Tuesday, May 11, 2010

A Blast from the Past--PIK Certificates and a Wrong Prediction

John Phipps must have been having a nostalgic moment because he threw in a mention of PIK in a recent post
with a link to an explanation  of "PIK and roll" from the 1987 Washington Monthly.

I remember the start of the PIK program, or at least the 1983 incarnation. I suspect there are many FSA employees who were hired back then and remember it with some mixed feelings.

At the end of the article, two long retired Senators, Boschwitz and Boren, discuss their proposal for "decoupling", for removing the link between the crop produced and what the program pays.  We moved towards that in the next two farm bills, with the 1996 Freedom to Farm incorporating it.  Here's what was said:
"A system of direct income support would make government dependency less easy for farmers to swallow. They could no longer kid themselves that the farm program merely provided them with a "fair price.' Many farm groups oppose the plan on the grounds that it would turn the farm program into welfare, to which Boschwitz replies: "Farmers are getting benefits now and they would get benefits under my plan. What's the difference? If they call my plan "welfare,' what do they call the current programs?'"
The prediction was wrong--farmers have had no problem at all of arguing to keep the DCP payments long after they were supposed to be phased out. The "fair price" argument may have faded into the pages of history but the argument for preserving farms remains.

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