Thursday, September 28, 2006

Chicago Council on Global Affairs calls for agricultural reforms in the 2007 Farm Bill

From today's provocative report by the Chicago Council on Global Affairs:
[C]urrent agriculture policies are not sufficient for addressing the challenges facing farmers and the nation as a whole. Federal farm programs, while remaining popular with many producers, are not serving U.S. agriculture as well as in the past and are having unintended consequences. These programs have traditionally been justified as a way to provide insulation against market fluctuations and keep more small farms in business. Current programs do, in fact, increase incomes and provide some protection against sharp market changes. But rather than keep smaller farmers on the land, they have contributed to farm consolidation and higher land prices. This, in turn, makes it more difficult for younger farmers to enter farming. In many cases the programs also discourage producers of program commodities from switching crops as markets change and undermine the incentive to innovate and develop the specialty products today’s consumers want.

Continued U.S. backing of our current farm programs is also one of the major reasons for the recent collapse of the World Trade Organization’s (WTO) Doha Round of negotiations. The view of this as a positive development by some U.S. farm groups is shortsighted. If it can be restarted, the Doha Round could be a catalyst for expanding markets for U.S. food and agricultural products. Additionally, our current farm programs are vulnerable to WTO litigation for breaking current international trade rules. We run the risk of losing these programs through litigation without receiving the benefits that a negotiated Doha Round agreement would provide. Farm programs that serve a smaller and smaller portion of farmers may also be vulnerable to Congressional budget-cutting because of their continuing high cost and perceived inequity at a time of historic deficits.

To be efficient and environmentally sustainable, agricultural production must be flexible and responsive to market opportunities. The biggest opportunity for American farmers today is in the new markets created by dramatically changing patterns of demand:
  • Economic growth in developing countries
  • Population growth and evolving consumption patterns in both the United States and developing countries
  • The expanding role of agriculture in energy production
To secure these new markets, farm production must reorient itself to today’s changing world, and public policy must support this goal.