Farm Bills Miss the Bigger Picture
THIS week the House dealt with a farm bill that pegs the price of corn but fails to address the larger issues of American agriculture policy. That is unfortunate, because agriculture's larger issues hold lessons for the rest of the US economy. A closer look at farm policy could show the US how to compete - and how not to compete - with Asia and Europe.
The Senate haggled over and last week finally passed a $54 billion farm bill, which continues current farm subsidies and strengthens some environmental provisions of the bill. Any fresh perspectives were quickly lost in the maneuvering over the arcane particulars of marketing loans and target prices.
Yet agriculture is one of this nation's largest industries on the world scene. US farmers face low-wage and highly subsidized foreign competition that would make automakers run screaming from their factories. For 30 years, nonetheless, the US has exported more food and fiber than it imported. Those exports were nice back in 1960, when the nation was running a healthy trade surplus. Today the nation's overall trade balance is billions of dollars in the red, but agriculture is running an $18 billion surplus. Those farm exports are more than nice - they are vital.
Plenty of conservatives say American farmers have succeeded in spite of farm programs. Many liberals would turn their backs on the world market, saying we must preserve the family-run farm at all costs. Neither extreme is correct.
Agriculture is the country's longest, most extensive experiment with a government-managed economy. Sometimes that experiment has worked well; sometimes it has failed miserably. Policymakers ought to take a hard look at those successes and failures and apply their lessons to other key industries. That is especially true now, when the US is casting worried sidelong glances at how Japan and Western Europe use government policy to help industries move forward.
Some claim the US Department of Agriculture is the closest thing the US has to Japan's Ministry of International Trade and Industry. That's a puzzling thought for farmers, most of whom would scrap the USDA if they could force other countries to eliminate their farm programs. Agriculture is no exception to the truism that government is a messy way to direct an economy.
Nevertheless, federal intervention has had its pluses. Land-grant universities have fostered agricultural research. Federally employed extension agents have transferred that research to family farmers. Farmers, in turn, have planted and invested in new technology thanks to steady credit from a quasi-governmental lending system. In the 1980s, the US started subsidizing farm exports, which broke the rules of free trade but helped force the European Community to reconsider its own farm subsidies.
Agriculture's key lesson is that careful, limited government intervention has its place. In any case, the debate ought to begin.