How Green It Is To Be (Un)Loved By You: Conservation Programs & The Farm Bill

So as mentioned in the previous post, with the "Secret" Farm Bill out, the process starting this coming January will be something of a blank slate, and much more open to both public comment and pressure from advocacy groups. This will be especially important for the three titles of the Farm Bill that, as of two weeks ago, looked to have the most to lose had the Supercommittee had its act together: Horticulture (home to the organics program), Food & Nutrition Assistance (home to SNAP, or food stamps), and our topic of today, the Conservation title.

Remember in my short history of the Farm Bill, that the combination of the Dust Bowl and the Depression exacerbated the problems of farm economics and ecology. The types of crop production taking place prioritized maximizing productivity, aggressively mishandling the land. This in turn exacerbated price and supply issues by generating more production, driving down prices further.  Farmers more aggressively turned their land because the economics demanded it, spiraling the situation out of control [1]. The Depression amplified this effect, setting the stage for the Dust Bowl [2]. So when the first drafts of Farm Bill legislation were written up, there was both economic as well as ecological considerations. Like many of the New Deal laws, there were many incarnations struck down before the passage of the Soil Conservation & Domestic Allotment Act of 1936, the first agricultural conservation law in the books.

Noting that a nation that didn't protect its soil didn't protect itself, Franklin Delano Roosevelt pointed out the three things that the government had a vested public interest in regulating with concerns to conservation practices:

"The new law has three major objectives which are inseparably and of necessity linked with the national welfare. The first of these aims is conservation of the soil itself through wise and proper land use. The second purpose is the reestablishment and maintenance of farm income at fair levels so that the great gains made by agriculture in the past three years can be preserved and national recovery can continue. The third major objective is the protection of consumers by assuring adequate supplies of food and fibre now and in the future."

Simply put, through conservation practices, the government was (at the time) regulating three things: maintaining soil health through regulating agricultural practices; in doing so, regulating the volume of production to levels that stabilized supply, therefore price; and lastly ensuring that such production was done with the long-term view of securing food & fiber needs of the nation.

The Act lasted well into the 1950's, when conservation programs and interest fell off the wagon for several years. While a couple of ecologically-based proposals rose in the 1970's, it wasn't until the 1980's that a stronger Conservation title was adopted with a series of incentive (read: voluntary) programs that attempted to deal with marginal agricultural lands, sensitive or degraded natural lands, or region-specific water or air pollution issues. This distinction is key: the Conservation program began as an income support program affecting mandatory changes in methods and turned into a voluntary land subsidy program [3].

In the world of today, the modern conservation title can be broken into 3 categories: the Conservation Reserve Program (CRP), Working Lands/Conservation Stewardship Program (CSP) and the EQIP programs. Broadly speaking, the CRP works to take sensitive or marginal lands out of production in the attempt to revitalize them or protect critical habitat. The CSP incentivizes ecological improvements through changes in growing & planting methods. And the EQIP programs deal with rectifying environmental issues through targeted, regionally-specific programs & skill-building workshops.

In an ideal world, these programs would seem to cover all the bases. Like many things, this is not the case. Due to organization of benefits, these programs are mutually exclusive to each other; provisions in the CRP prevent participants from entering into CSP programs, for example. So you have to choose between land retirement or changing methods. The CSP mandates contract periods that participants must abide to, while CRP has clauses that allow participants to leave voluntarily (meaning when crop prices are high, farmers can simply drop participation in order to plant on marginal land to bring it into acreage). This tends to leave most Conservation title programs underutilized, which leads into the biggest issue, which remains that, due to underutilization, allocations made to Conservation title programs tend to get reappropriated or just stolen from the title, meaning that if there ever is a spike in participation, the programs don't always have the funding to maximize the utility of the program [4].

These are all factored together with one final issue: the fact that the Conservation title exists in a vacuum. See, agricultural production is exempted from major federal policy like the Clean Water Act and the Clean Air Act. On a state to state level, even where federal policy has been extended to cover parts of agricultural production, exemptions have been made. Across the nation, piecemeal adoption of environmental protections and taxpayer incentives means that it is hard to gauge the success of Conservation on the whole, making it -- in the eyes of politicians and organizations such as the Farm Bureau -- a very tempting target for cuts.

