One of the features of "Freedom to Farm", the 1996 direct payments program, was that it complied with WTO restrictions, meaning basically it didn't affect what crops were grown or not grown. Regardless of what the farmer did, she was guaranteed the payment as long as she didn't sell the land for a suburban development. The vision at that time, the height of the Washington consensus, was that the world was gradually moving away from government subsidies and intervention in agricultural affairs. Oxfam and other international groups beat the U.S. around the head and shoulders for the distortions introduced by our farm programs, particularly the adverse effects of the cotton program on Third World cotton producers. But 17 years have passed since that law was enacted and the climate of opinion in the world has changed. It looks as if we'll replace the direct payments program with crop insurance subsidies without much concern for WTO rules, even though the subsidies obviously affect what's planted. Has the Great Recession created more tolerance for government intervention, more economic nationalism?
This BBC piece (hat tip John Phipps) shows some of the factors also affecting the EU's redo of their farm policy.
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