Farm Bill – one that America’s farmers and ranchers can depend on, one that protects vulnerable children and adults in times of need, and one that gives rural communities opportunities to grow and the longer-term certainty they deserve.”
– President Barack Obama, October 19, 2013
Today, the U.S. rural economy faces an important crossroad. Rural America suffered during the Great Recession, but driven by the innovation and smart business decisions of America’s farmers and ranchers, it also shared in the economic recovery. Farm income is currently near a record high level—notwithstanding a record drought in 2012 and many other natural disasters. At the same time, rural America faces unique challenges to further economic growth, including facing lost population in real terms for the first time.
In June of 2010, the Obama Administration began providing input to Congress regarding the prospective features and policy of contents for a reauthorized Farm Bill. Traditionally reauthorized every five years, Farm Bills govern an array of programs including farm commodity price and income supports, farm credit, trade, private lands conservation, research, economic development, renewable energy, food aid, and domestic nutrition assistance. These programs provide a cornerstone for supporting U.S. agricultural prosperity, conserving the nation’s natural resource base, as well as supporting the research and investments for the future of the nation’s food system, the production of alternative energy, and our food assistance safety net.
Over a period of more than three years, the Executive Branch has supported reauthorization efforts aimed to help build a better safety net for farmers and families, and to build a better farm, food, and energy policy for the nation. However, 43 months later and despite the best efforts of many in Congress, work on the Farm Bill remains incomplete. While some programs have been simply extended, others remain either unfunded, unauthorized, or without enactment of needed reforms.
The President’s Budget provides a strong safety net for farmers, that protects them from losses, while reducing budgetary outlays by more than$37 billion. This is accomplished by eliminating unnecessary direct payments, reducing crop insurance subsidies to companies and for farmer premiums, by streamlining conservation programs, while providing assistance for dairy and livestock producers as well as providing assistance for specialty crops, bioenergy, and beginning farmers. The Administration would like to work with the Congress to achieve crop insurance and commodity program savings consistent with the President’s Budget, while at the same time strengthening the farm safety net in times of need and supporting the next generation of farmers.
The Administration has made clear that the Farm Bill is important for every American.
For our farmers and ranchers, a comprehensive Farm Bill would provide a reliable safety net, including a strong crop insurance program, a long term extension of disaster programs and retroactive assistance for livestock producers. The Farm Bill is also a job creation bill that will expand new opportunities for American agriculture, increase manufacturing potential and support Main Street businesses across rural America. It’s a research bill that continues our long history of agricultural innovation. It’s a conservation bill that would continue Federal efforts alongside a record number of farmers and ranchers to conserve our soil and protect our water. The Farm Bill is a trade promotion bill that would honor our trade commitments and assist our farmers and ranchers to export a record amount of product around the world. The Farm Bill is a nutrition bill that would adequately protect those among us who need help putting good food on the table – an effort that is critical for millions of people, including hardworking families, senior citizens, people with disabilities who are unable to work and returning veterans. And it is a deficit reduction bill that would enact reforms saving billions of dollars in the coming decade.
Specifically, a comprehensive reauthorized Farm Bill would:
- Build on recent momentum of the U.S. agriculture economy and rising farm income: In recent years, the agriculture sector has seen strong growth, with farm income and agriculture exports both reaching historic highs. The U.S. agriculture sector is a key engine of economic growth: not only does it put food on the table of American families at affordable prices and provide raw material for a range of vital purposes—it also employs approximately three million workers, and is a key economic driver in many rural communities. The Farm Bill offers an opportunity to build on this progress, providing long-term certainty about the next five years of U.S. farm policy for America’s farmers, ranchers and producers.
- Contribute to a strong rural economy through investments in rural communities and local and regional food systems. The importance of the Farm Bill goes well beyond the role of agriculture. The Farm Bill authorizes and directs the work of USDA-Rural Development, which provides technical assistance and financing for long-term investments in the future of rural communities.
- Support vulnerable families by protecting our vital food and nutritional assistance programs: Congress should approach the reauthorization of the Farm Bill in a comprehensive manner. The Supplemental Nutrition Assistance Program (SNAP) is one of our country’s strongest defenses against hunger and poverty, and a crucial support for families during tough economic times. The program assists a broad array of Americans who are struggling to make ends meet, including working families with children, senior citizens, veterans, and adults who are still looking for work. In addition to helping families put food on the table, SNAP also benefits farm and rural economies. The Farm Bill should protect our vital food assistance programs, which benefit millions of families and individuals – in rural, suburban and urban areas alike – and reauthorize them on the same schedule as the agriculture programs. In addition, reforming our largest international food aid program would provide a much greater impact, helping up to 4 million more people each year in emergency food crises abroad, without additional budgetary resources.
- Encourage wise risk management through a secure and reliable safety net for producers: The Farm Bill offers an opportunity to provide an adequate safety net for those producers who most need it, while making meaningful reforms and generating budgetary savings. By eliminating Direct Payments – which have historically been made whether or not a producer suffered a loss – the Farm Bill would save billions of taxpayer dollars while continuing to provide a strong safety net for producers. Volatile input costs and markets with the ever present threat of natural disaster have made agriculture a historically high-risk business, which is why producers need a reliable safety net that both provides assistance quickly during times of need and encourages producers to use prudent risk management strategies. The new Farm Bill offers an opportunity to appropriately reform the safety net to reflect the diversity of American agriculture, allowing farmers to make necessary investments while avoiding needless risks and expenses. This reformed and modernized safety net would include a strong crop insurance program, as well as reauthorized disaster assistance programs for producers. In addition, the Farm Bill presents an opportunity to renew much needed disaster assistance for American’s livestock producers.
- Promote markets at home and abroad while meeting our global trade commitments: Vibrant, fair, and diverse markets at home and abroad benefit our farmers, ranchers, producers, and consumers of all types and sizes. This Administration has consistently focused on expanding markets for American goods abroad, working aggressively to break down trade barriers with our global partners while meeting our trade commitments, as well as by reaching out to producers and enterprises of all sizes to facilitate trade financing and promotion. These efforts have a real impact: after doubling over 5 years, U.S. agricultural exports have remained close to record levels since 2011. With the help of Farm Bill programs, including the Market Access Program and Foreign Market Development Program, U.S. producers have achieved the strongest five-year period for agricultural exports in our history. At the same time, a comprehensive Farm Bill will support efforts to expand opportunities here at home for producers. Local food marketing is one of the fastest growing segments of agriculture: in the past decade, direct sales to consumers have doubled. A new Farm Bill should build on this progress to support our specialty crop producers with improved risk management tools and expanded market promotion.
- Promote innovation and productivity by supporting key research: Agricultural research and development generates high payoffs for farmers and the public. A substantial body of literature on investing in agricultural research and development shows that the social benefits from public research in agriculture have been large, with social rates of return usually falling within the range of 20 to 60 percent annually. Research programs today address a broad array of problems facing U.S. agriculture including addressing food supply and security, developing new sources of bio-energy, responding to increased climate variability, addressing plant and animal health issues, water availability and quality, food safety, and nutrition and childhood obesity. A comprehensive Farm Bill will support these goals by investing in key research initiatives.
1 The full report is available on the White House website: http://www.whitehouse.gov/sites/default/files/docs/farm_bill_report_11202013.pdf