And taxpayers do matter in this discussion, because we all pay double: we pay to subsidize farms that practice ecologically unsound agriculture, and then we turn around and pay the cleanup costs.  In real terms, taxpayers pay for support payments in Farm Bill programs to the tune of $1,500/yr on average. We also pay for any environmental cleanup or health receipts caused by agricultural production, due to the exemptions listed above. If you live in a state where an animal waste lagoon seeps into local water supplies, taxpayers pay for cleanup, and if uninsured, the medical costs overhead. According to Thomas Kostigen, that can add up to an additional $6-800/yr for taxpayers. And therein lies the conundrum -- taxpayers not only subsidize agriculture that causes environmental hazards, but also pays for the externalized costs of cleanup and health caused by those practices.

Taken together, these make the Conservation title a difficult place to be. It is absolutely necessary -- especially as global warming patterns make agricultural production more susceptible to environmental events, and as ecological degradation of farmlands threaten not only our agricultural lands but also industries downstream -- and needs reform (the ways in which we can is topic of a later post). It also has a strong coalition backing it -- everyone from The Environmental Working Group to the American Enterprise Institute say the Conservation program is essential, for everything from ecological reasons to maintaining our World Trade Organization requirements [5]. And in more than one place, it can be done while saving taxpayers a head of cash through streamlining and correcting the issues listed above. More than anything though, the Conservation title is the tool to reign in the moral hazards represented by all the various support payment programs in the Farm Bill. As the Des Moines Register noted:

If American taxpayers are going to subsidize farmers, the least they should expect in return is that farmers will be required to practice sensible land use so waters are not fouled and soil is preserved for future generations.

Amen to that.

[1] This is a trend that still occurs today -- production agriculture in many industries, specifically corn, soy, and dairy, routinely push for greater production on an individual basis, though collectively this has the impact of reducing prices across the board. And in the move to put more land into cultivation, conservation is often ignored in exchange for intensification of planting. But more on that below.

[2] While the drought years would still have occurred, had better growing practices been in place, the effect may not have been so severe.

[3] As with the other Farm Bill programs, the Act was a form of income support for farmers -- allowing them to continue working their land despite perhaps growing less or in some cases not growing at all. The added benefits of soil conservation and price stabilization were value-added and strategic benefits, but the primary goal of all Farm Bill programs in the 1930's was income support to keep farmers on land. I know I belabor this point, but it's key to remember it.

[4] And a bit of clarifying language here: when bills are sent from committees to the floor of Congress, they are given allocations -- how much money the program should receive ideally. This tends to be the number blasted on front pages or toted by politicians in stump speeches. The reality of how much money a program gets comes from appropriations, usually through the Appropriation Committees, which can make deductions and cull spare moneys from current budget streams unless actively lobbied to do otherwise. This is the key to many government programs -- you can pass their creation in both houses of Congress, but if you don't like them, you can always not fund them, or reduce their funding over time as to make them unworkable or autistic.

[5] Let's not even go there. Basically, conservation programs are, under WTO rules, an acceptable form of subsidy to farm production.

A Funny Thing Happened on the Way to the Farm Bill...

So many of you might have wondered -- the few who read and check here consistently -- what happened to the posts here on the FBA. Firstly, came the papers -- things are wrapping up here at NYU's Food Studies department for the semester, and along with the Thanksgiving holiday, I had some research and writing to do. 

But more importantly than that, there was a bit of confusion on my end, and frustration around the politics surrounding the farm bill, and whether or not to continue this project. See, maybe some of you heard about the "secret" Farm Bill that was floating around with the deficit reduction "super" committee. Basically the leadership of the House and Senate ag committees, in closed door sessions, were reorganizing the Farm Bill with a bunch of sincerely disengenuous "reforms", effecting mostly conservation programs (already critically underfunded) and a host of other programs only marginally funded. 

But then something happened. The Ag committee chairs failed to meet their deadline, and then so too did the Supercommittee itself. In a matter of weeks, we went from having a farm bill with no public input, no feedback, no lobbying from anyone other than the money to purchase access (sorry to sound conspiratorial, but c'mon!), to having a farm bill that many are now asking "now what?" The general sense is now that  we're back at square one, with any of the examples of cuts we saw discussed in the last few weeks, basically nixed. We're literally starting from scratch -- that's at least the impression coming across from not only progressive food systems advocates but also the traditional benefactors of farm bill programs and conservative reform groups like the American Enterprise Institute. 

