The writer, a native of Eustis, Neb., was U.S. secretary of agriculture under President George H.W. Bush and U.S. trade representative under President Ronald Reagan.
U.S. farm policy is clearly in need of reform. The world of agricultural production and trade has changed enormously over the past decade or two, and our policies have been slow to change with it.
The example used most frequently in recent weeks is direct payments, which are an income supplement to farmers. Those payments, now impossible to justify, should either be eliminated or restructured to focus on conservation/environmental goals.
Traditional farm programs — so-called Title I crop subsidies — are also difficult to defend. Those programs need also to be restructured and refocused. Congress must dramatically reduce their cost, and can do so by focusing on revenue and risk rather than on price.
Non-farm media has given considerable attention recently to suggestions that these programs simply be eliminated. But those suggestions typically come from people who know little or nothing about farming and the risks it entails.
Critics of farm programs are inclined to forget the history and experience of the '70s and '80s. It was in the '70s that the Soviet Union began to import U.S. grain. Farm prices skyrocketed, consumers complained of high food prices, and Malthusians suggested that the world would soon starve. The first "world food crisis" was born.
What is occurring today is remarkably the same. But what we should most remember is the follow-on in the '80s. Farmers in the United States and elsewhere responded to the challenge, surpluses soon appeared, crop prices plummeted, and thousands of farmers went into bankruptcy. We ought to do everything we can to avoid replication of that disaster.
Though farm programs helped alleviate the economic turmoil of the '80s, they were costly and often failed to respond where they were most needed. That is still true today, as the vast bulk of Title I supports go to the nation's largest and most profitable producers. And almost all of those benefits go to producers of five crops — cotton, rice, wheat, corn and soybeans.
Present crop insurance coverage is heavily focused on the western Great Plains, and disaster programs have long had notable shortcomings. We can do a much better job of focusing, but we should not abandon the effort!
Farmers have risks they cannot predict, risks that are unique to agriculture, and risks that the private sector cannot or will not fully insure. Weather volatility makes crop insurance a risk management program of the first order. Crop insurance needs to be properly designed and readily available in all parts of the country.
Farmers face other risks, also of greater magnitude than in the past, and, they operate today in a global marketplace. That offers opportunities they've never had in the past, but it also batters them with unpleasant surprises such as import constraints based on sham food safety concerns, new subsidy programs in competitor nations, exchange rate manipulation, and many others. These barriers are outside farmers' control.
Such events will quickly remind us of the '80s if we're not careful. Confronting and managing these risks will require creativity on the part of Congress and our agricultural industry.
That creativity has begun to emerge. One suggestion is that our farm safety net should cover individual risk (at the farm level) and systemic risk (like the events mentioned above that affect large numbers of producers).
Traditional crop insurance, perhaps with some updated options, should cover "individual risk." Something broader will be necessary for "systemic risk." An altered ACRE program, tried on a limited basis in the 2008 Farm Bill, might handle that task. If not, we'll need a new and different "incubator program" to do so.
One specific proposal now before the Congress is known as Brown-Thune-Lugar-Durbin. It seeks to meet this composite of risk management challenges. It is certainly the most aggressive proposal on this topic to date. And it would significantly reduce farm program costs, an imperative at the present time. So it deserves careful consideration by the Congress.
At the same time, we must acknowledge that any shift in government support can affect producer behavior. Hence, as we intensify production we must not forget the role of conservation, an essential element in retaining the long-term health of our natural resources. So a modern farm safety net should seek to minimize distortions affecting trade as well as ones that affect the environment.
Both the administration and the Congress need to be cognizant of World Trade Organization rules as the legislative process proceeds. Global trade now accounts for about 30 percent of all economic growth in the world, the highest in the history of our planet. Hence, U.S. agriculture wants to, and needs to, play on that field. We need to make sure that our 2011/2012 Farm Bill does nothing to impede American farmers from doing so.
That legislation should, in fact, lay the groundwork for U.S. producers to get their share, or more, of the expansion in international trade of farm and food products. That expansion will occur, with or without us, and we want to be right in the middle of that action.
If we shift the emphasis of our farm policy to risk management, as I believe we must, we'll not achieve precision in the first go-round. But that should not discourage us.
Future Congresses and future administrations can tweak 2011-2012 legislation as necessary. After all, we've been tweaking Title I programs for more than 70 years!
Our goal should be to create a fiscally responsible, publicly accountable farm safety net. If everyone will work together cooperatively and constructively, we can re-design U.S. farm policy in a way that will better serve American agriculture and the public well for years to come.