fixing the farm bill

The 2012 U.S. Farm Bill: History, Problems and

Opportunities for Reform

www.nationalaglawcenter.org/assets/crs/RS22131.pdf

http://www.nationalaglawcenter.org/assets/crs/RS22131.pdf

http://www.nationalaglawcenter.org/assets/crs/RS22131.pdf

www.downsizinggovernment.org/agriculture/food-subsidies

School Breakfast and Lunch ServicesSupporting Students or Farmers?Chris Edwards • July, 2009 (excerpt)One affirmative case calls for expanding student lunches for those living in poverty.The federal government funds school breakfast and lunch programs at 80,000 public schools... The lunch program covers 30 million children, and the breakfast program covers about 8 million children. Federal spending on the two food programs, for free and low-cost meals, was $16 billion in fiscal 2009.

The programs had their origins in the Federal Surplus Commodities Corporation established in 1935. That entity was designed to distribute “surplus” meat, dairy, and wheat products to the needy, including children in schools. An official history of the school lunch program notes that the farm policies of the 1930s attempted “to remove price-depressing surplus foods from the market” yet goes on to note that “many needy school children could not afford to pay for lunches.”22 Perhaps it didn’t occur to officials that some children couldn’t afford lunch because the government was pushing up prices by its purchases of so-called surpluses.The official history notes that prior to the 1930s many local governments had provided food aid to the schools. However, “aid from federal sources became inevitable” because those local governments “could not provide the funds necessary to carry the increasing load.”23 One reads that excuse for federal intervention frequently—that state and local governments don’t have enough money to fund programs. Of course, the federal government has no funds of its own—it gets all of its money from taxes paid by people who live in local communities. 24The modern school lunch program dates to the National School Lunch Act of 1946. The program covered 7 million children in its first year and was expanded to 22 million children by 1970. Congress has occasionally expanded benefits since then, for example, by adding an after-school snack program in 1998. Congress began the school breakfast program as a pilot program in 1966 and made it permanent in 1975.The school lunch and breakfast programs are not just for low-income families. Any child at participating schools is allowed to receive meals under the programs. Those families with incomes below 130 percent of the poverty level receive free meals and those between 130 and 185 percent of the poverty level receive reduced-price meals. Those above 185 percent pay “full price,” but that price is subsidized to an extent. About 58 percent of school lunches are free or reduced price. 25Like the food stamp program, the school breakfast and lunch programs were designed to reduce hunger. But society has changed, and today the programs may contribute to the problems of excess weight and obesity of many young people, including those from low-income families. 26Like other subsidy programs, the school meal programs are widely abused. A large share of free and reduced-price meals is inappropriately provided to families with incomes above the statutory income cutoffs. Because schools put little effort into verifying recipient incomes, many higher-income parents receive subsidies. Audits have found that about one-quarter of those receiving free and reduced-cost lunches are not eligible. 27 The USDA testified to Congress that in 2002 “27 percent more students are certified for free or reduced-price meals than the Census data itself would suggest are eligible.” 28The USDA’s inspector general reports that another area of abuse is local school contracting. 29 The food service companies that supply school breakfasts and lunches are prone to inflate expenses and use fraudulent billing schemes in their school contracts.The bottom line is that local governments have many incentives to maximize the number of school meal recipients and little incentive to reduce waste and abuse. These problems are common in federal subsidy programs for state and local governments, in programs ranging from Medicaid to highway grants. The solution is to end the federal role and revive federalism... • See full article:www.downsizinggovernment.org/agriculture/food-subsidies

http://www.downsizinggovernment.org/agriculture/food-subsidies

http://www.downsizinggovernment.org/agriculture/food-subsidies

Food and Nutrition Subsidies• The bulk of Farm Bill spending is not for farms at all, but for food

and nutritional assistance programs that constitute the largest means-tested federal poverty programs outside Medicare.

•Of the $284 billion that the CBO projected the 2008 Farm Bill would cost (for the 2008– 2012 fiscal year period)

• $189 billion (about 65 percent) was spent on Title IV programs, which include food stamps (now known as the Supplemental Nutri- tion Assistance Program), the Women, Infants, and Children program, school lunch programs, and other such programs that are mainly aimed at providing assistance to children and adults from all families who suffer from poverty.

