 | The Big Cheese Giveaway |
Volume XXI No.33: August 19, 2016
Congress is a little more than halfway through its nine week recess, but powerful special interests in the agricultural sector are scurrying to secure special treatment from the Executive Branch. In Washington, that means dollars—your dollars—fattening the pocketbooks of special interests.
Before leaving town, 61 lawmakers wrote U.S. Department of Agriculture (USDA) Secretary Tom Vilsack, imploring him to address dairy prices now at their lowest level since 2009. While the 2014 farm bill created a dairy margin protection program to help compensate dairy producers that’s already kicking out payments, barely half of the producers actually signed up for it in 2015—and even fewer in 2016. Now, lawmakers are asking Secretary Vilsack to use his broad authority under Section 32 of the Agricultural Adjustment Act of 1935 to boost the incomes of dairy farmers.
The American Farm Bureau Federation goes one step further, specifying that the Secretary should address the sharp drop in prices by stocking up on sharp cheddar. Maybe not sharp cheddar exclusively, but in a letter to Agriculture echoing dairy-booster lawmakers, the federation states: “If the Department spent $50 million, it could purchase 28 million pounds of cheese for domestic feeding programs.” The Milk Producers Association, unsurprisingly, would like USDA to spend up to $150 million on cheese, effectively acquiring 900 million pounds of milk.
The dairy sector may be making the most obvious request for a return to Depression era policies of the government buying agricultural products to artificially inflate prices, but dairy producers are far from the only commodity interests trying to milk taxpayers.
Early this summer, the USDA provided $300 million in cost-share assistance to help defray processing costs for cotton growers. These are the same cotton growers who got two additional years of direct payments (the long-derided subsidies paid to farmers simply for farming on previously subsidized land) while every other commodity interests had their payments ended in 2014. Cotton growers can buy a special crop insurance known as Stacked Income Protection, available only to them. The insurance covers minor losses, but cotton growers have to pay only 20 percent of the total premiums (you’re picking up the rest of the tab). Don’t forget: After losing a World Trade Organization case in which Brazil challenged U.S. cotton subsidies, we sent $147 million-a-year to Brazil, or a total of nearly $750 million, to keep Brazil from enforcing retaliatory measures. While USDA claims this most recent special subsidy is a one-time payment, it has the touch and feel of yet another tool to make taxpayers foot the bill for cotton growers’ financial profitability. No wonder dollar bills are made from cotton fiber paper.
Many other sectors of Ag are looking for their payouts, too. Some producers want to change the way payments are calculated in the new Agriculture Risk Coverage program because they’re upset their payments are lower than expected. For the first time in more than a decade, wheat farmers are going to get loan deficiency payments under a program in which taxpayers pay them not to forfeit the grain put up as collateral for low interest loans. And, the Secretary has already used his authority to funnel $300 million to ethanol boosters to build pumps that blend higher grades of ethanol.
This commodity-by-commodity quest to harvest more government cash is important because it kills any hope taxpayers have of realizing savings promised by backers of the farm bill. Recent cost estimates show the price tag for the newly created Agriculture Risk Coverage and Price Loss Coverage programs is $15 billion more than original estimates. In just two fiscal years, disaster payments coming from the 2014 farm bill have totaled nearly $5.7 billion, or $2 billion more than was projected to be spent over10 years. Add these cost overruns to the unbudgeted payments for ethanol blender pumps, cotton, and possibly soon dairy, and the $16.6 billion in savings promised by apologists for the 2014 farm bill quickly vanishes.
Instead of a piecemeal approach to bailing out various commodities, it’s time to reopen the farm bill to debate what kind of safety net is needed for agricultural businesses. The Ag sector isn’t living as high on the hog as it was when the rest of the economy was in the doldrums. But this reduction in farm income comes after some of the most profitable years in agricultural history. Taxpayers can afford a limited, cost-effective, means-tested safety net for agriculture. We can’t afford the 2014 farm bill.
Quote of the Week:
" This is no longer a process they are concealing. It’s as open as a house of ill-repute with a red light in front. They’ll avoid the question of caps and sequester by simply adding more money in OCO.”
• Gordon Adams, Professor at American University and former Associate Director of the Office of Management and Budget responsible for national security spending, referring to Congress’ use of the Overseas Contingency Operations (OCO) account to evade defense spending caps
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