Why Farm Programs--Blame the Founding Fathers

There are a number of reasons for farm programs. One is the Constitutional Convention, with the bargain between the small states and large States that gave us the bicameral legislature. While we no longer are an agricultural country, as we were in 1790, farmers still retain enough influence to affect Senatorial elections in most states. The result is bipartisan support for farm programs. There's no way to build a coalition against farm programs per se. You have to make the case on budget grounds or perhaps as part of the free trade discussion.

Openness in Government--Coburn/Obama as a Cure for Problems?

Senators Coburn and Obama have sponsored a bill that would "require the Office of Management and Budget (OMB) to establish and maintain a single public website that lists all entities receiving federal funds, including the name of each entity, the amount of federal funds the entity has received annually by program, and the location of the entity. All federal assistance must be posted within 30 days of such funding being awarded to an organization. " See Coburn's website
(Obama seems less active and he's not much of a blogger). This proposal has been greeted enthusiastically by the NYTimes, and Wash Post. While the Post editiorial commends the proposal in the context of their recent articles on farm programs, it fails to mention that we've had a database of farm program payments for 12 years now. Granted, it's not run by OMB but by EWG,
a private entity, but it's based on USDA data. Not to be a gloomy Gus, but during the time the database has been available, farm subsidy payments have increased, not decreased.

Disaster Aid for Livestock, Wash Post Stories

The Post continued its series on agriculture programs this past week. See the links here.

If I weren't trying to catch up from hardware problems, I'd blog a bit more, but these points strike me (albeit with minimal research):

1. Neither program was a permanent yearly program, authorized by the 2002 farm bill. Instead there was a combination of administration action using the Section 32 authority (an obscure provision dating to the '30's, that's dusted off every decade or so for a one-shot deal) and Congressional action by sticking provisions in appropriations acts. That's different than the programs they covered last week--the continuing ones.
2. Regardless of whether the policy is correct, it's harder for bureaucrats to implement one-shot programs. There are several reasons including: a one-shot program usually is late before it's started, the bureaucrats are scrambling to get it in place but have little or no experience with it, and there's little chance and no real incentive to improve and learn from mistakes. Even if the OIG and GAO look at the program, the bureaucrat will say: "yes, we messed that up. We promise, if those [expletive deleted] in Congress ever give us a similar program to try to do better.
   

I think there's a parallel with Congressional earmarks--

Catchup

Well, my computer is fixed and I'm busily trying to catch up. Will probably take a couple days to do so.

Backup--Confessions of a Reformed Sinner

Yes, backup is important. I've had a home computer for over 16 years now and have not regularly backed up. But now I've lost both my new PC and my old (backup) PC. Although the new one is still under warranty, figuring out the problem has been slow. Before they would agree to replace parts I had to agree to reinstall the original software. That is, they restore the original software from the hard drive, wiping all of my programs and data. :-( Not wanting to do that, I had to get a new hard drive and pay to have the data copied from old to new. Now I'm waiting for next week and the arrival of the repair person. Meanwhile my whole routine is disrupted and being very anal, routine is critical to my happiness.

Lesson: backup is worth it.

Posting from the library, one of Franklin's better inventions.

Backup--Confessions of a Reformed Sinner

Yes, backup is important. I've had a home computer for over 16 years now and have not regularly backed up. But now I've lost both my new PC and my old (backup) PC. Although the new one is still under warranty, figuring out the problem has been slow. Before they would agree to replace parts I had to agree to reinstall the original software. That is, they restore the original software from the hard drive, wiping all of my programs and data. :-( Not wanting to do that, I had to get a new hard drive and pay to have the data copied from old to new. Now I'm waiting for next week and the arrival of the repair person. Meanwhile my whole routine is disrupted and being very anal, routine is critical to my happiness.

Lesson: backup is worth it.

Slow/No Blogging

Currently dealing with equipment problems at home, so will not be doing much blogging until those are resolved.

One thing I noted--the British suicide bomber who had his video played on Al Jazeera is described as having a Yorkshire accent. That says something about the different levels of acculturation.

The Pollan/Critser Farm Program Narrative

A summary of Michael Pollan, Omnivore's Dilemma, and Greg Critser, Fat Land, as they deal with agriculture programs: farming was undeveloped in the 1920's, went into crisis in the 1930's when the New Deal came up with the "Ever Normal Granary" program, after the war farming became mechanized, industrialized, using nitrogen fertilizer developed by the scientist who developed poison gas, but still was mostly okay until Nixon and Earl Butz. Butz, the racist Secretary of Agriculture destroyed New Deal farm programs, encouraging full production "fence row to fence row". This led to cheap corn, which was used by big business using the Japanese invention of high fructose corn syrup to make big soft drinks. Cheap food meant the fast food outlets could "supersize" their meals to get more business. As a result, Americans overeat and get fat.