Current Policy Debates

• Should the programs should be used to target increased consumption of specific categories of food (for example, fruits and vegetables), which poor families and individuals should be program eligible, and how much the country can afford to spend on these types of targeted income-transfer programs.7

• The issue of targeting food assistance to particular foods to reduce obesity, especially among children, and to more generally encourage healthy diets will be among the most hotly contested Farm Bill issues.

Separate Nutrition from Ag.


• Separating the nutrition programs from the farm subsidy provisions of the Farm Bill would reduce the potential for logrolling, which has meant that members from urban districts and states vote in favor of farm subsidies to obtain support for nutrition programs.


• Separating the nutrition programs from the farm subsidy provisions of the Farm Bill would reduce the potential for logrolling, which has meant that members from urban districts and states vote in favor of farm subsidies to obtain support for nutrition programs.

• In addition, since members representing farm constituencies dominate the agriculture committees in Congress, they do not have a background or interest in nutrition programs, which represent the bulk of the outlays under their purview. There is no natural connec- tion between these parts of the Farm Bill, and to continue the linkage reduces the quality of policy on both sides.

Commodity-oriented Farm Bill programs (Title 1)


• Provide income, price support, and other risk-management programs for a wide range of agricultural commodities, especially major crops like wheat, corn, rice, cotton, and soybeans, and other relatively smaller-revenue crops like barley, peanuts, and minor oilseeds (for example, safflower, sunflower, and canola).


• Provide income, price support, and other risk-management programs for a wide range of agricultural commodities, especially major crops like wheat, corn, rice, cotton, and soybeans, and other relatively smaller-revenue crops like barley, peanuts, and minor oilseeds (for example, safflower, sunflower, and canola).

• Some programs (for example, direct payments and price supports) apply broadly. Others are targeted to specific commodities, including cotton, milk, and sugar.

Direct Payments

Direct Payments• Unless modified by Congress, direct payments will amount to

about $5 billion in 2012.



• These payments are based on acres of program crops planted between 1983 and 1985 or from 1998 and 2001, and on estimated per-acre average yields for those crops from 1983 & 1985.



• These payments are based on acres of program crops planted between 1983 and 1985 or from 1998 and 2001, and on estimated per-acre average yields for those crops from 1983 & 1985.

• The payments are essentially gifts to farmers and landowners from taxpayers that are generally unrelated to the current use of the land (although fruits and vegetables cannot be planted on those acres). They are not targeted to low-income farm households, and larger farms and wealthier farm families and landowners generally receive larger payments.

Dairy Subsidies

Dairy Subsidies

• Dairy Policy. Some Title I programs target specific commodities and classes of farm operations, including dairy, sugar, and cotton.

Dairy Subsidies


• Taxpayers have provided milk producers with approximately $1 billion in annual subsidies, regardless of whether or not the dairy sector faced financial difficulties because of high input costs or low milk prices.

Dairy Subsidies


• Taxpayers have provided milk producers with approximately $1 billion in annual subsidies, regardless of whether or not the dairy sector faced financial difficulties because of high input costs or low milk prices.

• Consumers, many of whom are also taxpayers, have also indirectly subsidized milk producers through higher prices to the tune of more than $1 billion a year as a direct result of Farm Bill–sanctioned programs.14

Title IV: Crop Insurance

Title IV: Crop Insurance• The Risk Management Agency runs the USDA’s farm insurance programs.

Both “yield” and “revenue” insurance are available to farmers to protect against adverse weather, pests, and low market prices.



• The RMA describes its mission as helping farmers “manage their business risks through effective, market-based risk management solutions.” 11 The RMA has annual outlays of about $4 billion, employs about 550 people, and its activities are far from “market-based.”




• Federal crop insurance policies are sold and serviced by 16 private insurance companies, which receive federal subsidies for their administrative costs and insurance risks. The firms operate like a cartel, earning excess profits from the high premiums they charge.12




• Federal crop insurance policies are sold and serviced by 16 private insurance companies, which receive federal subsidies for their administrative costs and insurance risks. The firms operate like a cartel, earning excess profits from the high premiums they charge.12

• They get away with that because the government provides [subsidies]

fixing the farm bill

Education