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Now is the Time for Farm Bill Reform

Posted by Kara Laney on July 25th, 2007

With the chance alignment of ongoing international trade negotiations, the expiration of the 2002 Farm Bill, and the onset of high commodities prices spurred by biofuels consumption, the United States is in an ideal position to modify its agricultural policies when it authorizes the 2007 Farm Bill later this year. Reforming the Farm Bill could address many of the inequalities that current US farm policy creates both domestically and internationally. By reducing product-specific support to a small number of commodities, removing planting restrictions on acres enrolled in commodity programs, and redirecting funds to non-production-related programs, the US Congress could craft a Farm Bill that increases the efficiency of US agriculture while also ending trade-distorting practices that weaken its credibility in the World Trade Organization and hurt farmers in developing countries.

Unfortunately, the legislation proposed by the Committee on Agriculture and set to be debated tomorrow by the US House of Representatives will not accomplish any of these goals. It perpetuates production-related subsidies for corn, soybeans, wheat, cotton, and rice, thereby discouraging market-oriented decision-making by US farmers and undercuts unsubsidized farmers from other countries competing in the same crops on the international market. It also keeps in place the planting restrictions — barring the production of fruit and vegetables on acres enrolled in commodity support programs — again, eliminating the influence of market forces in farm management. Moreover, it increases the government support prices for many of these commodities. US agricultural commodities groups frequently tout the efficiency and production capacity of US agriculture, but by continuing to shelter farmers from the marketplace, this proposed Farm Bill does little to improve the competitiveness of the US agricultural sector.

Furthermore, on the international scene, this bill belies the US’s commitment to open and equitable trade. The US is currently participating in the Doha Round of negotiations, talks which were launched to address the development needs of the majority of the WTO’s member states. Yet these negotiations have stalled, in part due to the US’s reluctance to reduce trade-distorting support to its agricultural producers. Legislation that not only continues these programs but increases payments made under these programs undermines the US’s position in the negotiations. The proposed Farm Bill also ignores calls made by the WTO’s Dispute Settlement Process to remove the planting restriction provision and reform support programs for cotton. Adopting this legislation will send the unfortunate message to the US’s negotiating partners that the US does not honor its international trade commitments.

The US Congress has the opportunity to put the United States in a position of strong, positive leadership at the WTO by passing a Farm Bill that reduces trade-distorting support and creates a more level playing field in the realm of agricultural trade. Such legislation would send a clear message to WTO member states that the negotiations will bring meaningful market opportunities for their farmers through trade liberalization. At the same time, it would benefit US farmers by increasing their efficiency and providing them with access to new international markets. Congress should avoid the temptation to keep in place the protectionist policies of the 2002 Farm Bill and instead adopt farm policy that increases equity and efficiency in agriculture.

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