[This is based on memory, oversimplifies, but is not totally unfair to the writers. As you can tell from my tone, I quarrel with the narrative.]

Loan Deficiency Payments--WPost Ag Series

The Post's second article on agriculture programs is here: Growers Reap Benefits Even in Good Years. It's again well done, with some graphics that should be noted. The farm programs are so complex you almost have to draw pictures, and even then people will misinterpret what you write.

Today's article covers the loan deficiency program, focusing on corn. The following is of no interest to anyone, being too inside baseball. My memory, which gets worse daily and more cynical weekly, is that the cotton and rice people started "marketing assistance loans" and "loan deficiency payments" in the 1985 farm bill, partially to evade payment limitations. (Nonrecourse loans under the old loan and purchase program weren't subject to payment limitation because the hope was that the farmer would be able to pay them off. So you come up with "marketing assistance loans", which kick in when market prices fall below loan rates (roughly).

Again, this is outside my expertise even when I knew anything, but this is how it evolved. Say the loan rate for cotton is $.55 a pound. In the old days the farmer would harvest the cotton and then take out a CCC price support loan, getting $.55. If market prices never got above $.50 at the end of the loan period the farmer would forfeit the cotton to CCC and keep the $.55. When the marketing assistance program came in, the farmer had a new option--redeeming the cotton for $.50 and keeping $.05 in "marketing assistance loan" benefits. That meant CCC didn't have to worry about disposing of surplus, which meant that the next year we wouldn't require (as big) an reduction in planted acreage. But the net effect was to revert to the 1930's--a two price system where we'd dump surplus cotton on the world market. (That's my cynicism.)

But where do "loan deficiency payments" come in? To simplify operations, instead of going through a loan process on paper, just allow the farmer to pick a date, then compute the $.05 payment and give it to him. So "loan deficiency payments" were "in lieu" of marketing assistance loans. But still outside payment limitation. (They aren't now, but they were for years. And even when Congress instituted limitations, they came up with a separate amount.)

An irony--Al Gore trumpeted his "reinventing government" program--I think the only two programs ended under it were the wool/mohair and honey programs. Of course, Congress always has the last word, so when attention strays, guess what? That's right, welcome to the honey, wool, and mohair loan deficiency payment programs.

WPost on Farm Program Pays $1.3 Billion to People Who Don't Farm

Washington Post is running articles on farm programs, in advance of debate over the 2007 Farm Bill, is here--
Farm Program Pays $1.3 Billion to People Who Don't Farm:

I didn't catch major errors. (There was a misunderstanding by at least one payment recipient--if someone wants to refuse the money it would not go to others. As an entitlement program, FTF differs from appropriated funds.)It emphasizes the personal and the attention-grabbing--for some reason the media like to get readers. If I get the energy to read other blogs I'll probably see some other misinterpretations--like the distinction between cash-rent tenants and sharecroppers, even though it's in the article. Someone will swear that the government is paying some foreigner, I'm sure. One thing about today's article--it didn't lead with big payments to big producers as many such articles do.

It would have been less interesting, but fuller if the writers had pointed out (which they might do tomorrow):

• Freedom to Farm payments were more expensive than payments under the predecessor programs. The increased money was supposed to be part of the "buyout" of farm programs. (I can't say that a simple extension of the programs before FTF would have been cheaper than FTF, but we taxpayers sure didn't get what Pat Roberts promised.)
  
• the big impact of WTO negotiations. WTO rules frown upon payments directly tied to production, another motive to shift to payments based on history (in FTF) (Ironically, today's paper also carries a story about the breakdown of the latest round of WTO negotiations, all because of agricultural subsidies
• the farm lobby was able to consummate the buyout of tobacco and peanut programs in the last few years.

Bottomline--it's difficult to square the circle. Make sure that payments go to current farmers, don't tie payments to current production so they don't aggravate surpluses, don't help absentee landowners who don't have dirt under their fingernails, help the small farmer more than the large one, protect tenants (that's a fight that began back in 1933 with the socialist/communist left strong on the tenant side, just another historical irony). If you can create a program to do that, try tackling world peace.