Agricultural and Food Policy
 Agri Outlook
Radio
Number 106
Policy: Part 2 - Farm Bill Passes Senate By Historic Margin (5:52 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist
University of Arkansas, Division of Agriculture
Part 2 of farm bill passes Senate by historic margin. I’m Bobby Coats
Extension Economist University of Arkansas Division of Agriculture.
Congress is in the process of writing one of the most challenging farm bills
in U.S. history. No one familiar with the history of farm bills expected the
process to be quick or easy. The 1996 farm bill was signed into law in April
1996 and the 2002 farm bill was signed into law in May of 2002.
The Congressional Research Service says the farm bill is directed toward
providing a plentiful, safe and affordable supply of food and fiber through
programs and policies designed to:
- Maintain a stable domestic farm economy
- Promote U.S. agricultural products here and abroad
- Provide nutritious, safe, affordable food for consumers
- Support the food needs of low-income Americans
- Support food needs of those in underdeveloped nations
- Conduct research
- Provide inspection services related to plant and animal production,
protection, and disease prevention
- Protect farmland and conserve natural resources and the
environment
The new farm bill is being written during a period of strong global growth
and strong demand for commodities. For those wanting redirection from
traditional farm policy, this type of economic setting spotlights the
opportunity to accelerate toward increasingly open markets and free trade. Their
intent is to rapidly move away from traditional farm policy into a yet to be
defined transitional farm policy. The belief by those wanting a new direction
for U.S. farm policy is that now the time is right for farm legislation to be
more inclusive of all producer and commodity groups and other agricultural
policy interest groups ranging from
- Small to very large family farmers
- Agribusiness
- National and regional taxpayers
- Consumers
- Environmentalists
- Rural communities
- Social welfare advocates
Those familiar with U.S. farm policy realize that the 1996 farm bill was
designed to transition U.S. program crop producers into producing for the global
marketplace. The intent was that by 2003 the only price and income support that
would be available to program crop producers would, at the most, be price
support. A global recession started forming in 1997, only a year into the 1996
farm bill, and by the end of 2001 the global economy was in a deep recession.
This weak global economic activity produced dangerously low commodity prices. It
became very apparent that a return to traditional farm policy was an economic
and policy must.
To say that change and reform is not happening in the U.S. traditional
program crop sector is simply not true. For example, if current price and income
support for rice and cotton farmers were simply added to the new farm bill, then
change and risk exposure on these farms would continue to happen at the fastest
pace these producers have experienced in their lifetime. Transition of the U.S.
rice and cotton industry into responding to global market signals is happening
at a rapid pace due to strong global competition, and since farm government
programs are not indexed, declining price and income support guarantees
inefficient producers will not survive.
Reality is the global economy has amazing potential but the global economic
remains extremely unstable. It can show periods of strong robust growth and
conversely periods of extremely weak growth. With these periods of weak growth
similar to those experienced in the 2000 and 2001 periods, commodity prices can
deflate to devastatingly low levels. In 2001 U.S. rice and cotton producers saw
their prices fall to levels not experienced since the 1950s.
Additionally, the continued lack of reasonable global trade rules in global
agricultural trade has numerous consequences. Two key consequences are it limits
global market access to U.S. producers and it continues to promote food, feed,
and fiber protectionism in most countries of the world.
A strong global safety net will remain an important part of U.S. farm policy
as long as the global economic setting remains unstable, as long as fairness and
reason do not exist in agricultural and food trade policy, as long as
country after country around the world continues to protect their agricultural
and processing sector.
This has been Bobby Coats Extension Economist University of Arkansas
Division of Agriculture.
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