Agricultural policy of the United States

The agricultural policy of the United States is composed primarily of the periodically renewed federal U.S. farm bills. The Farm Bills have a rich history which initially sought to provide income and price support to US farmers and prevent them from adverse global as well as local supply and demand shocks. This implied an elaborate subsidy program which supports domestic production by either direct payments or through price support measures. The former incentivizes farmers to grow certain crops which are eligible for such payments through environmentally conscientious practices of farming. The latter protects farmers from vagaries of price fluctuations by ensuring a minimum price and fulfilling their shortfalls in revenue upon a fall in price. Lately, there are other measures through which the government encourages crop insurance and pays part of the premium for such insurance against various unanticipated outcomes in agriculture.

According to the United States Department of Agriculture[1]

"U.S. agricultural policy—often simply called farm policy—generally follows a 5-year legislative cycle that produces a wide-ranging “Farm Bill.” Farm Bills, or Farm Acts, govern programs related to farming, food and nutrition, and rural communities, as well as aspects of bioenergy and forestry. The most recent of these Farm Bills, the Agricultural Improvement Act of 2018 (2018 Farm Bill), authorizes policies in the areas of commodity programs and crop insurance, conservation on agricultural lands, agricultural trade (including foreign food assistance), nutrition (primarily domestic food assistance), farm credit, rural economic development, agricultural research, State and private forestry, bioenergy, and horticulture and organic agriculture. The 2018 Farm Bill replaces the 2014 Farm Bill, in place from 2014 through 2018."

History

Until the 1920s, the first 150 years of agricultural policy in the US was dominated by policies directed at developing and supporting family farms and the inputs of the total agricultural sector, such as land, research, and human labor. Developmental policy included such legislation as the Land Act of 1820, the Homestead Act, which granted 160-acre (0.65 km2) townships, and the Morrill Act of 1862, which initiated the land-grant college system, one in a long series of acts that provided public support for agricultural research and education.

In 1933, with many farmers losing money because of the Great Depression, President Franklin D. Roosevelt signed the Agricultural Adjustment Act, which created the Agricultural Adjustment Administration (AAA). The AAA began to regulate agricultural production by destroying crops and artificially reducing supplies. It also offered subsidies to farmers to encourage them to willingly limit their production of crops. The Supreme Court later struck down the AAA as unconstitutional, so in 1938 the Soil Conservation and Domestic Allotment Act was passed, which essentially created a similar organization for distributing farmer subsidies.[2]

Beginning of price supports

At the end of World War I, the destructive effects of the war and the surrender burdens enforced on the Central Powers of Europe bankrupted much of Europe, closing major export markets in the United States and beginning a series of events that would lead to the development of agricultural price and income support policies. United States price and income support, known otherwise as agricultural subsidy, grew out of acute farm income and financial crises, which led to widespread political beliefs that the market system was not adequately rewarding farm people for their agricultural commodities.

Beginning with the 1921 Packers and Stockyards Act and 1922 Capper–Volstead Act, which regulated livestock and protected farmer cooperatives against anti-trust suits, United States agricultural policy began to become more and more comprehensive. In reaction to falling grain prices and the widespread economic turmoil of the Dust Bowl (1931–39) and Great Depression (October 1929–33), three bills led the United States into permanent price subsidies for farmers: the 1922 Grain Futures Act, the June 1929 Agricultural Marketing Act, and finally the 1933 Agricultural Adjustment Act – the first comprehensive food policy legislation.

Out of these bills grew a system of government-controlled agricultural commodity prices and government supply control (farmers being paid to leave land unused). Supply control would continue to be used to decrease overproduction, leading to over 50,000,000 acres (200,000 km2) to be set aside during times of low commodity prices (1955–1973, 1984–1995). The practice was eventually ended by the Federal Agriculture Improvement and Reform Act of 1996.

Increased comprehensiveness

Over time, a variety of related topics began to be addressed by agricultural policy: soil conservation (1956 Soil Bank Act), surplus crops as food aid (National School Lunch Act of 1946, Agricultural Trade Development and Assistance Act of 1954, the 1964 Food Stamp Act), and much later wetlands and habitat conservation (Food Security Act of 1985, 1990 Wetlands Reserve Program, 1996 Wildlife Habitat and Environmental Quality Incentive Programs and 2002 Grassland Reserve Program) and organic food labeling (Food, Agriculture, Conservation, and Trade Act of 1990).

During this time, agricultural financial support also increased, through raised price supports, export subsidies, increased crop insurance (1938 Agricultural Adjustment Act), expanding price supports to different crops (Agricultural Risk Protection Act of 2000), offering more guaranteed federal loans, and through the replacement of some price supports with fixed payments (Food and Agricultural Act of 1962 and Federal Agriculture Improvement and Reform Act of 1996).

1970s

Beginning with the administration of Secretary of Agriculture Henry A. Wallace, the United States had generally moved to curb overproduction. However, in the early 1970s, under Secretary of Agriculture Earl Butz, farmers were encouraged to "get big or get out" and to plant "hedgerow to hedgerow". Over the course of the 20th century, farms have consolidated into larger, more capital-intensive operations and subsidy policy under Butz encouraged these large farms at the expense of small and medium-sized family farms.[3]

The percentage of Americans who live on a farm diminished from nearly 25% during the Great Depression to about 2% now,[4] and only 0.1% of the United States population works full-time on a farm. As the agribusiness lobby grows to near $60 million per year,[5] the interests of agricultural corporations remain highly represented. In recent years, farm subsidies have remained high even in times of record farm profits.[6]

Political and economic dynamics
From a Congressional Budget Office report

A large reason why agricultural policy has favored farmers over the course of United States history is because farmers tend to have favorable proportional political representation in government. The United States Senate tends to grant more power per person to inhabitants of rural states. Also, because the United States House of Representatives is re-apportioned only every 10 years by the United States Census, and population tends to shift from rural to urban areas, farmers are often left with greater proportional power until the re-apportionment is complete.

Also, the majority of agricultural policy research is funded by the USDA. Some economists believe this creates an incentive for government intervention because, among other considerations, the USDA will most likely not fund research criticizing its own activities.[7]

See also

General:

References
  1. United States Department of Agriculture Economic Research Service, Farm Commodity Policy at https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/
  2. United States Department of Agriculture, History of Price-Support Agricultural and Adjustment Programs, 1933–84
  3. Imhoff, Daniel. "Family Farms to Mega-Farms". Foodfight, The Citizen's Guide To A Food And Farm Bill. Watershed Media. ISBN 0-9709500-2-0. The Farm Bill is actually succeeding at one of its decades-old policy objectives:driving small- to medium-scale commodity farmers off the land.
  4. EPA
  5. "Center for Responsive Politics". Archived from the original on 2008-03-12. Retrieved 2008-03-15.
  6. Farm Subsidies Over Time
  7. Pasour Jr, E.C. "Intellectual Tyranny of the Status Quo: Agricultural Economists and the State", Econ Journal Watch. (April 2004).

Further reading
  • Gardner, Bruce L. (2002). American Agriculture in the Twentieth Century: How It Flourished and What It Cost. Harvard University Press. ISBN 0-674-00748-4.
  • Spitze, Robert G. F.; Harold G. Halcrow; Joyce E. Allen-Smith (1994). Food and Agricultural Policy. Mcgraw-Hill College. ISBN 0-07-025800-7.
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