This gives us the unique opportunity to spell out, even more aggressively, the details of how and why the Farm Bill operates. I'm pumping out a few more articles in the coming days, and hope to rally on this newfound energy. There's now a lot of considerations to happen after the December recess -- how the 2012 election will fit into farm bill formulation, if and how the Congress will be able to pass it in time for the September 8 expiration of the 2008 bills and allocations. This is a lot to ponder and a lot of excitement -- hope to have you along for the ride. 

Knowing Your Terms: Talking about Subsidies

So, Carolyn Dmitri, former economist with the USDA and a professor of mine, made the point to denote a distinction that went amiss in the last post, namely, the use of the term “subsidies”. Historically, the Farm Bill started out as a program to assist the profession of farming through price assurances – namely, allowing farmers to do what they do and get a price that allowed them to live off the land and their profession. Many of the programs that were primarily in the legislation of the 1930's and 1940's hit that happy medium, farmers being allowed to farm and their product being used in food stamps for the unemployed and hungry of the Depression. These were price supports and assurance programs, not subsidies (which are specifically for the purposes of spurring or protecting production, a semantic but important distinction). While we disagree as to their present use, the terminological distinction is noted, and that distinction becomes the point for this post – about vocabulary.

Price floors & income supports versus subsidies :: subsidy is a term thrown around a lot, but it is actually very distinct from the goals of the original Farm Bill. What the Farm Bill started out ensuring was income supports – namely, neutral and non-distorting ways of providing income to farmers to continue their day-to-day operations of production and continuing to farm their land. In the days of the depression and the Dust Bowl, the fear was very much that farmers would abandon their lands and in turn, the food supply would be driven inexorably into the red, leading to greater social unrest. Income supports allowed farmers to keep doing what they were doing. Over the 1940's and '50's, these income supports evolved into price floors, whereby the government ensures a price minimum per bushel. Whereas income supports were a triage measure to keep farmers on the land, price floors exist as a form of price stabilization and insurance against radical price fluctuations. These programs remained in place until the advent of actual subsidies – policies and programs designed specifically to boost production, underwrite costs, and incentivize planting, with a goal of making competitive a particular industry – in the 1980's in conjunction with a curious little event known as the Uruguay Round of the World Trade Organization¹.

These subsidy programs – direct payments, counter-cyclical payment programs, and the expansion of crop insurance programs – still operate under the notion of income supports for farmers. But each of them has, in the last 20-30 years, also become a systemic form of subsidy for a select series of crops, and many industries have been built around the de-facto subsidies that exist in the United States². These programs are usually measured not by financial need, but around the concept of historical base acreage, defined as the number of recorded acres dedicated to growing one of the 6 recognized supported crops (cotton, rice, sugar, corn, soy, wheat). As mentioned previously, the use of the term historical means that the land does not presently need to grow anything – it can remain fallow, and still collect payments, because it is the idea of production being protected³. And that amount is determined by the five-year Olympic average of production on that lot, or the average production over 5 years, minus the highest and lowest yielding years. These form the basis for the annual direct payment to a farmer over the course of a Farm Bill interval. Counter-cyclical payments are the form of price floor we were talking about earlier, ensuring that, on top of the direct payment, a farmer can derive a set minimum from his crop in the event of a low market.

On its face, crop insurance seems the most innocuous of the concepts and the easiest to understand. Its protection against weather and blight, a way to really help a profession where there is a large degree of external difficulty out of the hands of the farmers themselves. Problem is, who qualifies for the insurance and how does it cover farmers? The answer is pretty sad on both fronts, as only commodity growers qualify for crop insurance supports from the government (so apples, lettuces and the like? Those farmers need to buy privately), and it can cover a bevy of things. Shallow losses (a very popular term this Farm Bill season) are covered, meaning that any minor loss is covered, and the definition of minor loss is pretty broad. A tornado two counties away? Your croplands can qualify for full coverage, even if you haven't lost an ear of corn. Flood downriver from you? Your soy can also receive coverage. The crop insurance system is ultimately undermined by issues of moral hazard, whereby the insurance system itself sets farmers up to take unnecessary risks and also play the system in a way that protects them on two ends. Farms can make insurance claims, destroy portions of crop, and drive up the price of their product artificially, making good on both the insurance payment as well as the price increase. The reason this is problematic is that farmers who get coverage through Farm Bill programs don't actually pay for it – taxpayers cover both the costs of administration and application of the insurance program as well as the payment to the farmers themselves. And that is part of what makes this a moral hazard.

