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Heritage Foundation: The costly and outdated farm bill

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The Washington D.C.-based Heritage Foundation’s Daren Bakst reports that the agriculture bill currently under debate in the nation’s capital has less about farms than expanding food stamps:

Congress is once again taking up the farm bill — and continuing to treat agriculture like it was 1933, not 2013. The result: billions of taxpayer dollars going to waste.

This is unacceptable. It’s time for lawmakers to make reforms that reflect the reality of modern-day agriculture.

Even calling it the “farm bill” doesn’t reflect reality. Both the Senate and House versions are projected to cost close to $1 trillion over 10 years. Nearly 80 percent of this cost is attributed to food stamps and nutrition programs. The bill should be called the “food stamp” bill.

Congress undermines both the food stamp and farm programs by packaging them into one massive bill. It does a disservice to all Americans who want careful consideration of these critical issues.

There’s no legitimate policy reason to combine these distinct programs. Food stamps continue to be included in the farm bill “purely from a political perspective,” said Sen. Thad Cochran, R-Miss. “It helps get the farm bill passed.”

One of the most important reforms would be to separate these programs into two different bills. This would make it more likely to get reform of agriculture policy, instead of politicians using these different issues with their different interest groups to maintain the status quo.

The farm programs are often thought of as a safety net for small farmers. This also isn’t reality. About 75 percent of farms with incomes of $250,000 to $999,999 receive government subsidies. Only 24 percent of farms with incomes from $10,000 to $249,999 get them.

The programs are also less about providing safety nets and more about maintaining high-levels of prosperity. Agriculture is a high-tech and innovative sector of the economy. Unlike most sectors, it’s a booming industry. Congress shouldn’t ignore the condition of agriculture as it develops a new farm bill.

Farm programs have often been the butt of many jokes, for good cause. The direct-payment program literally pays farmers to not grow crops. Fortunately, Congress has recognized the absurdity of this program; both the House and Senate farm bills would eliminate it.

However, the House and Senate bills would continue to play a joke on taxpayers and consumers. The costliest farm program is crop insurance, yet Congress does little to address these costs.

When farmers buy insurance, 62 percent of their premiums are paid by American taxpayers. Unlike other programs, there’s no limit on the total subsidy received by farmers. According to the Government Accountability Office, a $40,000 limit on premium subsidies would have saved taxpayers $1 billion in 2011.

Worse, the House and Senate bills would add new programs that could prove even costlier than the direct-payment program. One is called “shallow loss.” Farmers would be able to enjoy a revenue guarantee program to cover even minor losses. Such programs only encourage more risk-taking by farmers, because the costs are being paid by taxpayers.

Congress should stop supporting market-distorting policies that restrict farmers from competing in an open manner.

Lawmakers need to keep the needs of both farmers and the American people in mind. The tax bill and the food bill shouldn’t be ignored anymore.

Daren Bakst is a research fellow in agricultural policy at The Heritage Foundation, 214 Massachusetts Ave. NE, Washington, DC 20002.

Read the full report at the Heritage Foundation: DAREN BAKST: The costly and outdated farm bill

About Steve Robinson

Steve Robinson the editor of The Maine Wire. A native of Dexter, Maine, Robinson is a graduate of Bowdoin College.

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