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Economists explore new farm bill options

Agriculture.com Staff 03/13/2007 @ 8:18am

Higher crop prices, international trade negotiations, the federal budget deficit and new congressional leadership are all factors in the farm bill discussions now under way.

Agricultural economists from the University of Nebraska-Lincoln (UNL) and Kansas State University traveled both states the last few weeks for a series of briefings on the emerging development of legislation that will shape federal farm policy for the next few years.

The debate comes at a time when the federal budget deficit may limit available funds or force tradeoffs in farm programs.

"All but two farm bills have been developed in the wake of a budget deficit in the past 40 years," said Brad Lubben, UNL extension public policy specialist at a recent Cozad, Nebraska, forum. "The current deficit represents only 1.9% of the nation's GDP and is much lower in real terms or constant dollars than the deficit at the time of most farm bill debates since the mid-1970s.

"The current farm programs are actually costing less than expected. This reduced spending does not technically count as savings to be allocated elsewhere, but it does change the political climate in which federal budget decisions will be made."

Troy Dumler, Kansas State University extension agricultural economist, says the five most common justifications for farm programs "are not always as valid as they may seem at first." The most popular justifications for farm programs, he says, are: Saving the family farm, supporting rural communities, maintaining a cheap food supply, maintaining the environment and competing with subsidizing countries and large agribusiness.

Dumler says his analysis shows subsidies often have unintended consequences that "mitigate their intended purposes" and as time goes by the "programs become outdated and ineffective." The noble goals of farm subsidies often have limited effect.

The question Dumler says should be asked in light of his analysis is not "should we eliminate farm subsidies, but rather are there farm policy options that would better serve U.S. agriculture, taxpayers, and consumers?"

Higher crop prices, international trade negotiations, the federal budget deficit and new congressional leadership are all factors in the farm bill discussions now under way.

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