Not to get too partisan for a moment – this blog is primarily an exploration of the Farm Bill – but the issue of moral hazard is probably the most important to understand because at its core, it is the concept that informs much of the payment programs to farmers. Through direct payments, counter-cyclical price propping, and myriad insurance and coverage programs, farmers – very specifically large commodity growers and the industries who benefit them – are able to play the system, and in so doing play a dangerous game with our food supply. The purpose of the Farm Bill in its origins was as a triage measure to allow farmers a degree of assistance to continue their occupation as stewards of the land and as productive members of society. The Farm Bill of the present still does this, but in a twisted, malformed sort of way, where taxpayers underwrite a system that fundamentally works against them in that it does not support food production so much as food products; it underwrites high-risk behaviors and practices that taxpayers again bear the brunt of the cost for (in terms of public health, environmental cleanup, and the labor market). And the majority of farmers who benefit from these programs are not the farmers at your farmers markets, but the farmers locked into a system where their only way of deriving a sound income is through working the system precisely because it does not benefit them, but the people they work for – the industries of food processing, agricultural insurance, agricultural bank & loans, and the agricultural industries of seed, machines & agribusiness, who tend to own in part or in whole the industries previously listed.

While the Farm Bill nominally helps support farmers through payments and price supports, the Farm Bill is also a subsidy to the industries that undermine the farms themselves. And it is important, when considering the Farm Bill, to recall this distinction.

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I'd like to know from readers what you might be interested in learning about the Farm Bill and its myriad programs. I can sit here and prattle on about the different titles and such, but then the blog is really no more different than a wiki. So we're looking to both expand the variety of content and make it relevant. Current events will start entering the picture here as we try and relate some issues (like, did you know that certain members of the Ag Committee have been trying to pass the Farm Bill under closed door negotiations? Or the odd coalition going on between the conservative Farm Bureau and environmental groups to make payment programs more accountable to farmers needs?) because there's a lot of rich stuff out there and be able to help filter stuff in and out. I've got plenty of copy set aside for various articles – but I am interested in your feedback and interest.

1And some of you might be wondering “WTF does the WTO have to do with the Farm Bill”? Actually, quite a lot, especially where the Uruguay round is concerned. See, Uruguay round talks were the first ones where the WTO took on the issue of agricultural trade and production, and one of the first meetings where the less-developed countries (LDC's) of the world took issue and proposed protections and safeguards for their exports. The result was a series of checks and balances that restricted or eliminated certain methods of internal protection or promotions of agricultural industry – and resulted in some cheeky new systems to get around those rules, specifically to be used in Farm Bill programs.

2And they won't go away if subsidies are removed, either. One of the major points economists would make is that, were we to get rid of the major payment programs and reform the insurance programs, the only discernable impact on the food industry would be that they would pay more for raw material, farmers would get paid more (and perhaps diversify their agricultural acreage), and the price for most of the “junk” food in the US supermarket might begin to reflect closer to true cost. And I say “only” in the tongue in cheek way that, while as a social scientist these represent big shifts that could have big impacts on consumer behavior, most economists would see this as a blip, not a sea change.

3And, if a part of the conservation programs, a double-incentive to the preservation of natural landscape or soil integrity. (Also the reason why subdivisions and housing can qualify for payments and program incentives.)

So how did we get here? :: A Short History of the Farm Bill(s)

Dorothea Lange's "Migrant Mother" is one of the most iconic photos taken of Dust Bowl and Depression-era America. It encapsulates a complexity of emotions, possibilities, and hardships that confronts this mother of two, living as a sharecropper recently moved points westward. As Lange herself recounted:

 I did not ask her name or her history. She told me her age, that she was thirty-two. She said that they had been living on frozen vegetables from the surrounding fields, and birds that the children killed. She had just sold the tires from her car to buy food. There she sat in that lean-to tent with her children huddled around her, and seemed to know that my pictures might help her, and so she helped me.

The story of this photo -- how this mother came to be here, her circumstances, and her surroundings, in all their complexity --  is the story of the Farm Bills origin. Its evolution is no less complex, a series of well-intended actions to protect farmers gone awry and large-scale attempts to systematize the way American agriculture worked, bringing in new stakeholders(1) into the story of American farming.

