There has been a lot of talk recently about federal farm subsidies, including whether the Super Committee is going to cut them to aid in reducing the federal deficit; whether these subsidies are contributing to growing health problems; and, whether the government is being inconsistent in encouraging us to eat more fruits and vegetables while supporting a $5 billion direct-payment subsidy program that expressly excludes fruits and vegetables.
Historically, farm bills have provided financial support for commodity crops (such as wheat, corn and soybeans) and no financial support for fruits and vegetables. Two types of subsidies given to commodity crop producers come in the form of direct and counter-cyclical payments. Counter-cyclical payments are tied to market prices. Farmers will get paid when the price of their commodity is less than a price set by the government. Direct payments, on the other hand, are paid to a producer regardless of the market price of the crop. The payments are based on the number of acres the producer was growing when the subsidy program began.
The direct payments program allows a producer to plant anything he or she wants except for fruits and vegetables and still remain eligible to receive payments. Why would fruit and vegetable producers be excluded from receiving direct payments?
The short answer is that the fruit and vegetable producers did not want fruits and vegetables to be subsidized. A look back at Congressional records from the 1990 Farm Bill provides some interesting insight into how we got to where we are today.
1990: A “Flexible” Farm Bill
In 1990, the farm bill debate centered on whether to give farmers more flexibility in what they plant without jeopardizing their eligibility for farm payments. Traditionally, eligibility was based on a farmer’s “historical planting patterns” so that if the farmer switched to a new crop, the farmer would lose eligibility for farm payments.
The notion of allowing a farmer to plant a different crop and remain eligible for payments, or “decoupling” payments from production, was quite controversial. A June 14, 1990, Reuters article reported that the Senate Agriculture Committee rejected an amendment that would have allowed producers to rotate crops on 25 percent of their base acres without losing payments or program eligibility. Then-Senator Tom Daschle said, “The issue is not flexibility. The issue is decoupling. I think it’s a big mistake from a policy standpoint.”
It’s About Flexibility: Any Program or Non-Program Crop
Despite Daschle’s disapproval, the July 6, 1990, Senate report included farm bill language that would have allowed producers the flexibility to plant any crop on 25 percent of their land without suffering a reduction in base acres used to determine payments.
If producers wanted to grow fruits or vegetables on a portion of their land, the producers would remain eligible for farm payments. The Agriculture Committee intended “that producers be allowed to plant within acreage limits any crop on acreage the producer so chooses, without suffering a loss in crop base acreage.”
Flexibility was still the buzzword in the July 18 Senate report: Sen. Bob Kerrey of Nebraska commented at the time, “Planting flexibility is important because it frees farmers to produce any mix of crops in response to market signals. It is also important because planting flexibility allows farmers to rotate their crops and thus better conserve the soil, protect groundwater, and thus reduce the need for fertilizers and herbicides.”
Proponents of decoupling farm payments wanted producers to be able to respond to market forces and not be locked in to growing a certain crop just to remain eligible for farm programs.
It’s About Fairness: Except Any Fruit or Vegetable Crop
There must have been some significant lobbying in the days following the abovementioned Senate reports because on July 24, 1990, Sen. William Cohen from Maine introduced an amendment “to prohibit certain fruits and vegetables from being eligible for the flexibility provisions in the commodity title.”
Cohen and other supporters of the amendment were concerned about fairness – “the fairness that is involved here is the situation where those who are covered with federal supports are in direct competition with those who are not.”
Sen. Kent Conrad of North Dakota expressed concern that program crop producers with a protected base would shift to producing non-program crops (including fruits and vegetables) during times of high prices, which would drive down prices and negatively impact those growers who rely solely on non-program crops for their livelihood.
The amendment was not without its critics. Sen. Rudy Boschwitz of Minnesota criticized the farm bill for sending mixed messages to farmers – for example, one farm bill focuses on planting more crops, and then the next encourages conservation. Boschwitz supported introducing more flexibility for farmers to respond to market forces in choosing what they plant, and therefore was very critical of the Cohen amendment.
“The purpose of this [farm] bill is not to lock farmers into doing certain things,” Boschwitz commented, “But now, as we begin to unlock, we are once again locking up by virtue of this amendment. We are saying to the farmers: You have flexibility, but not very much flexibility. Yes, you can plant your regular crop or you can respond to the market, but not in all crops. Not in most crops, as a matter of fact. … It is for that reason I object to this amendment.”
The focus on fairness to non-program fruit and vegetable growers prevailed over flexibility in the end. The amendment was supported by both the minority and majority members of the agriculture committee, the Western Growers Association, the American Farm Bureau Federation, the Florida Fruit and Vegetable Association, the United Fruit and Vegetable Association, the National Potato Council, and the administration.
Cohen concluded his remarks by focusing on the unfairness in allowing program farmers to try growing fruits and vegetables (and to be in direct competition with non-program fruit and vegetable growers) and in providing those program farmers with a safety net should their venture into fruits and vegetables not prove, well, fruitful.
“Do not ask Maine farmers to watch while their competitors whom they are subsidizing through their tax dollars come in and seek a share of the market and, if they fail, go back to their full acreage protection,” Cohen urged.
“All we are saying by this amendment is that if you want to get into the market, if you want flexibility, you cannot expect a guarantee. We are saying that you cannot go out into the volatility of the marketplace and then come back into the safety of the federal government’s security program. We do not have a security blanket for Maine potato farmers or other fruit and vegetable producers.”
Where We Are Today
During the debate on the fruit and vegetable amendment in 1990, Sen. Dick Lugar from Indiana, who did not support the amendment, said: “I take this occasion, however, to point out that there will come a time, I suspect, when many farmers will not be involved in the programs. They will find it advantageous economically not to restrict their planting in order to qualify for program crops. They will make choices as the market dictates.”
Twenty-plus years later, Lugar’s predictions have not come true as he imagined: farmers continue to farm program crops to receive direct payments (to the tune of $4.9 billion a year) and groups such as the American Farm Bureau Federation still strongly support direct payments.
Lugar’s predictions have some truth in that many farmers may not be involved in the programs anymore. The difference is, however, that Congress, and not the farmers, will decide whether direct payments and other farm support programs will continue into the future. The level-playing field for fruit and vegetable production that Cohen hoped for may become more of a reality.
A perhaps unintended consequence of excluding themselves from the direct payments program is that fruit and vegetable producers have created a successful industry without ever having received any subsidies, an experience that may prove crucial in the upcoming budget cuts.
Alli Condra is pursuing her LL.M. in Agricultural and Food Law at the University of Arkansas. She is the 2011-12 recipient of the Marler Clark Graduate Assistantship.