The Farm Bill began life not as a single piece of legislation, but a series of legislative acts and executive directives brought forth by Franklin Delano Roosevelt to counter two very specific and intertwined events: the increased & aggressively detrimental Dust Bowl and the ongoing economic complications of the Great Depression. The former was a result of increased mechanization and one-crop planting that had come to define Midwestern agriculture in the early 20th century -- deep plowing and planting loosened soil, and when drought cycles hit in the 1920's, these practices allowed large amounts of topsoil to dry out and literally blow away(2). (So much so that the Capitol in Washington, D.C. was covered in a fine film for many years.) The latter was (and still is) the subject of much debate by economists and historians, but the long story short, the price fluctuations that accompanied the market collapse not only left many families unable to afford milk, grains and other products, but also left the prices of many products (determined by the Chicago commodities market) completely under the cost of production. Farmers were producing product no one could by at volumes and costs that swamped any income they did derive from it(3).

In response, and as a part of the early experimentation in what would become the New Deal programs, a series of programs and legislative acts appeared in the 1930's to respond to the economic and ecological issues brought together by these events. Starting with the Agricultural Adjustment Act of 1933, 6 subsequent pieces of legislation would follow through to 1938 with these intial goals:

1) To stabilize price floors for farmers -- a government-backed guaranteed minimum price per bushel on crops -- to ensure that they could remain solvent.

2) To develop incentives for farmers -- government payments directly given to farmers -- to encourage the use of ecologically sound techniques to preserve soil health and long-term agricultural utility of the land.

3) Quotas and government buying programs -- used to keep production at specific levels to keep prices stable, and using the latter to buy the surplus to supplement the first of the major government food programs (food stamps and school lunches).

The initial Farm Bill legislation acted as triage for a farm sector that was bleeding profusely in the 30's, and the Bill retained that character when it was brought up for review in 1948. Going forward, those 3 elements -- price stability and assurances, conservation, and government food programs -- formed a trinity of overarching themes that cover the majority of the present-day 15 titles of the Farm Bill.

From here, individual farm bills matter less than the trends that accompanied them. For example, in the 1950's, complications began to arise with regards to those first and third principles as the General Agreement on Tariffs & Trade (GATT, the precursor to the World Trade Organization) sought to eliminate those sorts of artificial price supports. This lead to a massive restructuring of how payments were calculated and conducted, leading to the introduction of direct payments to farmers (a concept we'll come to in our next post). In the 1970's, we saw the introduction of Agriculture Secretary Earl Butz, man of the "get big or get out" school of agricultural production who oversaw not only an expansion of the subsidy program, but also more tightly focused its benefactors, specifically to the product of corn. The program saw only minor changes in content over the next several decades in terms of content, though the allocations made for its procurement would grow around 35-50% per five year period. In the 90's, we saw an increase for conservation and rural development programs, and the institutionalizing of the organics program. Much remained the same up until the the 2007 Farm Bill, which became a watershed moment for the amount of public attention turned towards its content, thanks to a little book called "The Omnivores Dilemma"(4).

And there, in less than 1000 words, is the historical order and general shifts of the Farm Bills. Does this seem to gloss over a lot? Hell yes. Is it possible to cover all of this matter succinctly? Hell no. That's why I am saving the content of specifics for the individual titles, to give more background and flesh out each topic in greater specifics. My goal here is to make sure these posts don't turn you into some Dinty Moore-snogging zombie and that you get bite-size pieces that give you enough to digest. Like Dorothea Lange's photo, each entry tells part of the story -- and like the photo, there's a lot to process in each title.  So sit back, relax, and digest. There's more to come(5).

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(1) Stakeholders is a delicious term that refers to anyone who has a "stake" or an investment in a given issue or topic. It's also a highly problematic term, in that not all stakes are created or weighed evenly.

(2) Donald Worster, 2004 (1979) Dust Bowl: The Southern Plains in the 1930s (25. anniversary ed) Oxford University Press.

(3) Bordo, Michael D., Claudia Goldin, and Eugene N. White , eds., The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (1998) University of Chicago Press.

(4) Most of this information is being drawn off a number of Congressional Research Service (CRS) reports on the Farm Bill. If you're unfamiliar with the CRS, it's a great institution that boils down the details of legislation and research for members of Congress, with an emphasis on dispassionate, fact-based review. Many of these reports are not available for public consumption, however at http://opencrs.com/ you can find many (search Farm Bill) for some of the ones used here. (Think of it as additional reading for the especially geeky!)

(5) In an effort to be succinct yet brilliant, I am in fact limiting myself to entries of about 1000 words. I could let myself go on for ages on given topics, but 1000 words is almost 4 pages of reading. That's a hunk these days. And it forces me to be concise and consider the most important parts of each section I'm creating here.